Reserve Asset

A reserve asset is an asset which is held by a central bank or a government monetary authority and for which there is an international demand.

Typically, reserve assets consist of commodities (like gold or other precious metals) and liquid currencies (like the U.S. dollar) which can easily be redeemed for international purchases of goods and services.

Reserve assets facilitate trade between countries by guaranteeing settlement of payments for goods and services in a form which keeps its value across borders.

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