Tag Archives: reserve currency

Full Faith and Credit    The United States has a unique advantage in the global economic system – the U.S. dollar is considered the global reserve currency.  This means that global debt markets use the dollar as a benchmark for much of the issuance of debt, even in other countries with other currencies.   There are many factors that influence which currency becomes the global reserve currency – financial stability included.  Investors in a country’s debt (treasury bonds) want to know that they’re going to be paid back, and the United States’ track record and economic prowess have given investors confidence.  The debt ceiling was enacted in 1917, because prior to that, congress had to approve each bond issuance that the U.S. treasury made.    If Congress fails to raise the debt limit, the Treasury will be unable to “print more money” to pay existing bondholders, which would surely spook…

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