Monetary Reserve
A nation's assets in foreign currency and/or commodities like gold and silver, which are used to back up the national currency. Monetary reserves also provide a cushion for executing central banking functions like adding to the money supply and settling foreign exchange contracts in local currencies. Investopedia Says:
When the United States was using the Bretton Woods-inspired monetary system, only gold was used as a monetary reserve, a structural problem that most saw as a roadblock to future economic growth. The U.S. dollar is now a fiat currency (not pegged to gold reserves), and even though the Federal Reserve Banks keep a large amount of reserves, most of what is held today is used for settling short-term currency contracts and for liquidity activities for the domestic economy. Related Terms:
Balance Of Trade - BOT
Fiat Money
Gold Standard
Monetary Policy
Special Drawing Rights - SDR |