Celcius

The Renminbi as a Reserve Currency (Part 1)

A reserve currency is just an indirect currency exchange for goods and services using a commonly accepted medium of exchange. AuGod! has a very valid point regarding the need of a reserve currency. A reserve currency only made sense when the US dollar was backed by gold. Bilateral currency swaps between trading partners is a better approach vs. reserve currencies, since you remove the risk of reserve currency price volatility. It also diversify's central bank reserve risk from a black swan event like a US default.