A world reserve currency can be defined as a currency which is kept in large quantities by many different governments and institutions for their international transactions. The world reserve currency is considered as safe-haven currency.
As of the 20th century, the US Dollar was made the world’s reserve currency and because of that the US government has an advantage of over $100 billion per year when they borrow capital from other countries.

World War 2 and Marshall Plan:

World War 2 destroyed many of the countries in Europe and Asia, except the United States of America. As a result European countries were running out of their gold reserves and borrowed from USA. This made USA ending up with large gold reserves, which resulted in USA being the only nation left with a good economy, making it a major political and economic power after the war.
In 1944, the allied nations came together in an effort to make an international monetary system which would prevent the economic crisis and sustain the economies around the world following WWII. The Allied nations named it “Bretton Woods Agreement”, which laid foundations for an international monetary system that created rules for economie…
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