Ishwar Prasad

One is liquidity, meaning that they should be able to buy and sell that asset easily and in large quantities without disrupting the market.

One is liquidity, meaning that they should be able to buy and sell that asset easily and in large quantities without disrupting the market.

One is liquidity, meaning that they should be able to buy and sell that asset easily and in large quantities without disrupting the market.

If you think about the Swiss franc, for instance, it's not a very big market. You know, Switzerland is a small economy. And if you try to buy, say, 50 or 100 billion dollars worth of Swiss government bonds and then try to sell them at one shot, it's going to destroy the market. You sell 100 billion dollars worth of U.S. treasuries. You know, this is a 33 trillion dollar market.

If you think about the Swiss franc, for instance, it's not a very big market. You know, Switzerland is a small economy. And if you try to buy, say, 50 or 100 billion dollars worth of Swiss government bonds and then try to sell them at one shot, it's going to destroy the market. You sell 100 billion dollars worth of U.S. treasuries. You know, this is a 33 trillion dollar market.

If you think about the Swiss franc, for instance, it's not a very big market. You know, Switzerland is a small economy. And if you try to buy, say, 50 or 100 billion dollars worth of Swiss government bonds and then try to sell them at one shot, it's going to destroy the market. You sell 100 billion dollars worth of U.S. treasuries. You know, this is a 33 trillion dollar market.

It's not going to register as more than a ripple.

It's not going to register as more than a ripple.

It's not going to register as more than a ripple.

Second, you need safety, meaning that the value of those assets is going to be preserved more or less.

Second, you need safety, meaning that the value of those assets is going to be preserved more or less.

Second, you need safety, meaning that the value of those assets is going to be preserved more or less.

But there's one other very important thing. A reserve currency issuer needs to have the trust of foreign investors. So you need good institutions. And what are those institutions? One is checks and balances. So you know that a government won't do anything crazy with its policies. Crazy like borrowing more money than it could ever pay back.

But there's one other very important thing. A reserve currency issuer needs to have the trust of foreign investors. So you need good institutions. And what are those institutions? One is checks and balances. So you know that a government won't do anything crazy with its policies. Crazy like borrowing more money than it could ever pay back.

But there's one other very important thing. A reserve currency issuer needs to have the trust of foreign investors. So you need good institutions. And what are those institutions? One is checks and balances. So you know that a government won't do anything crazy with its policies. Crazy like borrowing more money than it could ever pay back.

which means that the government will not change the rules at an instant and say that we're not going to pay back foreign investors. And you need an independent central bank so that you know the value of the currency is going to be preserved and the central bank will not let inflation run amok.

which means that the government will not change the rules at an instant and say that we're not going to pay back foreign investors. And you need an independent central bank so that you know the value of the currency is going to be preserved and the central bank will not let inflation run amok.

which means that the government will not change the rules at an instant and say that we're not going to pay back foreign investors. And you need an independent central bank so that you know the value of the currency is going to be preserved and the central bank will not let inflation run amok.

So those are all of the key attributes of a reserve currency. If one were looking for an ideal reserve currency, this is what you would want to have.

So those are all of the key attributes of a reserve currency. If one were looking for an ideal reserve currency, this is what you would want to have.