Foreign reserve

money held by a central bank to pay debts, if needed

A foreign reserve is the currency from another nation that is held by a nation's treasury. They are another set of assets in a country. Formerly, only gold and silver were used as reserves, but now the currency of other countries is used. There is a benefit to having a foreign reserve. When a nation has one, it can change the exchange rate to make it best for the country. But sometimes the exchange rate drops and the foreign reserve becomes worthless.

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