I heard that because the dollar is the reserve currency there is more demand for it. I understand this. But why is that the more demand there is for a currency, the lower the interest rate on borrowing it is?|||What matters to a government鈥檚 borrowing cost, as countries like Switzerland clearly demonstrate, is not major reserve currency status but rather creditworthiness. Since reserve currency status actually increases US borrowing, it is more likely to undermine the ability of the US Treasury to finance itself cheaply than the loss of reserve status would.|||"It also permits the government issuing the currency to borrow money at a better rate, as there will always be a larger market for that currency than others." Says wikipedia, ref below, can't say I understand the reasoning.
If you find the answere I'd like to know.|||Because it is risk free. And we have always been on time concerning debts payment.
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