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¶ … reserve currencies, with specific reference to how an asset manager should approach the issue of diversifying into multiple reserve currencies in order to achieve better stability in asset value.
While the U.S. dollar and the euro are the world's two leading reserve currencies, two new currencies have been added by the IMF to the list of reserve currencies. These are the Canadian dollar and the Australian dollar, both being commodity-driven currencies whose stock has risen significantly in the past decade, in part because of the commodity market and in part because those two countries have robust banking sectors and therefore avoided the worst of the 2008 global recession (RT, 2013). This paper will examine the issue of reserve currencies. For a company doing business internationally, is there any merit to using secondary...
Holding assets in stable currencies has always been a necessity, as stable currencies preserve their value better than unstable ones. Stability encourages investment in a currency for reserve purposes -- that is to say strictly as a store of value. Banks, including central banks, hold reserve currencies around the world. Prior to this year, there were five such currencies. Most of the work of reserve currencies around the world was done with the euro and the U.S. dollar. The British pound, Swiss franc and Japanese yen were the other reserve currencies.
The euro's problems are much-publicized.…
Works Cited:
RT. (2013). IMF to add CAD and AUD as reserve currencies; which one's next? RT.com. Retrieved April 13, 2013 from http://rt.com/business/imf-reserve-currencies-909/
Frolova, M. (2013). Will the world get new reserve currency? The Voice of Russia. Retrieved April 13, 2013 from http://english.ruvr.ru/2013_01_18/Will-the-world-get-new-reserve-currency/
Chovanec, P. (2013). Is the Chinese renminbi the next global reserve currency? The Atlantic. Retrieved April 13, 2013 from http://www.theatlantic.com/china/archive/2013/03/is-the-chinese-renminbi-the-next-global-reserve-currency/274454/
Federal Reserve in stabilizing the economy using monetary policy tools. The paper is divided into six major sections. The first section introduces the Federal Reserve by highlighting its objectives, roles, and composition. The second section explains its role and effectiveness in stabilizing the current U.S. economy. The next section discusses some important economic indicators which the Federal Reserve can analyze for better economic stabilization. The fourth section is dedicated
Federal Reserve The key information in the January 14, 2004 Federal Reserve summary ranged from mildly encouraging to 'no change' as far as the economy was concerned. Virtually all areas were experiencing small amounts of employment growth, although there were pockets of decline as well. ("Beige Book," January 14, 2004) In fact, retail sales were up a small amount, mainly because upscale retail stores were having a good season, although the lower
Part 1: The US Dollar There are several advantages for a nation to have its own currency. The biggest advantage is probably that having one's own currency allows a nation to print more money, which can help it to avoid debt default (Wood, 2011). This is tied to other issues of sovereignty, and especially fiscal and monetary sovereignty, where a nation can manage the value of its currency and use the
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other intangible assets such as patents and management strength. Finally, those future earnings are discounted to arrive at a net present value. Interbrand discounts against current interest rates and also against the brand's overall risk profile to factor in brand strength. Considerations include market leadership, stability, and global reach -- or the ability to cross both geographic and cultural borders. The final result values the brand as a financial