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0 pointstonfa5y ago0 comments

Aren't reserve in US dollars typically just an account at the Fed?

(Eurodollar are one way to bypass it tho)

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4 comments · 2 top-level

lottin5y ago· 2 in thread

It depends. US dollars held by US banks, probably yes. US dollars held as reserves by foreign central banks, such as say, the central bank of Iran, I don't think so. These are reserves in the form of physical dollars and bank deposits, typically not in a US bank. There is no way the Fed can make them disappear.

toast05y ago

> There is no way the Fed can make them disappear.

There's no US precedent, but US government could do something like India's 2016 Demonitization: require new notes, exchange current notes for a limited time only, also limited per person. This might not completely wipe out foreign physical USD holdings, but it would probably make a dent; logistics alone for replacing all the bills would make a dent.

That said, I don't think there's any reason for the US government to do such a thing, and it would most likely lead to significantly lower confidence.

wizzwizz45y ago

Except declaring those dollars “not legal tender”, of course. But that's more likely to weaken their control over the dollar than actually destroy the dollars.

etrabroline5y ago

https://www.theguardian.com/us-news/2019/aug/06/trump-freeze...

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