Currency Internationalization


DEFINITION of 'Currency Internationalization'

The widespread use of a currency outside the original country in which it was created for the purposes of conducting transactions between sovereign states. The level of currency internationalization for a currency is determined by the demand other countries have for that currency. This depends on the amount of business that is performed between the countries and/or the perceived value of the currency as a good store of value.

BREAKING DOWN 'Currency Internationalization'

From the 1970s onward, the currency with the highest amount of currency internationalization was the U.S. dollar.

Billions (if not trillions) of U.S. dollar reserves are held in Asian countries (such as Japan or China), which has caused the U.S. dollar to rise in value in recent years. However, there are concerns as to what would happen if some other currency (such as the euro) gained higher rates of currency internationalization. Some believe that the resulting flood of U.S. dollars could dramatically decrease the value of the dollar and take away America's title as the world's strongest economy.

  1. Currency

    Currency is a generally accepted form of money, including coins ...
  2. Monetary Policy

    Monetary policy is the actions of a central bank, currency board ...
  3. Euro

    The official currency of the European Union's (EU) member states. ...
  4. Store Of Value

    Any form of commodity, asset, or money that has value and can ...
  5. Money

    An officially-issued legal tender generally consisting of currency ...
  6. Reserve Currency

    A foreign currency held by central banks and other major financial ...
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