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.

Investopedia explains '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.



comments powered by Disqus
Hot Definitions
  1. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will respond similarly to a marketing action. Market segmentation enables companies to target different categories of consumers who perceive the full value of certain products and services differently from one another.
  2. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following:
  3. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option is purchased and the lower premium option is sold - both at the same time. The higher the debit spread, the greater the initial cash outflow the investor will incur on the transaction.
  4. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious debt when government leaders use borrowed funds in ways that don't benefit or even oppress citizens. Some legal scholars argue that successor governments should not be held accountable for odious debt incurred by earlier regimes, but there is no consensus on how odious debt should actually be treated.
  5. Takeover

    A corporate action where an acquiring company makes a bid for an acquiree. If the target company is publicly traded, the acquiring company will make an offer for the outstanding shares.
  6. Harvest Strategy

    A strategy in which investment in a particular line of business is reduced or eliminated because the revenue brought in by additional investment would not warrant the expense. A harvest strategy is employed when a line of business is considered to be a cash cow, meaning that the brand is mature and is unlikely to grow if more investment is added.
Trading Center