DEFINITION of 'Dollar Shortage'

A dollar shortage occurs when a country lacks a sufficient supply of U.S. dollars for use in international trade. One way to accumulate dollars is for a country to export more goods (paid for in dollars) than it imports. However, many countries are net importers, and therefore do not naturally accumulate enough dollars through their balance of payments. If the dollar shortage is critical, sometimes a country may request assistance from the U.S. for temporary liquidity.

BREAKING DOWN 'Dollar Shortage'

The U.S. dollar is one of the most important currencies used in international trade. Since the U.S. is the largest economy in the world (as of 2009), trade with the U.S. is an important facet of many countries' economies. In addition, the dollar is favored as a currency in international trade because of its stability as a store of value. One of the most important examples is crude oil, which is priced and sold in U.S. dollars worldwide.

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