Re:Evergrande teeters on edge of default as $148M payment fa...
by rsj_hn on Wednesday November 10, 2021 @07:27PM
(#29182901)
> If we're talking about a country that's attempting to (or has no choice but to) cut USD out of its foreign trading
For some small country -- and it would need to be a small country, like Sierra Leone, that cannot access the Forex markets, then they need foreign reserves ahead of time. This is true. But if they don't want to hold their reserves as USD they can hold them in EUR or YEN if they like, and then when they need to buy oil, they sell the EUR for USD and buy oil with USD.
While the USD is the largest foreign reserve, it's like 60%, there is also EUR, British Pound, Yen, and some other currencies that are ubiquitous enough for Sierra Leone to hold. These can readily be sold on the spot for whatever a nation wants as payment.
For some small country -- and it would need to be a small country, like Sierra Leone, that cannot access the Forex markets, then they need foreign reserves ahead of time. This is true. But if they don't want to hold their reserves as USD they can hold them in EUR or YEN if they like, and then when they need to buy oil, they sell the EUR for USD and buy oil with USD.
While the USD is the largest foreign reserve, it's like 60%, there is also EUR, British Pound, Yen, and some other currencies that are ubiquitous enough for Sierra Leone to hold. These can readily be sold on the spot for whatever a nation wants as payment.
https://www.federalreserve.gov/econres/notes/feds-notes/the-....