If you've probably used a lot of different currencies,

pesos, yen, pounds, and euros.

But there is one currency that is desirable pretty much anywhere you go.

The US dollar. Dollars have a near universal value and in a pinch a vendor in a new deli market or a waiter in Spain

will likely accept one as payment. But behind the scenes the dollar is playing

another more important global role. one that many of us find confusing.

It's a reserve currency. For almost a century countries have been buying dollars as a kind of insurance policy.

As a result, around 6.7 trillion US dollars are held in reserve around the world.

The fact that the dollar is the world's main reserve currency has given the United States significant economic power.

It allows the U.S. to borrow easily, to recover quickly from economic shocks

and to impose sanctions on adversaries.

But power like that comes with some drawbacks,

and there is no guarantee that the dollar will keep its status forever. I'm Gabri El Sierra and this is why it matters.

Today how the US dollar shapes the world and what it means for Americans. The Federal Reserve is taking sweeping action to try to protect the economy from the

coronavirus.

Fed Chairman Jerome Powell announced that interest rates will be drastically cut in one of the biggest

Fed moves since the 2008 financial crisis.

China has a huge vested interest in the American economy because it holds almost 25% of all foreign own U.S. debt.

U.S. sanctions against Iran over its nuclear program were reintroduced.

Iran's economies in free fall soaring inflation

has been from when push comes to shove the dollar proves it's the is a reserve currency and why does it matter?

So Gabby, I think the first thing is to explain what a currency is before we get to reserve currency.

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