Both the US Dollar and the Euro are considered major international reserve currencies. What does this status primarily imply?
A
They are the only currencies accepted for all forms of international trade and investment.
B
Central banks and monetary authorities worldwide hold significant amounts of these currencies as part of their foreign exchange reserves.
C
Their value is directly pegged to a fixed amount of gold, ensuring their stability.
D
Their exchange rates are fixed against all other currencies, eliminating currency risk.
✓ Correct Answer: Option B
A reserve currency is a foreign currency held in large quantities by central banks and monetary authorities as part of their foreign exchange reserves. It is widely used in international transactions, investments, and often serves as a safe-haven asset.
💡 Why is B) the correct answer?
The correct answer to the question "Both the US Dollar and the Euro are considered major international reserve currencies. What does this status primarily imply?" is Option B: Central banks and monetary authorities worldwide hold significant amounts of these currencies as part of their foreign exchange reserves..
The other options — A) They are the only currencies accepted for all forms of international trade and investment., C) Their value is directly pegged to a fixed amount of gold, ensuring their stability., D) Their exchange rates are fixed against all other currencies, eliminating currency risk. — are incorrect for this World Current Affairs question. As explained above: A reserve currency is a foreign currency held in large quantities by central banks and monetary authorities as part of their foreign exchange reserves. It is widely used in international transactions…
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