Reserve Flows

The dollar is today used extensively both as a store of value and as a medium of  international exchange by those who are involved in international trade and finance. Foreigners own hundreds of billions of’ dollars in U.S. dollar denominated assets. Because narrow money has a . zero or low interest rate, foreigners prefer to hold interest-bearing assets (bonds, stocks, etc.). However, foreigners do hold narrow money in U.S. dollar checking accounts because they need to buy and sell goods and assets. Additionally, any people in unstable or inflation-prone countries hold U.S..