What is a Reserve Currency?

Definition of Reserve Currency: This is a currency deemed to be reliable and stable like the Central Banks are planning to capture it in large amounts. At present U.S Dollar is the first reserve currency of the world that comprises nearly 62% of different reserves. Euro is at the second position at nearly 27% with Yen, Pound Sterling, Franc and others creating the balance. Governments hold the reserves in the currencies as an important part of the balances of exchange reserve for facilitating international trade, purchasing commodities and exchange at affordable rates. Commodities like gold and oil are generally priced in one among all the currencies. There is a worldwide movement, handled by the large trading countries like Russia, China and other states to create a sovereign new currency to restore the Dollar as a reserve currency.