Economic concept
Safe asset
An asset expected to preserve value, remain liquid, and be accepted as collateral, especially during stress.
All conceptsWhy does the dollar dominate the world?
US economic scale, legal and institutional credibility, open capital markets, and the supply of Treasury securities created a strong foundation. On top of it, a coordination loop developed: firms invoice in dollars because suppliers, customers, banks, and hedging markets already use dollars; that use deepens dollar funding and asset markets, making the next dollar transaction cheaper and safer. The loop is powerful, but it is conditional rather than permanent.
See it at workWhy can the United States sustain such a large public debt?
The United States borrows in its own currency, has a large tax base and issues the world's deepest pool of liquid government securities. That creates exceptional demand and refinancing capacity, but not unlimited fiscal space: interest costs, inflation, politics and confidence still constrain it.