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International reserve system is a system where every year, countries around the world set aside reserve as insurance against various contingencies such as:-

• Collapse of export price
• Change of investors sentiment.

This reserve currently amount to over two trillion US dollars worldwide and is mainly in US or Euro bonds.

[edit] Criticism of the arrangement

Since most of the poor countries are more vulnerable to change of currency flow, they have in effect been forced to hold a substantial percentage of these low interest bonds. This is potentially unfair as the capital might be spent more beneficially on education, health or infrastructure.

[edit] See also

• Foreign exchange reserves