The United States dollar (symbol: $; ISO code: USD) is the official currency of the United States and its territories. It is issued by the Federal Reserve System, the country's central bank, which manages monetary policy and controls the supply of currency in circulation. The dollar is subdivided into 100 cents. The US dollar functions as the world's primary reserve currency, meaning that foreign governments, central banks, and international institutions hold substantial dollar-denominated assets as a store of value and medium for international trade.
The dollar's role in the global economy extends well beyond the United States. A large share of international commodity trade - including oil, metals, and agricultural products - is priced and settled in dollars. The dollar's reserve status derives in part from the 1944 Bretton Woods Agreement, which established the dollar as the anchor of the post-World War II international monetary system, and persisted after the Nixon administration ended dollar-gold convertibility in 1971. The Federal Reserve's monetary policy decisions - particularly interest rate adjustments - carry significant effects for economies worldwide, not only for the United States.
The dollar's purchasing power, exchange rate, and reserve status are subjects of ongoing economic and political debate. Inflation, federal deficits, and US debt levels are frequently cited as factors bearing on the dollar's long-term stability. Some economists and policymakers argue that the dollar's reserve status confers economic advantages - sometimes called “exorbitant privilege” - including lower borrowing costs for the US government and private sector. Others contend that reserve currency status contributes to persistent trade deficits and the hollowing out of domestic manufacturing. See Viewpoint: Reserve Currency Advantage and Viewpoint: Triffin Dilemma.
The Federal Reserve's dual mandate - price stability and maximum employment - shapes its monetary policy decisions, and the appropriate balance between those goals is itself a matter of debate. The degree of Fed independence from political pressure is contested in both academic and policy circles.
There is broad consensus among economists that the US dollar currently functions as the dominant global reserve currency and that Federal Reserve monetary policy has global spillover effects. See Economics Consensus. The causes, durability, and desirability of dollar dominance remain contested. The appropriate targets for inflation, the risks posed by US debt levels, and the likelihood of dollar displacement are subjects of active scholarly and policy disagreement.