A currency used as foreign exchange reserves by other countries. To be suitable for use as reserves, a currency needs to be convertible, and to belong to a large country with a reputation for low inflation. The principal currency currently used as reserves is the US dollar. In the past the pound sterling was used as a reserve currency, mainly by sterling area countries, and the French franc has been used, mainly by francophone countries. The euro is becoming increasingly popular as a reserve currency. Opinions differ as to whether countries gain by having their currencies used as reserves. Reserve currency countries receive cheap loans from the holders while the system lasts, but their currencies are exposed to severe speculative pressure if confidence in them declines, which inhibits independence in monetary policy.