Secondly, in a small country, a certain amount of dollars can be derived, which is the same as currency issuance. For example, the salary paid to civil servants in this small country is US dollars. How to pay? The government borrows dollars from banks and remits them to personal accounts. The tax paid by the government is used to repay the bank. These are all numbers. If it doesn't involve cash, it is bank bookkeeping. In other words, the foreign exchange cash dollars obtained are real, with lids, and ten bottles have lids. Of course, the ratio is not so exaggerated, but it is no problem for a country to make ends meet. I'm afraid that suddenly the lid is not enough, banks close down and everyone's deposits disappear, such as Iceland in the financial crisis.
Small countries have certain advantages in giving up their currencies by adopting this model. For example, although Hong Kong has Hong Kong dollars, it adopts the method of keeping a close eye on the exchange rate of the US dollar, which is similar to that of China before. There is no exchange rate risk, but it is also troublesome. If the United States gets sick and the whole world takes medicine, it can also pass on inflation or deflation. In addition, it makes room for domestic monetary policy, but Iceland just can't play well.
International trade is mainly settled in dollars. Note that it is settled in US dollars, not delivered in US dollars. For example, if you import crude oil from Saudi Arabia, you don't have to pay US dollars in full. For example, importing hundreds of billions of dollars of crude oil every year does not mean that the dollar reserves will be reduced by hundreds of billions. Under normal circumstances, there are two ways to import crude oil from Saudi Arabia. For example, the first way is to deliver crude oil on the new york Stock Exchange, which requires real foreign exchange of 1 billion dollars.
Another way is to find Saudi Arabia directly, such as importing from Aramco, which opened an account in China with a book value of 1 100 million USD, and the crude oil arrived in China. At the same time, Saudi Arabia also needs to import other things from China, such as missiles. The book value of Aramco declined and missiles arrived in Saudi Arabia.
Of course, if Saudi Arabia wants to transfer US dollars to China, the country will use foreign exchange reserves, which is normal trade, but it is different after the war. For example, after the Sino-American War, Saudi Arabia distrusted China's banks and demanded cash payment, which quickly exhausted the country's foreign exchange reserves, such as Venezuela now. Of course, in the Sino-US War, it is estimated that the US dollar can't believe that Saudi Arabia will demand physical transactions, or even settle in gold.