Reserve currencies were designed to be highly liquid, serve as a unit of account, and preserve purchasing power. Reserve currencies provide a low-volatility asset that can be easily exchanged for other assets, products, and services. This stability of the reserve currency helps to ensure that other assets are denominated in the same currency and that purchasing power is maintained in the medium and long term..
Stablecoins are an essential part of cryptocurrencies. Also, its lack of volatility is like a rock in a stormier of other raging cryptocurrencies. Cryptocurrency users can take comfort in trading stablecoins knowing that their value will remain stable unless there is some horrible Black Swan event that leaves no one unscathed..
However, if the stablecoin is pegged to the US dollar it will move with the dollar in both a positive and negative direction. In other words, even if it is stable, if the dollar depreciates, so will the stablecoin. Therefore, to understand that it is a reserve currency, it must be clear that it is not a stable currency. Normally, reserve currencies are designed algorithmically with assets that support them, the concept is similar to the gold standard, they provide a floating value that users can depend on due to the fractional reserves they have in the treasuries that support them..