This also is known as Triffin's Paradox.
It is a conflict in interest between the short-term domestic and long-term international objectives regarding a reserve currency. Basically it is the idea that the interests of the domestic economy will be pitted against the global needs at some point.
Named after the economist Robert Triffin, it shows that a country must be willing to run a trade deficit. This is the natural result of ensuring the nations who want to hold the currency have enough supplied to them.
The present reserve currency is the U.S. Dollar.
When there is a rift between global and domestic monetary policy, we see imbalances in the balance of payments and current account.
Eurodollar System
It is theorized that the Federal Reserve was able to avoid Triffin's Dilemma due to the emergence of the Eurodollar System.
Under this situation, the global banking and financial institutions took over the role of money creation. As opposed to depending upon one form of money, in this case currency, they were able to generate what was needed. Simply put the Eurodollar System was able to get money where it was needed, in a timely manner.
This all started to fall apart during the Great Financial Crisis. Due to the evaporation of collateral, specifically the implosion of mortgage backed securities, the Eurodollar System found itself starved. Over the last 15 years, bank balance sheets were constrained to the point where the system started to fail.
The result is further pressure on the reserve currency. As the demand for USD increased, countries were finding it unavailable. Even US Treasuries became hard to come by. Nations that were sitting on a large stock of bonds and notes suddenly were having to sell them to get a hold of dollars.
We see the Fed pulled into the global economy like never before. Since the GFC, this institution has tried to backstop much of the international situation. At best, the results are mixed.
Reserve Currency Paradox
When a country's currency becomes the reserve, it is presented with a paradox.
Here are the two factors:
effectively getting interest-free loans by selling the currency to foreign governments thus raising capital quickly
use the capital and monetary policy to maintain the competitiveness of domestic industries
Because of the high demand for the bonds, the first is easy to accomplish. However, the result of trade deficits can make the domestic economy unhealthy.
Here is where we see low cost capital and positive trade balances cannot occur simultanously.
Hence the paradox.