Currency: The World of Currency, Unraveling the Secrets of Money

By Fouad Sabry

What is Currency

Currency is a standardization of money in any form, in use or circulation as a medium of exchange, such as banknotes and coins. Currency can be used to refer to any type of money. A currency is a system of money that is used in a common manner within a particular setting throughout a period of time, particularly for the general population of a nation state. This is a more generic meaning of the term. As per this particular definition, the British Pound sterling, euros, Japanese yen, and United States dollars are all instances of fiat currencies that are issued by the government. In addition to serving as a means of storing value, currencies can also be transferred between countries on foreign exchange markets. These markets are responsible for determining the relative values of the various currencies. In this sense, currencies are either chosen by users or legislated by governments, and each form has limited bounds of acceptance; for example, legal tender rules may require a specific unit of account for payments to government entities. Each type of currency has its own defined boundaries of acceptance.

How you will benefit

(I) Insights, and validations about the following topics:

Chapter 1: Currency

Chapter 2: Gold standard

Chapter 3: Seigniorage

Chapter 4: Afghan afghani

Chapter 5: Philippine peso

Chapter 6: Legal tender

Chapter 7: Hong Kong dollar

Chapter 8: Argentine peso

Chapter 9: Singapore dollar

Chapter 10: Indian rupee

Chapter 11: Cuban peso

Chapter 12: Convertibility

Chapter 13: Bermudian dollar

Chapter 14: Soviet ruble

Chapter 15: History of the United States dollar

Chapter 16: History of the Canadian dollar

Chapter 17: Japanese currency

Chapter 18: Money

Chapter 19: United States dollar

Chapter 20: Fiat money

Chapter 21: Paper money of the Qing dynasty

(II) Answering the public top questions about currency.

(III) Real world examples for the usage of currency in many fields.

Who this book is for

Professionals, undergraduate and graduate students, enthusiasts, hobbyists, and those who want to go beyond basic knowledge or information for any kind of Currency.

• Language: English
• Publisher: One Billion Knowledgeable
• Release date: Jan 25, 2024

Book preview

Chapter 1: Currency

Look up money in the free dictionary Wiktionary.

A unit of currency A currency is a system of money that is commonly used within a given setting throughout time, particularly by citizens of a country state. In this context, currencies are either selected by users or mandated by governments, and each form has restricted acceptability; for example, legal tender rules may demand a certain unit of account for payments to government entities.

Other meanings of currency may be found in the following articles: banknote, coin, and money. This article use the definition that emphasizes the money systems of nations.

Depending on what ensures a currency's value (the economy as a whole vs. the government's actual metal reserves), currencies may be divided into three monetary systems: fiat money, commodity money, and representational money. Some currencies serve as legal currency in particular jurisdictions or for particular reasons, such as payment to the government (taxes) or government agencies (fees, fines). Others are merely exchanged for their monetary worth.

Due to the surge in use of computers and the Internet, digital money has emerged. It remains uncertain if government-backed digital notes and coins (such as the digital yuan in China) can be effectively produced and deployed. In 2014, the Internal Revenue Service (IRS) of the United States issued a statement clarifying that virtual currency is treated as property for Federal income tax purposes and providing examples of how long-standing tax principles applicable to transactions involving property apply to virtual currency.

Cowry shells being used as money by an Arab trader

Initially, money was a type of receipt reflecting grain held in temple granaries in Sumer and ancient Egypt.

In this first phase of money, metals were utilized as symbols to symbolize the worth of goods. This was the foundation of commerce in the Fertile Crescent for more than 1,500 years. However, the collapse of the Near Eastern trade system revealed a flaw: in a period when there was no secure location to keep wealth, the worth of a circulating medium was only as reliable as the forces that guarded that store. A transaction could only go as far as the military's reputation would allow. By the end of the Bronze Age, however, a series of treaties had secured safe passage for traders across the Eastern Mediterranean, from Minoan Crete and Mycenae in the north to Elam and Bahrain in the south. Copper ingots fashioned like oxhide and manufactured in Cyprus are believed to have been used as cash in these transactions, but this is not known for certain.

It is believed that the surge in piracy and raiding linked with the end of the Bronze Age, presumably caused by the Sea Peoples, brought an end to the oxhide ingot trade system. Only the resumption of Phoenician commerce in the tenth and ninth century B.C. led to a return to wealth and the emergence of actual currency, presumably first in Anatolia with Croesus of Lydia and then in Greece and Persia. In Africa, several kinds of value storage have been used, such as beads, ingots, ivory, different types of weaponry, animals, the manilla money, ochre, and other earth oxides. West African manilla rings were one of the currencies used to purchase slaves beginning in the 15th century. African money is still renowned for its diversity, and different kinds of barter are still prevalent in many regions.

It is possible that the ubiquity of metal coinage led to the metal itself being the store of value: initially copper, then silver and gold, and at one time bronze. Today, non-precious metals are used for coinage. The mining, weighing, and coining of metals. This was done to ensure that the recipient receiving the coin received a known quantity of precious metal. However, the presence of standard coins produced a new unit of account, which contributed to the development of banking. Archimedes' concept supplied the next link: coins could now be readily tested for their fine metal weight, allowing the worth of a coin to be established even if it had been shaved, debased, or otherwise altered (see Numismatics).

The world's oldest coin, originating from the ancient Kingdom of Lydia

Copper, silver, and gold coins of varying values were used in the majority of the world's largest economies. Gold coins were used for significant purchases, payment of the military, and governmental operations. Frequently, units of account were specified as the value of a certain sort of gold coin. Silver coins were used for medium-sized transactions and occasionally served as a unit of account, whilst copper or silver coins, or a combination of the two (see debasement), were sometimes used for daily transactions. In ancient India, this system had been in use since the period of the Mahajanapadas. The exact ratios between the values of the three metals varied greatly between different eras and locations; for instance, the opening of silver mines in the Harz mountains of central Europe and the influx of silver from the New World after the Spanish conquests decreased the relative value of silver. However, the scarcity of gold made it constantly more valuable than silver, and the same was true of silver over copper.

In premodern China, the demand for lending and a less physically onerous means of exchange than enormous quantities of copper coins led to the invention of paper money, or banknotes. Their gradual introduction lasted from the late Tang dynasty (618–907) to the Song dynasty (960–1279). It developed as a way for wholesalers to exchange heavy coins for receipts of deposit issued as promissory notes. These notes were temporarily redeemable inside a tiny geographical zone. In the tenth century, the Song dynasty government started circulating these banknotes among its monopolized salt business merchants. The Song government authorized a number of businesses to create banknotes, and in the early 12th century, the government seized control of these enterprises to generate state-issued money. However, the banknotes created were still only valid locally and temporarily; it was not until the middle of the 13th century that a standard and uniform government supply of paper money became a nationally recognised currency. In premodern China, the widespread use of woodblock printing and Bi Sheng's moveable type printing by the eleventh century provided the impetus for the mass manufacturing of paper currency.

Song dynasty Jiaozi, the oldest paper money in the world

During the 7th to 12th century, a robust monetary system was established in the medieval Islamic world on the basis of the growing circulation of a stable, high-value currency (the dinar). Among the innovations brought by Muslim economists, businessmen, and merchants are the first credit systems, In 1661, Sweden was the first country in Europe to issue paper money on a regular basis (although Washington Irving records an earlier emergency use of it, by the Spanish in a siege during the Conquest of Granada). Due to Sweden's copper wealth, many copper coins circulated, but their comparatively low value needed exceptionally large coins, often weighing several kilograms.

It facilitated loans of gold or silver at interest, as the underlying specie (money in the form of gold or silver coins rather than notes) never left the lender's possession until someone else redeemed the note; thus it permitted the separation of currency into credit- and specie-backed forms. It allowed for the selling of investments in joint-stock corporations and the redemption of those shares in a paper form.

However, there were downsides as well. First, since a note has no fundamental worth, there was nothing preventing issuing authority from creating more notes than they had actual currency to support them. David Hume noted in the 18th century that this created inflationary pressures since it increased the money supply. Thus, paper currency would often result in an inflationary bubble, which might burst if people demanded real currency, so reducing the demand for paper notes to zero. In addition to being related with conflicts and the funding of wars, the production of paper currency was seen as an element of sustaining a standing army. In Europe and the United States, paper cash was viewed with mistrust and animosity for these reasons. Large speculative gains from commerce and capital production contributed to its addictive nature. Major governments developed mints to print currency and mint coins, as well as treasury departments to collect taxes and store gold and silver reserves.

At that period, both silver and gold were recognized as legal money and accepted for payment of taxes by governments. Instability in the exchange rate between the two metals increased during the course of the 19th century as the supply of these metals, notably silver, and commerce surged. The concurrent usage of both metals is known as bimetallism, and inflationists spent their time attempting to establish a bimetallic standard in which gold and silver-backed money remained in circulation. Governments may now employ money as a tool of policy by creating paper currency such as the U.S. dollar to fund military expenses. They might also determine the parameters under which they would redeem paper currency for physical currency by restricting the purchase amount or the minimum quantity that could be redeemed.

By 1900, the majority of industrializing countries had adopted some version of the gold standard, with paper currency and silver coins serving as the means of exchange. Private banks and governments around the globe adhered to Gresham's law by retaining the gold and silver they received and disbursing their funds as paper currency. Beginning in the early 20th century and continuing throughout the globe until the late 20th century, when the regime of floating fiat currencies came into effect, this did not occur simultaneously everywhere in the world. Rather, it happened irregularly, often during war or financial crises. In 1971, the United States was one of the last nations to abandon the gold standard, a move known as the Nixon shock. No nation has a gold standard or silver standard currency system that is enforceable.

A banknote or bill is a kind of cash and is often accepted as legal tender in a variety of nations. Alongside coins, banknotes constitute the cash form of a currency. In the 1980s, the Commonwealth Scientific and Industrial Research Organisation of Australia created a polymer money, which entered circulation on the nation's bicentennial in 1988. And significantly boosts the longevity of banknotes and decreases counterfeiting.

Name of currency units by country, in Portuguese

The currency is founded on the notion of lex monetae, in which a sovereign state determines its own currency. The International Organization for Standardization (ISO) has introduced a system of three-letter codes (ISO 4217) to denote currency (as opposed to simple names or currency symbols) to eliminate the confusion caused by the fact that there are dozens of currencies called the dollar and a number of currencies called the franc. Even the pound is used in almost a dozen distinct nations, the majority of which are related to the pound sterling and the rest of which have varied values. The first two letters of the three-letter code are the ISO 3166-1 country code, and the third letter is the initial letter of the currency's name (D for dollar, for example). For instance, the money of the United States is referred to universally as USD. Currencies such as the pound sterling have unique codes, since the first two letters do not represent the precise nation name but rather an alternate term used to define the country. GBP is the code for the pound, where GB stands for Great Britain and not the United