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Currency

A currency is a unit of exchange, facilitating the transfer of goods and services. It is a form of money, where money is defined as a medium of exchange (rather than e.g. a store of value). A currency zone is a country or region in which a specific currency is the dominant medium of exchange. To facilitate trade between currency zones, there are exchange rates i.e. prices at which currencies (and the goods and services of individual currency zones) can be exchanged against each other. Currencies can be classified as either floating currencies or fixed currencies based on their exchange rate regime. In common usage, currency sometimes refers to only paper money, as in "coins and currency", but this is incorrect. Coins and paper money are both forms of currency.

In most cases, each country has monopoly control over its own currency. Member countries of the European Monetary Union are a notable exception to this rule, as they have ceded control of monetary policy to the European Central Bank.
In cases where a country does have control of its own curency, that control is exercised either by a Central Bank or by a Ministry of Finance. In either case, the institution that has control of monetary policy is referred to as the monetary authority. Monetary authorities have varying degrees of autonomy from the governments that create them. In the United States, the Federal Reserve operates with full independence from the government. It is important to note that a monetary authority is created and supported by its sponsoring government, so independence can be reduced or revoked by the legislative or executive authority that creates it. In almost all Western countries, the monetary authority is largely independent from the government.

Several countries can use the same name, each for their own currency (e.g. Canadian dollars and US dollars), several countries can use the same currency (e.g. the euro), or a country can declare the currncy of another country to be legal tender. For example, Panama and El Salvador have declared US currency to be legal tender, and from 1791-1857, Spanish silver coins were legal tender in the United States. At various times countries have either restamped foreign coins, or used currency board issuing one note of currency for each note of a foreign government held, as Ecuador currently does.

Each currency typically has one fractional currency, often valued at 1/100 of the main currency: 100 cents = 1 dollar, 100 centimes = 1 franc, 100 pence = 1 pound. Units of 1/10 or 1/1000 are also common, but some curencies do not have any smaller units. Mauritania and Madagascar are the only remaining countries that do not use the decimal system; instead, the Mauritanian ouguiya is divided into 5 khoum, while the Malagasy ariary is divided into 5 iraimbilanja. However, due to inflation, both fractional units have in practice fallen into disuse.

See Non-decimal currencies for other (mostly historic) currencies with non-decimal divisions.

Coinage
These factors led to the shift of the store of value being the metal itself: at first silver, then both silver and gold. Metals were mined, weighed, and stamped into coins. This was to assure the individual taking the coin that he was getting a certain known weight of precious metal. Coins could be counterfeited, but they also created a new unit of account, which helped lead to banking. It was with Archimedes' principle that the next link in currecy occurred: coins could now be easily tested for their fine weight of metal, and thus the value of a coin could be determined, even if it had been shaved, debased or otherwise tampered with.

In most major economies using coinage, copper, silver and gold formed three tiers of coins. Gold coins were used for large purchases, payment of the military and backing of state activities. Silver coins were used for large, but common, transactions, and as a unit of account for taxes, dues, contracts and fealty, while copper coins represented the coinage of common transaction. In Europe this system worked through the medieval period because there was virtually no new gold, silver or copper introduced through mining or conquest. Thus the overall ratios of the three coinages remained roughly equivalent.

In China, however, the need for credit and for circulating medium led to the introduction of paper money. In Europe paper money was first introduced in Sweden 1661. Sweden was rich on copper but because of copper's low value extraordinarily big coins had to be made. It was probably more convenient to have a note stating your possession of such a coin.

Legal Tender Era
With the creation of central banks, currency underwent several significant changes. During both the coinage and credit money eras the number of entities which had the ability to coin or print money was quite large. One could, literally, have "a license to print money"; many nobles had the right of coinage. Royal colonial companies, such as the Massachusetts Bay Company or the British East India Company could issue notes of credit—money backed by the promise to pay later, or exchangeable for payments owed to the company itself. This led to continual instability of the value of money. The exposure of coins to debasement and shaving, however, presented the same problem in another form: with each pair of hands a coin passed through, its value grew less.

The solution which evolved beginning in the late 18th century and through the 19th century was the creation of a central monetary authority which had a virtual monopoly on issuing currency, and whose notes had to be accepted for "all debts public and private". The creation of a truly national curreny, backed by the government's store of precious metals, and enforced by their military and governmental control over an area was, in its time, extremely controversial. Advocates of the old system of Free Banking repealed central banking laws, or slowed down the adoption of restrictions on local currency. (See Gold standard for a fuller discussion of the creation of a standard gold based currency).

At this time both silver and gold were considered legal tender, and accepted by governments for taxes. However, the instability in the ratio between the two grew over the course of the 19th century, with the increase both in supply of these metals, particularly silver, and of trade. This is called bimetallism and the attempt to create a bimetallic standard where both gold and silver backed currency remained in circulation occupied the efforts of inflationists. Governments at this point could use currenc as an instrument of policy, printing paper currency such as the United States Greenback, to pay for military expenditures. They could also set the terms at which they would redeem notes for specie, by limiting the amount of purchase, or the minimum amount that could be redeemed.

By 1900, most of the industrializing nations were on some form of gold standard, with paper notes and silver coins constituting the circulating medium. Governments too followed Gresham's Law: keeping gold and silver paid, but paying out in notes.

Modern currencies

To find out which currency is used in a particular country, start at the countries of the world or look at the table of historical exchange rates.

Nowadays ISO have introduced a system, ISO 4217, using three-letter codes to define currency (as opposed to simple names or currency signs), in order to remove the confusion that there are dozens of currencies called the dollar and many called the franc. Even the pound is used in nearly a dozen different countries, all, of course, with wildly differing values. In general, the three-letter code uses the ISO 3166-1 country code for the first two letters and the first letter of the name of the currency (D for dollar, for instance) as the third letter.

The International Monetary Fund uses a variant system when referring to national currencies.

See Non-decimal currencies

Currency names

Currency names of the world in alphabetic order by currency name:

A-E
Afghani - Afghanistan
Ariary - Madagascar
Baht - Thailand
Balboa - Panama (U.S. dollar used for paper money)
Birr - Ethiopia
Bolívar - Venezuela
Boliviano - Bolivia
Cedi - Ghana
Colon - Costa Rica
Cordoba - Nicaragua
Dalasi - The Gambia
Denar - Macedonia

Dinar
Algerian dinar - Algeria
Bahraini dinar - Bahrain
Iraqi dinar - Iraq
Jordanian dinar - Jordan, Palestine
Kuwaiti dinar - Kuwait
Libyan dinar - Libya
Tunisian dinar - Tunisia
Serbian dinar - Serbia
Sudanese dinar - Sudan

Dirham
Moroccan dirham
United Arab Emirates dirham

Dollar
Australian dollar - Australia, Christmas Island, Cocos (Keeling) Islands, Heard Island and McDonald Islands, Norfolk Island, Kiribati, Nauru and Tuvalu
Barbados dollar - Barbados
Bahamian dollar - Bahama
Belize dollar - Belize
Bermuda dollar - Bermuda
Brunei dollar - Brunei
Canadian dollar - Canada
Cayman Islands dollar - Cayman Islands
East Caribbean dollar - Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines
Fijian dollar - Fiji
Guyanese dollar - Guyana
Hong Kong dollar - Hong Kong
International dollar - hypothetical currency pegged 1:1 to the United States dollar
Jamaican dollar - Jamaica
Liberian dollar - Liberia
Namibian dollar - Namibia
New Zealand dollar - New Zealand, Cook Islands, Niue, Tokelau, Pitcairn Islands.
Singapore dollar - Singapore
Solomon Islands dollar - Solomon Islands
Suriname dollar - Suriname
New Taiwan dollar - Taiwan
Trinidad and Tobago dollar - Trinidad and Tobago
Tuvaluan dollar - Tuvalu (not an independent currency, equivalent to Australian dollar)
United States dollar - United States of America; also used officially in several other countries: East Timor (has own centavo coins), Ecuador (has own centavo coins), El Salvador, Marshall Islands, Federated States of Micronesia, Palau and Panama (has own Balboa currency)
Zimbabwe dollar - Zimbabwe

Dong - Vietnam
Dram - Armenia
Escudo - Cape Verde

Euro - Austria, Belgium, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal, Spain
• Countries that have made legal agreements with the EU to use the euro: Monaco, San Marino, Vatican City
• Territories that unilaterally use the euro: Andorra, Montenegro, Kosovo
• Currencies pegged to the euro: Cape Verdean escudo, CFA franc, CFP franc, Comorian franc, Bulgarian lev, Estonian kroon, Lithuanian litas, Bosnia and Herzegovina convertible mark

F-M
Florin - Aruba
Forint - Hungary
Franc
CFA franc - Benin, Burkina Faso, Cameroon, Central African Republic, Chad, Republic of the Congo, Equatorial Guinea, Gabon, Guinea-Bissau, Mali, Niger, Senegal, Togo
CFP franc - New Caledonia, French Polynesia, Wallis and Futuna
Comorian franc - Comoros
Congolese franc - Democratic Republic of Congo (replaced in 1967, re-established in 1998)
Burundi franc - Burundi
Rwandan franc - Rwanda
Djiboutian franc - Djibouti
Guinean franc - Guinea (replaced in 1971, re-established in 1985)
Malagasy franc - Madagascar (replaced by Ariary in 2004)
Swiss franc - Switzerland, Liechtenstein.
Gourde - Haiti
Guaraní - Paraguay
Gulden - Netherlands Antilles
Hryvnia - Ukraine
Kina - Papua New Guinea
Kip - Laos
Koruna
Czech koruna - Czech Republic
Slovak koruna - Slovakia
Kroon - Estonia
Icelandic krona
Krona - Sweden
Krone
Danish krone - Denmark, Greenland
Norwegian krone - Norway
Kuna - Croatia
Kwacha
Malawian kwacha - Malawi
Zambian kwacha - Zambia
Kwanza - Angola
Kyat - Myanmar
Lat - Latvia
Lari - Georgia
Lek - Albania
Lempira - Honduras
Leone - Sierra Leone
Leu
Moldovan leu - Moldova
Romanian leu - Romania
Lev - Bulgaria
Lilangeni - Swaziland
Lira
Maltese lira - Malta
Turkish new lira - Turkey
Litas - Lithuania
Loti - Lesotho
Manat
Azeri manat - Azerbaijan
Turkmenistani manat - Turkmenistan
Mark, convertible - Bosnia and Herzegovina
Metical - Mozambique

N-R
Nakfa - Eritrea
Naira - Nigeria
Ngultrum - Bhutan
Ouguiya - Mauritania
Pa'anga - Tonga
Pataca - Macau
Peso
Argentine peso - Argentina
Chilean peso - Chile
Colombian peso - Colombia
Cuban peso, Cuban convertible peso - Cuba
Dominican peso - Dominican Republic
Mexican peso - Mexico
Philippine peso - Philippines
Uruguayan peso - Uruguay
Pound
Cyprus pound - Cyprus
Egyptian pound - Egypt
Falkland pound - Falkland Islands
Gibraltar pound - Gibraltar
Saint Helenian pound - Saint Helena
(New) Sudanese pound - Southern Sudan
Lebanese pound - Lebanon
Pound sterling - United Kingdom
Syrian pound - Syria
Pula - Botswana
Quetzal - Guatemala
Rand - South Africa
Real - Brazil
Renminbi - People's Republic of China
Rial
Iranian rial - Iran
Omani rial - Oman
Yemeni rial - Yemen
Riel - Cambodia
Ringgit - Malaysia
Riyal
Qatari riyal - Qatar
Saudi riyal - Saudi Arabia
Ruble
Belarusian ruble - Belarus
Russian ruble - Russia
Transnistrian ruble - Transnistria (non-recognized currency)
Rufiyah - Maldives
Rupee
Indian rupee - India
Mauritian rupee - Mauritius
Nepalese rupee - Nepal
Pakistani rupee - Pakistan
Seychelles rupee - Seychelles
Sri Lankan rupee - Sri Lanka
Rupiah - Indonesia

S-Z
Sheqel - Israel, Gaza Strip, West Bank
Shilling
Kenyan shilling - Kenya
Somali shilling - Somalia
Tanzanian shilling - Tanzania
Ugandan shilling - Uganda
Sol - Peru
Som
Kyrgyzstani som - Kyrgyzstan
Uzbekistani som - Uzbekistan
Somoni - Tajikistan
Taka - Bangladesh
Tala - Samoa
Tenge - Kazakhstan
Tolar - Slovenia
Tugrug - Mongolia
Vatu - Vanuatu
Won
North Korean won - North Korea
South Korean won - South Korea
Japanese yen - Japan

See also
Currency band
Exchange rate
Exchange rate regime
Fixed exchange rate
Floating exchange rate
Linked exchange rate
Markets
• Foreign Exchange Market
• Foreign Exchange Options
• Currency
• Dividends
• Euro
• Exchange Rate
• Currency Future
• Futures Contract
• Futures Exchange

• Basis Point
• Interest Rate
• Investment

• Summary Measures of the Foreign Exchange Value of the Dollar
• Forex and Commodities Futures and Options. What to know before you trade
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• Earning Money From Forex

Futures exchange
Currency future
Forex swap
Currency swap
Foreign exchange option
Base currency

This article is licensed under the GNU Free Documentation License.
It uses material from the Wikipedia article "Currency".