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The currency in the most narrow sense is money in any form when you use or circulation as a medium of exchange, especially circulating banknotes and coins. A more General definition is that the monetary system of money in common use, especially for people in the country. According to this definition, US dollar, Euro, Japanese yen, pounds sterling examples of currencies. These different currencies are recognized as stores of value and are traded between Nations in foreign exchange markets, which determines the relative values of different currencies. Currencies in this sense are defined by governments, and each type has limited boundaries of acceptance.
Other definitions of the term "currency" are discussed in their respective synonymous articles banknote, coin and money. The last definition concerning the monetary systems of the States, is the subject of this article. Currencies can be classified into two monetary systems: Fiat money and commodity money, depending on what guarantees the value of the currency from the economy and governments physical metal reserves. Some currencies are legal tender in certain jurisdictions political. Others are simply traded for their economic value. Digital currency arose with the popularity of computers and the Internet.
1.1. History. Before currency. (Прежде чем валюту)
Initially, the money was in the form of receipt, representing grain stored in temple granaries in Sumer in Ancient Mesopotamia, and later in Ancient Egypt.
In the first stage of currency, metals were used as symbols to represent value stored in the form of commodities. This formed the basis of trade in the fertile Crescent for over 1500 years. However, the collapse of the Middle East, trading system, point to a flaw: in an era where there was no place that was safe to store value, the value of current assets can be only as sound as the forces that defended that store. In trade, one can reach only as far as the credibility of that military. By the late bronze age, however, a number of agreements were established safe passage for merchants around the Eastern Mediterranean sea, stretching from Minoan Crete and Mycenae in the Northwest to Elam and Bahrain in the Southeast. It is not known what was used as a currency for these exchanges, but it is thought that ox-hide shape of ingots of copper, produced in Cyprus may have functioned as a currency.
It is believed that the increase in piracy and raiding associated with the bronze age collapse, possibly produced by the peoples of the sea, brought the trading system of oxhide ingots to an end. It was only the recovery of Phoenician trade in the 10th and 9th centuries BC, which led to a return to prosperity, and the appearance of real coinage, possibly first in Anatolia with Croesus of Lydia and subsequently with the Greeks and the Persians. In Africa many forms of value store have been used including beads, ingots, ivory, various types of weapons, livestock, currency, Manilla, and ochre and other earth oxides. Manila rings of West Africa were one of the currencies used from the 15th century sold slaves. African currency is still marked by diversity, and in many places various forms of barter still apply.
1.2. History. Coinage. (Чекана)
These factors led to the metal itself being the store of value: first silver, then gold and silver and bronze. Now we have copper coins and other non-precious metals as coins. Metals mined, weighed and stamped into coins. This was supposed to convince the person receiving the coins that he received a certain weight of precious metal. Coins could be counterfeited, but this coin has also created a new unit of account, which led to banking. The Archimedes principle provided the next link: coins could now be easily tested for their fine weight of metal, and therefore the value of a coin can be determined, even if she was shaved, impaired or otherwise tampered with see numismatics.
Most major economies using coinage had several tiers of coins of different denominations made of copper, silver and gold. Gold coins are the most valuable and used for large purchases payment of the military and support activities of the state. The unit is often defined as the value of a specific type of gold coin. Silver coins were used for secondary operations, and sometimes also defined the unit in the coins of copper or silver, or some mixture of them see humiliation, can be used for everyday operations. This system was used in Ancient India since the times of the Mahajanapadas. The exact relationship between the values of these three metals vary greatly between different eras and places, for example, the discovery of silver mines in the Harz mountains of Central Europe silver relatively less valuable as the flow of new world silver after the Spanish conquest. However, the rarity of gold has always made it more valuable than silver, and silver is constantly worth more than copper.
1.3. History. Paper money. (Бумажные деньги)
In old China, the need for credit and means of exchange that was less physically cumbersome than large number of copper coins led to the introduction of paper money, i.e. banknotes. Their introduction was a gradual process that lasted from the Tang dynasty in 618-907 the end of the song dynasty 960-1279. It started as a means for merchants to exchange heavy coins for receipt of contributions is issued as bills of exchange and wholesale stores. These notes were valid for temporary use in a small regional territory. In the 10th century, the government of the song dynasty began to circulate these notes amongst the traders in the monopolized salt industry. The song government granted several shops the right to issue banknotes and in the early 12th century the government finally took these shops to produce state of the currency. However, issued Bank notes were still only locally and temporarily valid: it was not until the mid 13th century that a standard and uniform government issue of paper money became an acceptable nationwide currency. The already widespread methods of woodblock prints, and then twice Shengs movable type printing of the 11th century was the impetus for the mass production of paper money in ancient China.
Around the same time in the medieval Islamic world, a vigorous monetary economy was created during the 7th–12th centuries on the basis of the expanding levels of circulation of a stable high-value currency Dinar. Innovations of Muslim economists, traders and merchants include the earliest use of credit, cheques, promissory notes, savings accounts, current accounts, lending, asset management, exchange rates, transfer of credit and debt, and banking institutions for loans and deposits.
In Europe paper money was first introduced on a regular basis in Sweden in 1661, although Washington Irving records an emergency previous to use it in Spanish in a siege during the conquest of Granada. As Sweden was rich on copper, lot of copper coins were in circulation, but its relatively low cost has led to unusually large coins, often weighing several pounds.
The advantages of paper money were numerous: it reduced the need to transport gold and silver, which was risky, it is facilitated loans of gold or silver at interest, since the main form of money in the form of gold or silver coins, not notes left in the possession of the lender until someone bought the note and it allowed a division of currency into credit and security forms. This allowed the sale of shares in joint-stock company and redemption of those shares in paper.
But there are also disadvantages. First, since a note has no intrinsic value, there was nothing to stop the authorities to print more notes than they had a form for them. Second, it increases the money supply, it increased inflationary pressures, that are observed by David Hume in the 18th century. Thus, paper money will often lead to an inflationary bubble which could collapse if people began demanding money, as a result, the demand for paper notes to fall to zero. Printing of paper money was also associated with wars, and financing of wars, and therefore regarded as part of maintaining a standing army. For these reasons, paper currency was held in suspicion and hostility in Europe and America. It was also addictive after the speculative profits of trade and capital creation were quite large. Major United Nations established mints to print money and mint coins, and branches of their Treasury to collect taxes and hold gold and silver stocks.
At the time, as silver and gold were considered legal tender and accepted by governments for taxes. However, instability in the exchange rate between the two grew during the 19th century, with the increase in the supply of these metals, particularly silver, and in trade. Concurrent use of both metals is called bimetallism and the attempt to create a bimetallic standard, when gold and silver backed currency remained in circulation occupied the efforts of inflationists. The government at this stage can use currencies as an instrument of policy, printing paper currency such as the United States greenback, to pay for military spending. They can also set the conditions under which they would redeem notes for the breed, limiting the amount of the purchase or the minimum amount that can be redeemed.
By 1900, the majority of developing States were on some form of gold standard, with paper notes and silver coins being means of payment. Private banks and governments across the world followed Greshams law: keeping gold and silver they received, but paying out in notes. This did not happen all around the world at the same time, but occurred sporadically, generally in times of war or financial crisis, at the beginning of the 20th century and continues worldwide until the end of the 20th century, when the regime of floating Fiat currencies came into force. One of the last countries to break away from the gold standard of the United States in 1971, this action is called the Nixon shock. No country has a legally enforceable gold standard or silver standard currency system.
1.4. History. Era banknote. (Банкноты эпохи)
Banknotes are better known as bill in the United States and Canada is a type of currency and commonly used as legal tender in many jurisdictions. Along with coins, banknotes make up the cash form of all money. Banknotes are mostly paper, but the Australian scientific and industrial research organization the Commonwealth has developed a polymer currency in the 1980s, he went to the treatment of the peoples bicentennial in 1988. Polymer bills have already been introduced in the Isle of man in 1983. In 2016, currencies of the polymer is used in more than 20 countries more than 40, counting commemorative issues, and significantly increases the lifespan of the banknotes and reduce counterfeiting.
2. Modern currencies. (Современные валют)
The use of currency is based on the concept of the application of the Lex monetae that a sovereign state decides which currency it will use. International organization for standardization system was introduced three-letter ISO 4217 codes to indicate the currency as opposed to simple names or currency signs, in order to remove the confusion arose because there are dozens of currencies, the dollar and several called Frank. Even "pound" is used almost a dozen different countries, most of them pegged to the pound sterling, and the balance has various meanings. In General, the three-letter code uses the ISO country code 3166-1 for the first two letters and the first letter of the name of the currency d per dollar, for example, the third letter. The currency of the United States, for example, in the world called USA.
The international monetary Fund uses different system when referring to national currencies.
3. Alternative currency. (Альтернативная валюта)
Unlike a centralized system of money, private decentralized trust networks support alternative currencies such as Bitcoin, Ethereum, Litecoin, of Miner, Peercoin or Dogecoin, that are categorized as cryptocurrencies, as payments and transfers without surveillance, as well as branded currencies, for example the obligation based stores of value, such as quasiregular BarterCard, loyalty points credit card, airline or game-credits MMO games that are based on reputation of commercial products, or strictly regulated, asset-backed alternative currency such as mobile money schemes like MPESA-called e-money issuance.
Currency may be Internet-based and digital, for example, bitcoin is not tied to any particular country or the IMF SDR, which is based on a basket of currencies and assets.
4. Inspection and production. (Контроль и производство)
In most cases, the Central Bank has a monopoly right to issue of coins and banknotes paper money, its area of circulation a country or group of countries it regulates the production of currency by banks Credit through monetary policy.
The exchange rate is the price at which two currencies can be exchanged each other. It is used for trade between the two currency zones. Currencies can be classified as either floating or fixed. In the former, day-to-day changes in foreign currency exchange rates are determined in the market, in the past, the state intervenes in the market to buy or sell their currency to balance supply and demand at a static rate.
In cases where a country has control over its own currency, that control is exercised either by the Central Bank or Ministry of Finance. The institution which controls the monetary policy called the monetary authority. Monetary authorities have varying degrees of autonomy from the governments that create them. The monetary authority is created and supported by its sponsoring government, so independence can be reduced by the legislative or Executive authority that creates it.
Several countries can use the same name for their own separate currencies. On the contrary, some countries can also use the same currency, e.g. the Euro or the CFA franc, or one country can declare the currency 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 years of Spanish silver coins were legal tender in the United States. At various times countries have either broken foreign coins, or a currency Board issuing one note of currency for each note of a foreign state held as currently in Ecuador.
Each currency typically has a main currency and a fractional unit, often defined as 1 ⁄ 100 of the main unit: 100 cents = 1 dollar, 100 centimes = 1 franc, 100 pence = 1 pound, although units of 1 ⁄ 10 or 1 ⁄ 1000 sometimes also occur. Some currencies do not have smaller units such as the Icelandic Krona.
Mauritania and Madagascar are the only remaining countries that have a theoretical fractional part is not based on the decimal system, instead of the ouguiya in theory divided into 5 khoums, while the Malagasy ariary is theoretically divided into 5 iraimbilanja. In these countries, words like dollar or pound "were simply names for this weight of gold." Due to inflation khoums and iraimbilanja not used in practice. See non-decimal currencies for other historic currencies with non-decimal divisions.
5. Convertibility of the currency. (Конвертируемость валюты)
The convertibility of a currency determines the ability of an individual, corporate or government to convert local currency into another currency or Vice versa With or without Central Bank and government intervention. Based on the above restrictions and freely and willingly convert, currencies are classified as:Fully convertible When there are no restrictions or limitations on the amount of currency that can be traded on the international market, and the government does not artificially impose a fixed value or minimum value on the currency in international trade. The US dollar is an example of a fully convertible currency and, for this reason, US dollars are one of the major currencies traded in the foreign exchange market. Partially convertible Central banks control international investments flowing into and out of a country. While most domestic transactions are handled without any special requirements, there are significant restrictions on international investing, and special approval is often required in order to convert into other currencies. The Indian rupee and the renminbi are examples of partially convertible currencies. Nonconvertible A government neither participates in the international currency market nor allows conversion of its currency by individuals or companies. These currencies are also known as blocked, e.g. the North Korean won and the Cuban peso.
6. Local currency. (Местная валюта)
In Economics, a local currency is a currency not backed by a national government and intended to trade only in a small area. Advocates such as Jane Jacobs argue that this enables an economically depressed region to pull itself up by giving the people living there a medium of exchange that they can use to exchange services and locally produced goods in a broad sense, this is the original purpose of all money. Opponents of this concept argue that local currency creates a barrier which can interfere with economies of scale and comparative advantage, and in some cases they can serve as a means of tax evasion.
Local currencies can also come into being when there is economic turmoil involving the national currency. An example of this is the Argentine economic crisis of 2002 in which ious issued by local governments quickly took on some features of the local currency.
One of the best examples of the national currency of the original lets currency, founded on Vancouver island in the early 1980-ies. In 1982, interest rates on loans from the canadian Central Bank ran up to 14% which drove chartered rates on Bank loans are as high as 19%. The resulting currency and credit scarcity left island residents with few options other than to create local currency.
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