In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of the euro. The exchange rate is also regarded as the value of one country's currency in relation to another currency. For example, Estimated Reading Time: 10 mins Market (economics) In economics, a market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labour power) to buyers in exchange for money Eurocurrency - Wikipedia
Foreign exchange market - Wikipedia
Numismatics portal. A currency [a] is a standardization of money in any form, in use or circulation as a medium of exchangefor example banknotes and coins.
Currencies may act as stores of value and be traded between nations in foreign exchange marketswhich determine the relative values of the different currencies.
legal tender laws may require a particular unit of account for payments to government agencies. Other definitions of the term "currency" appear in the respective synonymous articles: banknotecoinand money.
This article uses the definition which focuses on the currency systems of countries. One can classify currencies into three monetary systems : fiat currency market wikipediacommodity moneyand representative moneydepending on what guarantees a currency's value the economy at large vs. the government's physical metal reserves.
Some currencies function as legal tender in certain jurisdictions, or for specific purposes, such as payment to a government taxesor government agencies fees, fines. Others simply get traded for their economic value. Digital currency has arisen with the popularity of computers and the Internet. Whether digital notes and coins will be successfully developed remains dubious. Many warnings issued by various countries note the opportunities that cryptocurrencies create for illegal activities, such as money laundering and terrorism.
Originally currency was a form of receipt, representing grain stored in temple granaries in Sumer in ancient Mesopotamia and in Ancient Egypt. In this 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 years. However, the collapse of the Near Eastern trading system pointed currency market wikipedia a flaw: in an era where there was no place that was safe to store value, the value of a circulating medium could only be as sound as the forces that defended that store.
A trade could only reach as far as the credibility of that military. By the late Bronze Agehowever, currency market wikipedia, a series of treaties had established safe passage for merchants around the Eastern Mediterraneanspreading 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 shaped ingots of copper, produced in Cyprusmay have functioned as a currency. It is thought that the increase in piracy and raiding associated with the Bronze Age collapsepossibly produced by the Peoples of the Seacurrency market wikipedia, 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 that 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 Persians, currency market wikipedia.
In Africa, many forms of value store have been used, including beads, ingots, ivoryvarious forms of weapons, livestock, the manilla currencyand ochre and other earth oxides. The manilla rings of West Africa were one of the currencies used from the 15th century onwards to sell slaves. African currency is still notable for its variety, and in many places, various forms of barter still apply. The prevalence of metal coins possibly led to the metal itself being the store of value: first copper, then both silver and gold, and at one point also bronze, currency market wikipedia.
Today other non-precious metals are used for coins. Metals were mined, weighed, and stamped into coins. This was to assure the individual accepting the coin that he was getting a certain known weight of precious metal. Coins could be counterfeited, but the existence of standard coins also created a new unit of accountwhich helped lead to banking.
Archimedes' principle provided the next link: coins could now be easily tested for their fine weight currency market wikipedia the metal, and thus the value of a coin could be determined, even if it had been shaved, debased or otherwise tampered with see Numismatics. Most major economies using coinage had several tiers of coins of different values, made of copper, silver, and gold. Gold coins were the most valuable and were used for large purchases, payment of the military, and backing of state activities.
Units of account were often defined as the value of a particular type of gold coin. Silver coins were used for midsized transactions, and sometimes also defined a unit of account, while coins of copper or silver, or some mixture of them see debasementmight be used for everyday transactions, currency market wikipedia. This system currency market wikipedia been used in ancient India since the time of the Mahajanapadas. The exact ratios between the values of the three metals varied greatly between different eras and places; for example, currency market wikipedia, the opening of silver mines in the Harz mountains of central Europe made silver relatively less valuable, as did the flood of New World silver after the Spanish conquests.
However, the rarity of gold consistently made it more valuable than silver, currency market wikipedia, and likewise silver was consistently worth more than copper.
In premodern Chinathe need for lending and for a medium of exchange that was less physically cumbersome than large numbers of copper coins led to the introduction of paper moneyi.
Their introduction was a gradual process that lasted from the late Tang dynasty — into the Song dynasty — It began as a means for merchants to exchange heavy coinage for receipts of deposit issued as promissory currency market wikipedia by wholesalers ' shops. These notes were valid for temporary use in a small regional territory. In currency market wikipedia 10th currency market wikipedia, the Song dynasty government began to circulate these notes amongst the traders in its monopolized salt industry.
The Song government currency market wikipedia several shops the right to issue banknotes, and in the early 12th century the government finally took over these shops to produce state-issued currency. Yet the banknotes issued 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 currency market wikipedia woodblock printing and then Bi Sheng 's movable type printing by the 11th century were the impetus for the mass production of paper money in premodern China.
At around the same time in the medieval Islamic worlda 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 the dinar. Innovations introduced by Muslim economists, traders and merchants include the earliest uses of credit[8] chequespromissory notes[9] savings accountstransaction accountsloaningcurrency market wikipedia, trustsexchange ratesthe transfer of credit and debtcurrency market wikipedia, [10] and banking institutions for loans and deposits.
In Europe, paper currency was first introduced on a regular basis in Sweden in although Washington Irving records an earlier emergency use of it, by the Spanish in a siege during the Conquest of Granada.
As Sweden was rich in copper, many copper coins were in circulation, but its relatively low value necessitated extraordinarily big coins, often weighing several kilograms. The advantages of paper currency were numerous: it reduced the need to transport gold and silver, which was risky; it facilitated loans of gold or silver at interest, currency market wikipedia, since the underlying specie money in the form of gold or silver coins rather than notes never left the possession of the lender until someone else redeemed the note; and it allowed a division of currency into credit- and specie-backed forms.
It enabled the sale of stock in joint-stock companies and the redemption of those shares in a paper. But there were also disadvantages.
First, since a note has no intrinsic value, there was nothing to stop issuing authorities from printing more notes than they had specie to back them with. Second, because it increased the money supply, currency market wikipedia, it increased inflationary pressures, a fact observed by David Hume in the 18th century.
Thus paper money would often lead to an inflationary bubble, which could collapse if people began demanding hard money, causing the demand for paper notes to fall to zero, currency market wikipedia. The 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 currency market wikipedia in suspicion and hostility in Europe and America. It was also addictive since the speculative profits of trade and capital currency market wikipedia were quite large.
Major nations established mints to print money and mint coins, and branches of their treasury to collect taxes and hold gold and silver stock. At that time, both silver and gold were considered a legal tender and accepted by governments for currency market wikipedia. However, the instability in the exchange rate between the two grew over the course of the 19th century, with the currency market wikipedia both in the supply of these metals, particularly silver, and in trade.
The parallel use of both metals is called bimetallismand 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 currency as an instrument of policy, printing paper currency such as the United States greenbackto pay for military expenditures. They could also set the terms at which they would redeem notes for specie, by limiting the amount of purchase, currency market wikipedia, or the minimum amount that could be redeemed.
Bymost of the industrializing nations were on some form of gold standardwith paper notes and silver coins constituting the circulating medium. Private banks and governments across the world followed Gresham's law : keeping the 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, beginning in the early 20th century and continuing across the world until the late 20th century, when the regime of floating fiat currencies came into force. One of the last countries to break away from the gold standard was the United States inan action which was known as the Nixon shock, currency market wikipedia. No country has an enforceable gold standard or silver standard currency system.
A banknote more commonly known as a bill in the United States and Canada is a type of currency and is commonly used currency market wikipedia legal tender in many jurisdictions. Together with coinscurrency market wikipedia, banknotes make up the cash form of a currency. Banknotes were initially mostly paper, but Australia's Commonwealth Scientific and Industrial Research Currency market wikipedia developed a polymer currency in the s; it went into circulation on the nation's bicentenary in As ofpolymer currency is used in over 20 countries over 40 if counting commemorative issues[12] and dramatically increases the life span of banknotes and reduces counterfeiting.
The currency used is based on the concept of lex monetae ; that a sovereign state decides which currency it shall use. The International Organization for Standardization has introduced a system of three-letter codes ISO to denote currency as opposed to simple names or currency signsin order to remove the confusion arising because there are dozens of currencies called the dollar and several called the franc, currency market wikipedia.
Even the "pound" is used in nearly a dozen different countries; most of these are tied to the pound sterlingwhile the remainder has varying values. In general, the three-letter code uses the ISO country code for the first two letters and the first letter of the name of the currency D for dollar, for example as the third letter. United States currency, for instance, is globally referred to as USD, currency market wikipedia.
Currencies such as the pound sterling have different codes, as the first two letters denote not the exact country name but an alternative name also used to describe the country, currency market wikipedia. The pound's code is GBP where GB denotes Great Britain instead of the United Kingdom. The former currencies include the marks that were currency market wikipedia circulation in Germany and Finland. The International Monetary Fund uses a different system when referring to national currencies.
Distinct from centrally controlled government-issued currencies, private decentralized trust-reduced networks support alternative currencies such as bitcoinEthereum's etherLitecoinMonerocurrency market wikipedia, Peercoinor Dogecoinwhich are classified as cryptocurrency since the transfer of value is assured through cryptographic signatures validated by all users.
There are also branded currencies, currency market wikipedia, for example 'obligation' based currency market wikipedia of value, such as quasi-regulated BarterCard, Currency market wikipedia Points Credit Cards, Airlines or Game-Credits MMO games that are based on reputation of commercial products, or highly regulated 'asset-backed' 'alternative currencies' such as mobile-money schemes like MPESA called E-Money Issuance.
The currency may be Internet-based and digital, for instance, bitcoin [15] is not tied to any specific country, or the IMF's SDR that is based on a basket of currencies and assets held. Possession and sale of alternative forms of currencies is often outlawed by governments in order to preserve the legitimacy of the constitutional currency for the benefit of all citizens.
For example, Article I, section 8, clause 5 of the United States Constitution currency market wikipedia to Congress the power to coin money and to regulate the value thereof. This power was delegated to Congress in order to establish and preserve a uniform standard of value and to insure a singular monetary system for all purchases and debts in the United States, public and private. Along with the power to coin money, the United States Congress has the concurrent power to restrain the circulation of money which is not issued under its own authority in order to protect and preserve the constitutional currency.
It is a violation of federal law for individuals, or organizations to create private coin or currency systems to compete with the official coinage and currency of the United States. In most cases, a central bank has the exclusive power to issue all forms of currency, including coins and banknotes fiat moneyand to restrain the circulation alternative currencies for its own area of circulation a country or group of countries ; it regulates currency market wikipedia production of currency by banks credit through monetary policy.
An exchange rate is a price at which two currencies can be exchanged against each other. This is used for trade between the two currency zones.
Exchange rates can be classified as either floating or fixed. In the former, day-to-day movements in exchange rates are determined by the market; in the latter, governments intervene in the market to buy or sell their currency to balance currency market wikipedia and demand at a static exchange rate.
In cases where a country has control of its own currency, that control is exercised either by a central bank or by a Ministry of Finance. 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.
Foreign exchange market - Wikipedia, the free encyclopedia
, time: 0:10Market (economics) - Wikipedia
In finance, an exchange rate is the rate at which one currency will be exchanged for another currency. Currencies are most commonly national currencies, but may be sub-national as in the case of Hong Kong or supra-national as in the case of the euro. The exchange rate is also regarded as the value of one country's currency in relation to another currency. For example, Estimated Reading Time: 10 mins Market (economics) In economics, a market is a composition of systems, institutions, procedures, social relations or infrastructures whereby parties engage in exchange. While parties may exchange goods and services by barter, most markets rely on sellers offering their goods or services (including labour power) to buyers in exchange for money Eurocurrency - Wikipedia
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