What is a currency?
What is a currency?
A cash is a type of cash, as a rule gave by the public experts in a specific locale. It performs three capacities – it is a unit of record, a store of significant worth and a mode of trade. It can do so in light of the fact that organizations and families acknowledge it in repayment of obligations.
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What is a currency?
Currency is a means of exchanging goods and services. Available in the form of banknotes or coins. Usually issued by the government and acts as a means of payment.
In today's world, money is an important means of change. It is accepted at face value.
As you all know, the new form of currency is virtual currency and Bitcoin is an example. There is no physical person and no government support. It is stored in electronic form.
Historical development of the currency
You can refer to the resume through the following literacy:
In the commodity economy, development can be summarized through the forms of currency exchange from time to time: the first currency exchange system , the exchange of shells and the birth of coins , the birth of banknotes. You follow the details below Dentist.
The first currency exchange system in history
Occurred around 9,000 BC. ស. Direct exchange systems are inefficient. Restrict population from development throughout thousands of years of history.
The exchange is very simple, for example, you have rice and your neighbors have cows. Then there are times when you want to eat beef and your neighbors want to eat. Then you will get 4 to 5 sacks of rice in exchange for cows from the neighbors.
This system has issues related to the nature of money, which we will discuss in the next section. So there is a need for an intermediary that can convert into commodity prices.
Changing the shell to the arrival of coins
Occurred about 1200 BC. White. The goods are gradually becoming more diverse with many items such as weapons, food ...
From here the intermediary system of exchange between goods is established. Europeans traveled around the world to exchange handicrafts and imitations in exchange for silk and perfume.
They use all kinds of items that can be used to exchange goods, such as: shells ... However, these items can not be used for a long time. In addition, there is no storage cost or easy to transport.
There are more than 150 species of snails used to make money. Each area has its own category. In Vietnam, for example, traces of the first coins found were also shells. Like many other places in Asia, the snail that used to make money in Vietnam is also a cipara.
The birth of a coin
The first official currency was squeezed by King Alitas of Lydia in present-day Turkey. Over the years, the coin evolved and evolved into a more rounded design.
Lydia's currency has helped the country grow, both in domestic and foreign trade. Make it one of the richest empires in Asia Minor.
The popularity of coins is widespread. Gold and silver were the most popular currency forms in that era. Although silver is also made of other metals, it cannot be compared to gold and silver.
Precious metals such as gold and silver have standards that set them apart from other metals. That standard has been extended to this day.
Paper money was born
For coins made of precious metals such as gold and silver. Circulation will occur. Meanwhile, growth and supply are limited by the availability of these metals.
In addition, they take up a lot of space and space, which makes loading and unloading of goods inconvenient. This is a big problem and is solved until the banknotes come out.
Banknotes were first issued in China. And it was recognized as a currency in the 10th century. However, its original form dates back to ancient times in many parts of the world.
In 1290, Marco Polo, a Venetian merchant and European explorer, first arrived in China via the Silk Road, bringing the banknotes back to Europe.
The first European banknote issued by the Palmstruch Bank of Sweden in 1666
In 1694 the British government granted legal tender to the British private bank, owned by William Patsonsen. And the Bank of England became the first central bank in the world.
In the United States, federal reserves in the United States have the same rights. After being established in 1913, the government authorized and represented the legal tender. They are backed by the gold or silver parts and theories. Can be exchanged for gold or silver anywhere
At the beginning of the 20th century, most countries adopted this gold standard. And support their legal tender with a fixed amount of gold.
The central bank issues banknotes with the amount of gold they have in the treasury because people are in need of more banknotes. So banks started issuing more banknotes so they could lend and circulate at the same time.
Needle position mode (gold standard system)
This is a monetary system that existed from 1871 to 1971. Banknotes can be converted into fixed amounts of gold. In such a monetary system, gold is the support that guarantees the value of money.
The international gold standard appeared in 1871 after German adoption, and in 1900 developed countries were associated with the gold standard.
In the US, the $ 20 coin is backed by $ 20 gold, which is 100% the equivalent of a reserve. This note is a legal gold certificate with the Treasury.
You can use this money anywhere given to the collector which will give you the corresponding amount of gold or silver.
If you have $ 20, you can now print a $ 50 bill instead of the $ 20 bill it used to be.
During the American War, the two countries benefited the most. Due to not participating in the fight, plus selling a certain number of weapons for all factions. The war brought America into the golden age.By the end of World War II, the United States held two-thirds of the world's gold and the world monetary system was no longer functioning properly. The United States has lent money to Europe in dollars. This helped Europe rebuild everything after the war.
In 1944, World War II came to an end. Western powers meet in (New Hamshire, USA) to decide on a new monetary system. The Bretton Woods system was born.
How it works Bretton Forest
Bretton Woods simply understood that all currencies in the world would be supported by the US dollar, and that the US dollar would be supported by gold at $ 35 per ounce (equivalent to an ounce as a unit of measurement. Mass). . This is understandable because the United States owns two-thirds of the world's gold.
Bretton Woods Fall
The United States prints money without a fixed gold reserve ratio. When the US government suffered a severe budget deficit due to printing and spending too much on the war.
In 1965, the dollar plunged into crisis. At that time, the 18th President of France, Charles de Gaulle, was aware of the problem. America does not have enough gold to guarantee dollar printing.
At this time, France intends to withdraw its dollar assets to get gold. Other countries also noticed and jumped on the train. This caused the United States to lose 50% of its gold from 1959 to 1971.
Meanwhile, the amount returned to the United States is 12 times the amount of gold they have. The United Kingdom also requested a $ 750 million gold exchange for the 1971 summer.
In this situation, in August 1971, US President Nixon announced on television the abolition of the gold standard from the dollar. Finally, the United States subtracts the fixed value of the dollar.
The dollar is depreciating. World leaders have tried to restore the Bretton Woods system, but these attempts have failed. The system collapsed from here.
Legal Auction (ft)
Since August 1971, all other currencies of all countries in the world have become the FC currency. This is because all monetary value links with gold have been removed.
The fact that all the currencies of the country are based on the dollar will lead to the risk of losing its value, inflation or even worthless in case of inflation.
Therefore, anticipation is guaranteed by faith. If people lose faith in a country's currency, that money will no longer hold its value.
Phone and electronic payments
The 21st century has created two forms of currency: mobile payments and virtual money.
Mobile payments are money spent on a product or service through a mobile device such as a smartphone or tablet.
Mobile payment technology can also be used to send money to friends or family members. Increasingly, services like Apple Pay and Samsung Pay are competing for retailers to take their platforms for sale
Gregorian crypt (Cryptocurrency) or virtual money. It is a currency without physical entities.
- Most notably, Bitcoin was released in 2009 by the identity of Sina Shinagakuto.
- Unlike the government issued the currency. It is not issued by any government or organization.
- Virtual money completely decentralized. This is also why many people think that this is the currency of the future will replace the legitimate currency.
- Overview of Monetary Properties and Values
- Currency function with present and future time is immeasurable. Let us list some properties:
- Traffic : This is the most important money. People must be willing to accept money as a movement. Otherwise, it will no longer be considered as money.
- Recognize : to be able to easily accept the currency must be able to easily distinguish. Banknotes issued by the central bank are printed. It does not look like any other high quality paper.
- Can be split : Currency must have different denominations so that the seller gets the right sales volume. And buyers who pay in big denominations have to get paid.
- Forever : Currency must be durable in order to fulfill its function in store prices as well as be useful in exchange.
- Easy to transport : For the convenience of people to store and transport. Currency must be easy to transport. That is why banknotes and coins are so large.
- Rare : Currency must be scarce because it is easily available. Then it will no longer be a problem in the store and will no longer be accepted in traffic. That has always been proved throughout history.
- Similarity : Currency must have the same value. If so, the currency will function as a unit of calculation.
- Money is valuable not because it is self-created, but based on the number of services.
- To enhance the apparent value of the fiat currency. Governments often force people to interact to pay taxes in the local currency. Thereby dealing with disobedient criminals. The internal value of a fiat currency largely depends on the strength of the military and the executive branch.
Currency in circulation
There are currently 180 official currencies in the world. It belongs to 193 member states of the United Nations. Two United Nations Observer States. There are 9 independent territories and 33 foreign territories.
Including some countries that use multiple currencies at the same time. Inside, there are official currencies and a number of recognized and recognized currencies. Some examples include: Dong (Vietnamese dong) Dollar (Dollar) Euro!
Some ideas about money
National currency : The national currency issued by the central bank or monetary authority that we use to exchange goods and services.
Banknote : A physical or monetary note of the country in which it is being used.
Monetary reserves : For example, the Treasury, perhaps through metals such as gold, silver ...
Monetary union : For example, the European Union (EU). Euro (Euro) is used by 19 member countries.
The process of creation looks like the process of human evolution. Everyone reads together to gather more knowledge offline yourself. Thank you and wish you success.