Currency
Currency
Currency (pronunciation: /ˈkʌrənsi/) is a system of money in general use in a particular country. The term is derived from the Middle English word "curraunt", in use from the 14th century, which means "in circulation".
Definition
A currency is a medium of exchange for goods and services. In short, it's money, in the form of paper or coins, usually issued by a government and generally accepted at its face value as a method of payment.
History
The use of currency is intertwined with the history of money, which is essentially any clearly identifiable object of value that is generally accepted as payment for goods and services and repayment of debts within a market or which is legal tender within a country. The history of money can be traced back to at least 3000 B.C.
Types of Currency
There are two types of currency: fiat money and commodity money. Fiat money is currency that a government has declared to be legal tender, but it is not backed by a physical commodity. The value of fiat money is derived from the relationship between supply and demand rather than the value of the material from which the money is made.
Commodity money is a type of good that functions as currency. In the 17th and early 18th centuries, for example, American colonists used beaver pelts and dried corn in transactions. Possessing generally accepted values, these commodities were used to buy and sell other things.
Modern Currencies
Modern currencies are usually paper or digital and are issued by a country's central bank, such as the Federal Reserve in the United States or the Bank of England in the United Kingdom. These institutions control the money supply and implement monetary policy to ensure the currency's value remains stable.
See Also
External links
- Medical encyclopedia article on Currency
- Wikipedia's article - Currency
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