A currency is a medium or unit of exchange, facilitating the transfer of goods and services within a currency zone. 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 currency is the dominant medium of exchange. 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.
Typically, each country has given monopoly to a single currency,
controlled by a state owned central
bank, although exceptions to this rule exist. 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 currency of another country to be legal
tender (e.g. Panama has declared US currency to be legal tender).
Each currency typically has one fraction currency, often valued
at 1/100 of the main currency: 100 cents = 1 dollar,
100 centimes = 1 franc.
Units of 1/10 or 1/1000 are also common, but some currencies do
not have any smaller units. Mauritania is the only remaining country
that does not use the decimal system; the only smaller currency
unit is the khoum, which equals 1/5 of a ouguiya (UM).
The history of currencies follows the history of money closely. Although any form of representational money can be considered currency, the term is typically applied to standardized coinage, and the systems that developed from it.
Prior to the introduction of standard coinage, calculating the
value of a metal-based money required several steps. First the metal
was tested on a touchstone to calculate the quality, then it was
weighed, and then the two values were multiplied. Thus if someone
alloyed gold and lead (which was a common cheating process) the
metal's weight was multiplied by the percentage of gold to get the
weight of the gold alone.
Coinage was introduced to simplify this process. Coins were created of a set weight and gold quality, and then stamped to prove their worth. No measurement was needed, as long as the original values were known. Of course one could use an alloy with the same stamp as the coin to cheat, but the stamps were complex and thus difficult to duplicate (at the time).
More modern currency systems developed from the introduction of
coins. The process started with the replacement of the original
metal, with a coin representing it. The gold itself was kept safe
in government vaults. Examples of this system in the past was the
gold
standard, where the US Dollar was backed with gold stored at
Fort Knox, and the British pound
sterling, which was backed by one pound of sterling silver at
its inception in 1158 in the hands of King Henry II.
The evolution continued, first to paper representations of the same standard, and finally to removing the metal altogether - the paper itself is considered to be valuable.
In order to prevent forged currency, various technologies such
as watermarks
are inserted into most paper currencies. In the early 21st century,
the use of RFID tags has been proposed to track bank notes which
were illegally obtained. Such efforts have been criticized by privacy
advocates.
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, 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.
Currency symbols are rendered obsolete by ISO 4217.
- ¤ - generic currency sign
- $ - dollar sign
- ¢ - cent sign
- ₥ - mill sign - USA (1/10 cent)
- £ - pound sign
- ¥ - yen sign - Japan
- ৲ - rupee mark - Bengal
- ৳ - rupee sign - Bengal
- ฿ - baht sign - Thailand
- ៛ - riel sign - Khmer
- ₠ - euro-currency sign - intended for ECU, but not widely used. Historical character, this is NOT the euro!
- € - euro sign - currency sign for the Eurozone countries.
- ₡ - colon sign - Costa Rica, El Salvador
- ₢ - cruzeiro sign - Brazil
- ₣ - French franc sign - France
- ₤ - lira sign - Italy, Turkey
- ₦ - naira sign - Nigeria
- ₧ - peseta sign - Spain
- ₨ - rupee sign - India
- ₩ - won sign - Korea
- ₪ - new sheqel sign - Israel
- ₫ - dong sign - Vietnam
- ₭ - kip sign - Laos
- ₮ - tugrik sign - Mongolia (also transliterated as tugrug, tugric, tugrog, togrog)
- ₯ - drachma sign - Greece
