Foreign exchange market

The foreign exchange market (forex, FX, or currency market) is a global decentralized market for the trading of currencies. This includes all aspects of buying, selling and exchanging currencies at current or determined prices. In terms of volume of trading, it is by far the largest market in the world. The main participants in this market are the larger international banks. Financial centres around the world function as anchors of trading between a wide range of multiple types of buyers and sellers around the clock, with the exception of weekends. The foreign exchange market does not determine the relative values of different currencies, but sets the current market price of the value of one currency as demanded against another.

The foreign exchange market works through financial institutions, and it operates on several levels. Behind the scenes banks turn to a smaller number of financial firms known as “dealers,” who are actively involved in large quantities of foreign exchange trading. Most foreign exchange dealers are banks, so this behind-the-scenes market is sometimes called the “interbank market”, although a few insurance companies and other kinds of financial firms are involved. Trades between foreign exchange dealers can be very large, involving hundreds of millions of dollars. Because of the sovereignty issue when involving two currencies, forex has little (if any) supervisory entity regulating its actions.

United States dollar

The United States dollar (sign: $; code: USD; also abbreviated US$ and referred to as the dollar, U.S. dollar, or American dollar) is the official currency of the United States and its overseas territories. It is a Federal Reserve Note and consists of 100 smaller cent units.

The U.S. dollar is fiat money. It is the currency most used in international transactions and is the world's most dominant reserve currency. Several countries use it as their official currency, and in many others it is the de facto currency. Besides the United States, it is also used as the sole currency in two British Overseas Territories in the Caribbean: the British Virgin Islands and the Turks and Caicos islands. A few countries use only the U.S. Dollar for paper money, while the country mints its own coins, or also accepts U.S. coins that can be used as payment in U.S. dollars, such as the Susan B. Anthony dollar.

Overview

The Constitution of the United States of America provides that the United States Congress has the power "To coin money". Laws implementing this power are currently codified at 31 U.S.C. § 5112. Section 5112 prescribes the forms, in which the United States dollars should be issued. These coins are both designated in Section 5112 as "legal tender" in payment of debts. The Sacagawea dollar is one example of the copper alloy dollar. The pure silver dollar is known as the American Silver Eagle. Section 5112 also provides for the minting and issuance of other coins, which have values ranging from one cent to 50 dollars. These other coins are more fully described in Coins of the United States dollar.