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Currency

A currency (from Middle English: curraunt, "in circulation", from Latin: currens, -entis) in the most specific use of the word refers to money in any form when in actual use or circulation as a medium of exchange, especially circulating banknotes and coins. A more general definition is that a currency is a system of money (monetary units) in common use, especially in a nation. Under this definition, British pounds, U.S. dollars, and European euros are examples of currency. These various currencies are recognized stores of value, and are traded between nations in foreign exchange markets, which determine the relative values of the different currencies. Currencies in this sense are defined by governments, and each type has limited boundaries of acceptance.

Other definitions of the term "currency" are discussed in their respective synonymous articles banknote, coin, and money. The latter definition, pertaining to the currency systems of nations, is the topic of this article. Currencies can be classified into two monetary systems: fiat money and commodity money, depending on what guarantees the value (the economy at large vs. the government's physical metal reserves). Some currencies are legal tender in certain political jurisdictions, which means they cannot be refused as payment for debt. Others are simply traded for their economic value. Digital currency has arisen with the popularity of computers and the Internet.

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.

Euro

The euro (sign: €; code: EUR) is the official currency of the eurozone, which consists of 19 of the 28 member states of the European Union: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain. The currency is also officially used by the institutions of the European Union and four other European countries, as well as unilaterally by two others, and is consequently used daily by some 337 million Europeans as of 2015. Outside of Europe, a number of overseas territories of EU members also use the euro as their currency.

Additionally, 210 million people worldwide as of 2013 use currencies pegged to the euro. The euro is the second largest reserve currency as well as the second most traded currency in the world after the United States dollar.As of August 2014, with more than €995,000,000,000 in circulation, the euro has the highest combined value of banknotes and coins in circulation in the world, having surpassed the U.S. dollar. Based on International Monetary Fund estimates of 2008 GDP and purchasing power parity among the various currencies, the eurozone is the second largest economy in the world.

Pound sterling

The pound sterling (symbol: £; ISO code: GBP), commonly known simply as the pound, is the official currency of the United Kingdom, Jersey, Guernsey, the Isle of Man, South Georgia and the South Sandwich Islands, the British Antarctic Territory, and Tristan da Cunha. It is subdivided into 100 pence (singular: penny). A number of nations that do not use sterling also have currencies called the pound. At various times, the pound sterling was commodity money or bank notes backed by silver or gold, but it is currently fiat money, backed only by the economy in the areas where it is accepted. The pound sterling is the world's oldest currency still in use and which has been in continuous use since its inception.

The British Crown dependencies of Guernsey and Jersey produce their own local issues of sterling: "Guernsey pound" and "Jersey pound". The pound sterling is also used in the Isle of Man (alongside the Manx pound),Gibraltar (alongside the Gibraltar pound), the Falkland Islands (alongside the Falkland Islands pound), Saint Helena and Ascension Island in Saint Helena, Ascension and Tristan da Cunha (alongside the Saint Helena pound). The Bank of England is the central bank for the pound sterling, issuing its own coins and banknotes, and regulating issuance of banknotes by private banks in Scotland and Northern Ireland. Banknotes issued by other jurisdictions are not regulated by the Bank of England; local governments use Bank of England notes as backing for local issuance by allowing them to be exchanged 1:1 at face value.