Currency or money is the most important asset which is used by everyone to acquire resources. Whether it is a house, food, or any other commodity currency is used to get it.
Everyone is working to accumulate more and more money and increase their living standard, Also The entire country’s economy is dependent on the currency and its value.
There are 192 United Nations-recognized countries in the world with 180 Currencies which are in circulation.
All of them have their currency issued by their central bank and based on the fiscal and monetary policies of the bank are released to the market.
This article is all about educating you about currency, how many currencies are there in the world, types of currency, and much more.
But first, let’s understand what is a Currency?
Table of Contents
What is a Currency?
A Currency is a bank paper note of promise that is issued by the central bank to facilitate trade and commerce among people.
The holder of the currency note becomes eligible to acquire anything equivalent to the value of the currency note.
Earlier in the absence of the banknote, a barter system was used for the exchange of the resource but, the problem with this system was the value of the products in exchange.
Product A does not necessarily have the same value as product B hence, a third party was used i.e. Currency as a mediation between the exchange of the commodities.
Earlier currency was backed by gold or other metal which is used to create the coin itself but, today due to the lack of valuable metal, fiat currency is used which is backed by nothing but the trust of the country.
Since trust is a subjective matter, there are various credit rating agencies and economic system which is utilized to finalize the trust of the currency.
Some indicators like inflation, GDP, Foreign Exchange reserves, Import-Export, etc. are some of the macroeconomic factors that affect the value of the currency.
Types of Currency
There are three types of currency which are in use, which are as follows:
Digital currency is a new-age currency that many countries are currently operating in a pilot phase. This type of currency uses digital means to transact between two parties.
It uses the latest technology like Blockchain which is a non-central blockchain-based technology based on an algorithm that helps the exchange of the currency.
Various countries are currently operating digital currency as a pilot project, which is as follows:
Bank Notes are the notes that are issued by the central bank of a country and are considered paper money. The central bank prints the money and creates fiscal and monetary policies around it to manipulate the value of the currency. Almost every country in the world uses a banknote for trading and exchanging commodities.
Cryptocurrency is a form of digital currency without having any centralized authorizer meaning no one is controlling the Cryptocurrency. The currency value is purely based on the market rate and the value attached by the market for trading.
There are some countries where you can use Cryptocurrency, also some private individuals might accept Cryptocurrency as a payment. The use of Cryptocurrency is still unclear in some countries like India, Iran, UAE, etc.
List of All Currency in the World in Circulation
The following is the list of all currencies in the world that are in circulation:
|Country and Currency||Currency Code||Symbol|
|Bosnia and Herzegovina Convertible Mark||BAM||KM|
|Brunei Darussalam Dollar||BND||$|
|Cayman Islands Dollar||KYD||$|
|China Yuan Renminbi||CNY||¥|
|Costa Rica Colon||CRC||₡|
|Czech Republic Koruna||CZK||Kč|
|Dominican Republic Peso||DOP||RD$|
|East Caribbean Dollar||XCD||$|
|El Salvador Colon||SVC||$|
|Euro Member Countries||EUR||€|
|Falkland Islands (Malvinas) Pound||FKP||£|
|Hong Kong Dollar||HKD||$|
|Isle of Man Pound||IMP||£|
|Korea (North) Won||KPW||₩|
|Korea (South) Won||KRW||₩|
|Netherlands Antilles Guilder||ANG||ƒ|
|New Zealand Dollar||NZD||$|
|Saint Helena Pound||SHP||£|
|Saudi Arabia Riyal||SAR||﷼|
|Solomon Islands Dollar||SBD||$|
|South Korean Won||KRW||₩|
|South Africa Rand||ZAR||R|
|Sri Lanka Rupee||LKR||₨|
|Taiwan New Dollar||TWD||NT$|
|Trinidad and Tobago Dollar||TTD||TT$|
|United Kingdom Pound||GBP||£|
|United States Dollar||USD||$|
The Kuwaiti Dinar is the highest currency in the world at an exchange rate of 1 KWD= 3.36 USD or 1KWD=266 INR. This makes Kuwait one of the most stable economies in the world.
United States Dollar or USD as it is abbreviated is the most traded currency in the world. The daily trade rate of the dollar is at $6.6 trillion due to which the world’s reserve currency is in dollars only.
Forex trading market is a currency trading market that trades primarily with the currency of all the countries in the world. It is one of the most liquid markets in the world where every day trillions of dollars worth of currency is traded.
Inflation affects the currency value greatly by reducing the purchasing power of the currency. Let’s say you save Rs.100/- in an FD account that is giving you an FD Account interest rate of 3% p.a. with an inflation of 5% p.a. your value of the currency decreases by 5%-3%=2%, i.e. you’ve lost 2% of the valuation of your currency due to inflation. So now your Rs.100/- has been reduced to Rs.98/-.
I’m Shiv Kumar, a graduate with a passion for finance, marketing, and technology. My journey into finance started with a desire to understand money management and investing.
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