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Modern currencies

To find out which currency is used in a particular country, check list of circulating currencies.

Currently, the International Organization for Standardization has introduced a three-letter system of codes (ISO 4217) to define currency (as opposed to simple names or currency signs), 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. United States currency, for instance is globally referred to as USD.

The International Monetary Fund uses a variant system when referring to national currencies.

Local currencies

In economics, a local currency is a currency not backed by a national government, and intended to trade only in a small area. Advocates such as Jane Jacobs argue that this enables an economically depressed region to pull itself up, by giving the people living there a medium of exchange that they can use to exchange services and locally-produced goods (In a broader sense, this is the original purpose of all money.) Opponents of this concept argue that local currency creates a barrier which can interfere with economies of scale and comparative advantage, and that in some cases they can serve as a means of tax evasion.

Local currencies can also come into being when there is economic turmoil involving the national currency. An example of this is the Argentinian economic crisis of 2002 in which IOUs issued by local governments quickly took on some of the characteristics of local currencies.

Banknote era

A banknote (more commonly known as a bill in the United States and Canada) is a type of currency, and commonly used as legal tender in many jurisdictions. With coins, banknotes make up the cash form of all money.

In monetary economics Currency can refer either to a particular currency, for example United States Dollars, or, to the coins and banknotes of a particular currency, which comprise the monetary base of a nation’s money supply. The other part of a nation’s money supply consists of money deposited in banks (sometimes called deposit money), ownership of which can be transferred by means of checks (cheques in the United Kingdom and Australia) or other forms of money transfer such as credit and debit cards. Deposit money and currency are ‘money’ in the sense that both are acceptable as a means of exchange, but money need not necessarily be ‘currency’

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