Questions tagged [currency]

a generally accepted form of money, including coins and paper notes , which is issued by a government and circulated within an economy.

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1answer
16 views

How does the Federal Reserve reduce “excess reserves”?

Over the last few years, the amount of currency is circulation (and the corresponding liability on the Fed's balance sheet) has been growing; however, the asset side of the BS hasn't increased. By ...
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79 views

Calculating the amount paid for a loan in today's dollars

So I was trying to figure out the amount paid for a loan in today's dollars using two different methods but they give me different results. I was hoping that someone could explain which method is ...
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50 views

Consequences of removing hard currency [closed]

If an appropriate electronic system were implemented governments would know how much money there is in circulation, who has it and if some illegal transaction has been done. This measure could help ...
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1answer
44 views

Dealing with Missing Values in Diff-in-Diff Estimation

To preface this, I am asking this question on the Econ SE because I was made aware on Cross Validated that Difference in Difference estimation is quite an economics specific method. The picture above ...
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1answer
29 views

Currency Devaluation - As a Means of Paying Off Debt

From https://www.sapling.com/8117368/debt-handled-currency-devaluation: Currency devaluation will not only affect consumer debts, but it will affect how a country pays back its national debt. If a ...
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What happens if a country omits the zeros of it's current money?

I mean, for example, the government changes all x10000 to x1; where x equals to currency of the respected country (Dollar, for instance).
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Why exchange rates of national currency are usually stable, where as cryptocurrency like bitcoin and ethereum is highly volatile?

Exchange rate of national currency like US dollar or INR don't fluctuate much during a month or year, but the exchange rate of cryptocurrency like bitcoin is highly volatile even in a single day. What ...
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Effect of interest rates on currencies

I always understood that high interest rates in country A attract investors and cause the currency to appreciate. However, the interest rate parity theory suggests that high interest rates weaken a ...
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2answers
45 views

How does key currency work?

When a country make too many of their currencies, it will eventually lower the currencies' value and inflation would occur. But why won't key currency work like this? If the US is making more and ...
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2answers
39 views

Why does a weaker currency make sovereign debt cheaper?

Investopedia tells me that a weaker currency will reduce sovereign debt burdens. It is quoted as saying 'a weaker currency makes [these] payments effectively less expensive over time.' However, I ...
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1answer
82 views

Facebook's Libra - Why would it vary in value

Facebook has come up Libra its version of crypto-currency. The unique feature of Libra is the "reserve" which backs Libra. The reserve is supposed to be held in stable global currencies (USD, GBP, ...
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Currency board, why the fluctuation in local currency

I have very basic question about currency boards: Assume that a country floats a new local currency "N" with the currency board model. It uses USD as the reserve currency. To begin with 1 N = 1 USD. ...
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1answer
18 views

Purchasing power of currency abroad

Say you have two countries A and B. Suppose we have a situation where country A's currency can purchase much more in country B than the other way round. What causes this phenomenen? Is it possible ...
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What is the optimal fiscal transfer rate between regions in a currency union?

I'm aware of the theory of optimal currency areas, and that both the Euro and the US dollar* are technically not optimal. This would tend to cause their optimal monetary policy to diverge over time. ...
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76 views

Are currencies equilibrating?

I was travelling recently and realised that dollars, euros, British pounds and Swiss francs all have more or less the same worth (i.e. 1 dollar $\cong $1 pound $\cong$ 1 euro $\cong $ 1 chf). This was ...
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How is seigniorage redistributed in the Eurozone?

An ECB page notes that: As euro banknotes travel freely across borders, at any one time the number of banknotes in circulation registered at each national central bank can vary enormously. The ...
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2answers
83 views

Value of Currency Itself

What is the value of an individual piece of currency itself based on the efficiencies it allows in trade, in contrast to the value it represents? For example, people often talk (complain) about the ...
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Are IMF interventions in currency crises good leading indicators for the performance of financial assets in that country?

The point in time during a currency crisis when the IMF finally steps in tends to be relatively close to the trough of the crisis - at least it seems that way anecdotally. Is there any research that ...
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Can inflation occur in a positive-sum game currency system such as the Stack Exchange reputation system?

As most active users of this site know, the way the reputation system works is that everyone starts out with 1 reputation and a user can earn more reputation by asking good questions and writing ...
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“Increasing trade barriers causes a country’s currency to appreciate”?

Mishkin (2016, p. 476) writes: Barriers to free trade such as tariffs (taxes on imported goods) and quotas (restrictions on the quantity of foreign goods that can be imported) can affect the ...
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Nominal GDP to Current purchasing power parity

Hi I would like to convert nominal GDP in current US dollars to current purchasing power parity in 2011 US dollars. Is this nominal GDP already converted? if GDP were in LCU I would convert it to ...
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Commonly used indicators for currency pair strength?

I am attempting to write a program in Python that monitors a single currency pair, GPB/NZD to be specific. My main focus will be to run constant calculations every 2 to 3 minutes in order to give ...
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2answers
124 views

Soros shorting the pound

How did Soros make money by shorting the pound? When he sold the pound and made its price to decrease, he had to buy it back again to return the amount he borrowed, but doesn't buying the pound raise ...
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1answer
43 views

Is an EU single currency still a trade advantage in 2019?

When the single currency was planned, there was no internet and there all currency exchange was manual. Today the web can automatically convert prices using multiplication of the numbers in the ...
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1answer
193 views

Why does capital flight cause inflation?

Context: I was watching a video about Venezuela, and, it all started with capital flight due to poor confidence in the government. The government tried to stop it, and in the process it created a ...
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1answer
24 views

Why is it a problem if a considerable amount of currency is hoarded by the enemy of the issuing government?

During WWII and after Pearl Harbor, the United States issued the Hawaii overprint notes because they feared the possibility that if the Japanese captured Hawaii they would also control a considerable ...
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1answer
65 views

Currencies fixed to gold

Based on the quoted section & example below: Why would the Franc or USD fall in price vs the other if they are both fixed to gold; why would having less gold cause paper money to contract? Why ...
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Paying Filipino workers in USD. What should the inflation rate be?

I'm not sure where to ask and, since this is not Personal Finance, I'm gonna ask it here. Here's my situation: for the past 2 years, I hired and trained a team of Filipino workers. They are paid in ...
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116 views

Where do Montenegro and Kosovo get their euros from?

Both Montenegro and Kosovo have unilaterally (?) decided to use euros as their official currencies. I think that most of their capital exists only as records in bank registers, so there is not much ...
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2answers
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Theory of Optimal Currency Areas

Should a country be more inclined or less inclined to join a currency union (common currency) under the following events: a) Increase in the size and frequency of AD shocks to the economy. b)...
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3answers
226 views

What is the maximum number of characters in a currency symbol?

In the program I am writing, I need to show a currency selector. I would like it to display currency symbols. For this, I need to know what is the longest, in characters, currency symbol (or rather ...
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What are the issues with currencies backed by commodities?

I have seen it suggested that currencies that are backed by a commodity are generally considered to be a bad idea in most cases. However, I have done a bit of my own research into representative money ...
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1answer
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If a currency is pegged to another currency which collapses, what happens? [closed]

If a currency X is pegged to another currency Y which collapses, what happens to currency X?
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1answer
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Should we get rid of the Penny?

Jeff Gore has suggested to scrap the 1 cent coins a few years ago. Why doesn't the US cancel the pennies? Is it really that bad as ?
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3answers
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Buying locally vs abroad

I interested in the net effect of buying locally versus abroad. The UK Government wants to buy a ship. It can buy from a UK or Korean shipyard. The unit price is the same for both yards: £10. A ten ...
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1answer
67 views

Why hyper-inflation?

I understand the $MV=PQ$ identity. I also understand the benefit for the government in some cases to having non increasing over time (even if high) values of $\Delta P$ (stealth tax & seigneur-age ...
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125 views

How large is the Underground Economy in the U.S

How large is the Underground Economy in the US, and is it growing or getting smaller as a percent of GDP?
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49 views

Can we get rid of banknotes and coins?

this is more a theoretical question, nowadays with Internet, Debit/Credit cards and Cryptocurrencies, why should we keep printing/making more physical money? granted not everybody has access to ...
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1answer
108 views

Is it true that the U.S has to run a chronic trade deficit with the rest of the world as a price to pay for being the world's reserve currency?

I have heard of the argument that in order for USD to be reserve currecy, the rest of the world must own enough USD to store it as reserves. In order for the rest of the world to own enough USD, U.S ...
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1answer
49 views

Devaluation of Venezuelan Bolívar - Will it increase or fight hyperinflation?

According to recent news, Venezuela is lopping 5 zeros out of its regular Bolívar, and devaluing it, and pegging it to a cryptocurrence issued by Venezuela, to fight the economic situation (...
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133 views

Does accumulation of fiat currency cause instability?

If the value of fiat currency is a function of the supply of money and it's velocity, is the accumulation of that currency detrimental to its stability? I may be wrong in my understanding of the ...
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Does only “supply/demand” rule justify different prices for a digital good?

Provided the network infrastructure costs the same for the seller (if things going on with net neutrality weren't to effect that), certainly considering the fact that an average citizen of a given "...
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1answer
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What are the advantages and disadvantages to a country's people when the national currency is the world's reserve currency?

Today, the world's reserve currency is USD. At the start of the 20th century, the reserve currency was the British Pound GBP. Using U.S as an example to narrow the scope, what are the advantages and ...
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1answer
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Why do different countries have different currency ? Why not there are different currencies for each 10-20 kilometers?

I have researched a bit in different forums. Main answers include: 1. So Different countries can control different monetary policies 2. So different countries can handle shocks(up and down). 3.Based ...
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When/Why would a country want to create its own currency?

A while ago I asked how countries make a currency and give it value, specifically pointing out that I wasn't concerned about when/why such a thing would be done. Well, now I'm asking the exact ...
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115 views

Why don't we transact with securities rather than fiat money?

I don't know a whole lot about economics besides for an intro course I took once so bear with me please... I'm a software developer working with cryptocurrencies, and I got to thinking that it would ...
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Does the currency in circulation equal the annual production of goods and services?

I have learned that in a country currency is printed equal to production of goods and services in a year. I want to know if in a year a country produces rice of 10000 rs. The government will print ...
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199 views

What would happen if a country bans the trading of its currency against foreign currency?

The iranian rial has been losing its value rapidly recently. The dollar went from 40,000 rials to 60,000 rials in less than 6 month, most of the loss of value happening in the last few weeks. Iran ...
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1answer
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Why would a common currency such as the Euro that can't be devalued be incentive for banks to lend money to a country?

I'm reading an article that is claiming that when the Euro was created, banks began lending more money to countries than before because as the Euro is a common currency across many countries one ...
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Can a currency crisis be the proximate cause of a debt crisis?

I'm just curious whether there are any historical examples of a currency crisis in a country (speculative attacks leading causing a sudden devaluation of currency) leading directly to a debt crisis?