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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2answers
168 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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30 views

How was sulphuric acid used to back money?

I remember reading in a economics and history book that sulphuric acid production was used as an alternative to gold standard as the basis of the value of currency due to it’s importance in making ...
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1answer
42 views

Are there any notable exceptions to the Impossible Trinity theory?

I am referring to the theory presented on Wikipedia and The Economist that states: The impossible trinity (also known as the trilemma) is a concept in international economics which states that it is ...
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1answer
37 views

Does it make sense to talk about Bitcoin 'inflation' when little to no goods and services are listed in Bitcoin currency?

I think of inflation as a generalized increase in the price levels of a basket of goods and services. I should add that my understanding presumes that inflation should be measured in the same currency ...
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2answers
449 views

Is there any pressure to keep currency exchange rates around 1?

I notice that for any pair of currencies, the exchange rates seem to stay around 1 (as opposed to, say, 1,000,000). This is no longer the case if one country experiences an economic crisis that ...
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7answers
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Why do different countries have different currency?

Why do different countries have different currency? I have this question because I want to know why to divide it? If it's not divided then we can easily use the money anywhere and we won't need to ...
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4answers
7k views

Could eliminating all taxes and only creating new money theoretically work?

Imagine you had the opportunity to found a new country from scratch (in 2020). Value exchange would be digital, where only the state can create new currency units. Instead of relying on income tax ...
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1answer
57 views

Why GDP is converted to 2010 $US constant in international studies?

GDP is a widely-used macro control variable in finance-related papers, especially for international studies. I am wondering what is the reason why GDP is converted to $US 2010 as noted by WorldBank. ...
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Is modern monetary theory sustainable?

I am looking around at a lot of the central banks around the world (primarily ECB, Fed, and BOJ) and they all seem to be simply printing their way out of any issues with their economies. As far as I ...
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1answer
23 views

Why the stock market went up when the currency being weakened?

From Bloomberg Market Concept (BMC), in 2013, Japan is traditionally a heavy exporter, especially automobiles. When the yen being weakened, the Japanese automobile being more attractive because it ...
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Inter country currency exchange [duplicate]

This is probably a stupid question as I don't know much about economics, please bear with me. My question is; why can't a country insist on the worth of their currency relative to the dollar. For ...
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7answers
106k views

How interest rate affects currency

I am quite new to economics. I was reading about changes in interest rates and its effect on currency value. The fact is as interest rates increases, the currency value also increases and vice versa....
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Does a high current account deficit devalue the national currency?

I've been reading some materials about Belarus's 2011 financial crisis, and a common thread among them is this: Belarus had had a rapidly growing current account deficit, and in 2011 it came to a head ...
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30 views

Comparing Real GDP with different base years and currencies

I have a quarterly panel data of several countries. I have taken the data from Fred. Some countries' real gdp is in chained 2010 prices and some in other years (such as 2015 and 2018). How can I make ...
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FX - Reconciling monetary policy and interest rate parity

Theory suggests that as rates rise domestically, the home currency (call it currency A) will appreciate against currency B (all else equal). What we see with currency forward rates though seems to be ...
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1answer
114 views

Math based proof for currency changes (microeconomics)

This isn't part of my homework but I am genuinely interested in the mathematical proof behind this question (this is my line of work currently). I tried to work through it but after 2 hours gave up. ...
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1answer
28 views

Creating a pragmatic, useable (not theory heavy) proxy for a currency basket for a set of economies

This is currently, a gedanken experiment, but may well form the basis of a whitepaper - or better still, an actual project. I am trying to come up with a practical way of creating a "currency ...
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Does Dogecoin or Bitcoin have a more appropriate rate of monetary inflation?

The supply of new Bitcoins and Dogecoins is depicted in the graph below. The Bitcoin inflation rate is currently higher than the Dogecoin rate, but it reduces sharply to a rate close to zero. It ...
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1answer
78 views

Why isn't high inflation along with robust welfare a 'good' system?

High inflation, by definition, means that the demand for goods and services is higher compared to the demand for currency. In other words, people are more willing to give up currency for goods and ...
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1answer
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How does one country peg its currency to another's? [closed]

For example, Belize has pegged its currency to the US dollar at an exchange rate of 2 Belize dollars to 1 US dollar. How does Belize do that?
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1answer
45 views

If Lebanon has a shortage of dollars, are USD donations meaningless?

I was reading about the dollar crisis in Yemen the other day, which mentioned that even people who owned dollars couldn’t withdraw them. If the situation with Lebanon’s currency is similar, what ...
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1answer
59 views

What are the benefits of reducing zeroes from currency (eg: Iran)?

Recently, Iran decided to replace its old currency to a new one. Quoted from Wikipedia A proposal has been agreed to by the Iranian parliament to drop four zeros, by replacing the rial with a new ...
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Are financial markets “unique” for each “currency pair”, or are they simply “translated”?

This is something I've been long wondering about. Let's say that I have statistics showing the daily closing Bitcoin price in USD since early 2009. Great. Now, if I wanted to get the daily closing ...
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Who owns money?

Bishop Nicole Oresme (1320-1382), in the first monetary treatise, wrote: CHAPTER VI: Who owns the Money? (Cuius sit ipsa moneta?) Although it is the duty of the prince to put his stamp on the money ...
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Should Finland leave the eurozone?

Finland's economic recovery from the shock of the global financial crisis of 2007–2008 has been very weak. The country has been in recession for the past three years, with GDP expected to expand by ...
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1answer
18 views

Big Mac Index based on other products or services?

The Big Mac Index compares the cost of a McDonalds Big Mac in different currencies around the world. In doing so, it provides: an informal way of measuring the purchasing power parity (PPP) between ...
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1answer
111 views

What are the advantages of using euro for Greece?

Theoretical benefits of using unified currency are well known and described in many places like https://www.economicshelp.org/europe/benefits-euro/ However, reality (or more comprehensive analysis) ...
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1answer
34 views

Why doesn't Dollar exchange rate go down?

I am from India and my question is related to conditions based in India which may be applicable to other countries as well. Dollar value is gradually rising in India. I was trying to understand why. ...
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What is the effect of currency depreciation on import prices?

In Macroeconomics: A European Perspective (3rd ed., Blanchard, Amighini and Giavazzi), when discussing the reason for differences in the GDP deflator and the HICP for the EU, it states the following ...
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1answer
37 views

Currency and GDP

USA's GDP (at this time) is ~21 trillion dollards, and UK's is ~2.8 trillion dollars, then how come UK's currency is more than USA's. By that I mean, 1 GBP gets you more than 1 USD.
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1answer
76 views

Should we get rid of the Penny?

Jeff Gore has suggested scrapping the 1 cent coins a few years ago. Why doesn't the US cancel the pennies? Is it that terrible to the economics to keep the copper coin? As mentioned in the comments, ...
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1answer
47 views

Relationship between government expenditure and exchange rate?

I've read an increase in government expenditure can lead to increase the chances of currency crisis but shouldn't it lead to the opposite? Fiscal deficit ----> Govt will undertake borrowings --->...
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3answers
109 views

How can a currency be tied to a commodity like energy?

To make a stable (crypto)currency it basically needs to be tied to a thing of value that can not be just flooded onto the market with minimal effort. I think energy is the ideal thing to tie a ...
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1answer
40 views

Is the debt owed to resourceful producers by resourceless consumers practically irrepayable?

Here is my argument for the debt owned by resourceless consumers to resourceful producers (as currency, bonds, loans, or other means). Is it correct? If not, where am I going wrong? Economic value is ...
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47 views

For stability, is there a limit to the sovereign debt that a Government owes to itself against issued fiat currency?

Looking beyond the optical illusion of Governments owing debt to Central Banks, Governments effectively owe themselves the sovereign debt created against issued fiat currency. By definition, there ...
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1answer
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Why don't Governments do away with the optics of taking on debt against new currency, and instead issue a limited currency every year (say 5% of GDP)?

Governments engage in the optical illusion of taking on debt against issued currency. The debt is effectively owed by the Government to itself. The value of the debt is completely controlled and ...
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1answer
29 views

Oliver Hart said that financing deficits by printing money can lead to hyperinflation “once the economy is close to full capacity”. What does he mean?

In response to a poll on Modern Monetary Theory, Nobel Laureate Oliver Hart said that Governments financing deficits by printing more money "can quickly lead to inflation or even hyperinflation ...
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Is it theoretically possible for a singular national currency to exist under a free banking system?

Free Banking is a proposed monetary system, usually by Austrian Economists, as an alternative to the prevalent Central Banking system. Under this arrangement, commercial banks would issue their own ...
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Can banks 'create' money on their own or do they need help from other banks?

My current understanding of the banking money multiplication process goes as follows: Alice comes along and deposits 100 cash into Bank A. Bank A gains 100 in vault cash (reserves) as an asset and 100 ...
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1k 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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1answer
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How digital currency (like Bitcoin) proponents solve the problem of its high volatility to make it a good candidate to replace fiat?

I have recently read an article about a family living with no fiat currency for several years. Indeed there are lots of advantages of using a digital currency. I am wondering if having an important ...
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1answer
60 views

Is Currency Devaluation a cause or effect of interest rates?

I understand that Federal bank/Goverment can manipulate the currency market and devalue its currency by printing more money or buying foreign currencies/assets (essentially increasing the supply of ...
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1answer
32 views

Why does Bimetallism require international cooperation to have a chance at succeeding?

I was reading the Britannica encylopedia's article about Bimetallism and under the arguments put forth against it, they cite that bimetallism doesn't work without international cooperation. Could ...
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1answer
217 views

Conversion of GDP PPP International \$ 2005 into GDP PPP International \$ 2011

Essentially I have two different datasets that I'm trying to consolidate. One set of data comes from the World Bank Databank, and is a set of historical GDP PPP values for all countries expressed in ...
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2answers
90 views

Is fiat currency better than a backed-currency?

My question is would it be better if we went back to something like a gold standard but backed by a finite virtual material instead? It avoids the problem of fluctuations in gold supply. The money-...
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1answer
35 views

What happened to the Zimbabwe cash dollar after the introduction of Dollarization?

Let's say, before dollarization, I owned 1 million Zimbabwean dollars in cash and the next day dollarization went into effect. So in dollarization, the current Zimbabwean dollars will be invalid and ...
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1answer
34 views

Why does the United States have a fungible currency?

Given all the problems of money laundering and black market money entering the market why does the US have a fungible currency at all? If I put my totalitarian hat on it would make sense for every ...
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1answer
381 views

On what basis, is currency created?

This is more like a homework question. I am quite a beginner. I would appreciate any help, preferably with less technical terms, that guides me in the right direction. I went through the Wikipedia ...
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1answer
195 views

Demand Curve of Foreign Exchange

My high-school Macroeconomics textbook states that 'There is an inverse relationship between the price of foreign currency, or exchange rate, and demand for foreign exchange. When the exchange rate ...
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1answer
126 views

Why did the pound sterling lose its reserve status to USD?

Why did the pound sterling lose it reserve status to USD? Was this due to some agreement during the Bretton Woods negotiations?

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