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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19
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7answers
13k views

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 ...
19
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5answers
4k views

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 ...
17
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4answers
737 views

I lost $100 in the laundry, who won?

I lost a 100 dollars bill in the laundry (it was destroyed). I clearly lost 100 dollars. Where are they now? Who won 100 dollars?
16
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1answer
445 views

When a country adopts the Euro, what happens to its debt?

When a country, say Greece, adopted the Euro as its currency, what happened to the debt that was based on the Drachma? Was it converted into Euros?
15
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3answers
17k views

Real Exchange Rate vs PPP rate

I'm having troubles to understand the difference between the Real Exchange Rate and the PPP rate. I know the first one is calculated using a basket of goods and services so that the non-tradeable ...
14
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4answers
902 views

What benefits does Bitcoin (i.e. cryptocurrency) offer?

I really, really like moderate inflation. I live in Sweden where the interest rates just went negative because we are on the brink of deflation, and the rate of inflation we have now is far too low. ...
14
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3answers
2k views

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 ...
12
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2answers
176 views

How could the Euro zone be broken up in an ordered way?

Let’s assume that the members of Euro zone all agreed that it would end in 18 months time with each country getting its own currency. What process could be put in place to allow this to happen ...
12
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4answers
7k views

Why does any treasury / central bank hold gold?

I know the US treasury is slowly selling its gold reserves, but what is the actual mission and purpose when it comes to the holdings? What is the reasoning behind the slow rate of liquidation? I have ...
11
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4answers
13k views

How does a country devalue its currency?

I recently read an article in the New York Times that talked about China devaluing its currency (which I believe is held to a peg against the US Dollar). My question is: specifically what tools does a ...
10
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1answer
1k views

Wouldn't abolition of cash give rise to a substitute currency?

Some countries (e.g. Sweden and Denmark) plan to abolish physical cash in the future and restrict the use of cash to electronical deposits. One of the reasons for this is to prevent hoarding / boost ...
9
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7answers
4k views

What are the known / alleged problems against using energy as currency?

What are the known (and alleged) problems of using Joules (i.e. a measure of energy/work) as a currency? I tried to find such idea in Google (searched terms like "technocracy", since someone told me ...
9
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7answers
70k 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....
9
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2answers
675 views

What effect would removing the lowest denomination currency have?

Here in New Zealand our lowest denomination coin is 10c after the 5c was removed about 10 years ago. I think generally the public is pretty happy about the move. It's quite a common argument to ...
9
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1answer
341 views

Financial Smart Contract on Ethereum: can an Ether Futures contract be priced in Ether?

BACKGROUND This is more in the wheel-house of economics than programming, but after a few different titles, I thought it best not to skirt around the root of my question OR create a oddly phrased USD ...
8
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3answers
479 views

The reasons why rouble is collapsing

What can you people say about the reasons why rouble is collapsing? Which one is the main?
8
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2answers
1k views

What would happen if the world switched to a single currency?

What would happen if all countries suddenly stopped using local currencies and adopted a global currency (like the Euro, but for everyone)?
8
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5answers
459 views

Why do currencies cover orders of magnitude?

Using 1 USD as a reference, most currencies are within an order of 5 away from the USD: that is, one unit of most currencies is worth between 0.2 USD and 5 USD. (Source.) In fact, most European ...
8
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8answers
5k views

What would be the effects of an expiration date on currency?

Let's say we introduce a monetary system where each piece of money is printed with an expiration date - a year, perhaps. I'm imagining something rather different from inflation (although I do not ...
8
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2answers
6k views

What is the advantage and disadvantage to have a high value of USD for USA?

What is the advantage and disadvantage to have a high value of USD for USA? China and Japan always want to keep their currency low as oppose to USA.
8
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3answers
2k views

What are the differences between the older gold standard and the current fiat money standard?

My current limited understanding is that the gold standard was a system in which there was a fixed currency amount per unit of gold. For example, 1 ounce of gold might be 100 USD. Another country like ...
8
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3answers
1k views

Calculating nominal GDP

I would like to understand one detail of how nominal GDP of a country in a given year is calculated. It seems to me that the GDP in each country is first calculated in the national currency and then ...
8
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1answer
150 views

How does a bank convert one currency to another?

Say for example I sell ZAR and buy USD. What happens behind the scenes so that the local ZAR bank is able to deposit USD into my account? Does the bank require some sort of USD cash reserve? How do ...
7
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1answer
471 views

How can the Swiss exchange rate be very biased in a free market?

In 2002, when Germany, France, Italy and Austria adopted the Euro currency, the exchange rate with Switzerland was 1.60 CHF (Swiss Franc) = 1€ (Euro). The prices and salaries in Switzerland were ...
7
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1answer
69 views

What may have caused these blips in the value of Euro vs. US dollar

I was looking at the USD/EUR exchange rates a few minutes ago (Saturday evening, Eastern Time Zone here in USA) at xe.com and noticed some sharp blips on it from earlier today. The graph looked as ...
6
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2answers
676 views

Why could interest rates go up if Brexit happens?

I was reading this article, George Osborne says Brexit would drive up mortgage rates: George Osborne has issued a stark warning that mortgage rates will rise if Britain leaves the European Union. ...
6
votes
1answer
482 views

How does US (its economy, banks, industry) profit from dollar being the “standard currency”?

How does US (its economy, banks, industry, "finance industry") profit from dollar being the "standard currency"? I am not seeking "ideological" explanations, but explanations of the mechanisms ...
6
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3answers
217 views

Fractional reserve banking and the value of someone else's currency

Suppose there are two countries: $A$ and $B$. $A$ is a large, stable, democratic country with its own currency, the dollar. $B$ does not have its own currency. All prices and financial transactions in ...
6
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1answer
668 views

Australian Dollar Devaluation

I am a layman in economics. I am curious about the current devaluation of Australian Dollar in comparison with the US Dollar. Could someone please explain, in simplest words possible: What causes ...
5
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3answers
983 views

Why is the Euro a bad idea compared to other currencies?

Many economists, including Nobel laureates Paul Krugman and Joseph Stiglitz, have said that the Euro was a bad idea from the beginning and is a major reason for all the current economic problems. My ...
5
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5answers
418 views

Why should Greece destroy their cash euros?

Leading economists in my country (Sweden) recommend and predict that (in the case of default) the Greek government will destroy all the euro bills in the country. Making holes in them and stamp them ...
5
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1answer
895 views

Why does the Dutch disease cause the value of the currency to increase?

I was just reading about the Dutch Disease and it causes that the value of a country's currency increases when said country suddenly finds natural sources of oil. Why is that?
5
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1answer
183 views

Book for Bretton Woods conferences and gold standard

I am looking for a good book to explain to me why the gold standard existed and why in the Bretton Woods conferences, some countries choose to abandon it. An explanation of the general scenario in a ...
5
votes
1answer
196 views

The Insane Sultan of Slickcrudistan: Calculating Currency Equilibrium

I work for a start-up that has encountered an economics problem no one on our team has been able to crack. A story form and a general form of the problem are below. I believe they are equivalent, ...
5
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2answers
440 views

Why was Swiss National Bank in red by keeping fix exchange rate to Euro?

When I read news about the action of Swiss National bank of not keeping fix ration to Euro any more, I read in all articles, that it was too expensive for Swiss National Bank to keep the fixed ...
5
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3answers
323 views

Are cryptocurrencies a ponzi scheme or a bubble?

Several users in this forum have addressed bitcoin and other cryptocurrencies as ponzi schemes. Bitcoins have several uses which could legitimate its value as a currency, but also have received ...
5
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2answers
161 views

How does the russian interest rate raise will defends the Ruble from devaluation?

This strategy (interest raise to minimize currency devaluation) is being adopted in countries like Brazil and Russia: Brazil interest rate http://www.tradingeconomics.com/brazil/interest-rate Russia ...
5
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1answer
153 views

Why is JPY considered a “safe currency”?

When the economic prospect around the world feels getting worse and/or getting higher uncertainty, usually the value of JPY is getting higher, because investors are said to start to buy JPY to shelter ...
5
votes
3answers
513 views

How can a country ensure its national currency is used by its citizens?

I am wondering how countries are able to force everyone to use its own currency, instead of some external currency (like the U.S. dollar or Bitcoin or cookies or something else not under government ...
5
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2answers
158 views

Unlimited supply of national currency?

I was reading this article about Denmark central bank defending its currency peg: http://www.bloomberg.com/news/2015-01-22/denmark-cuts-key-deposit-rate-to-minus-0-35-to-drive-down-krone.html In it ...
5
votes
3answers
169 views

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 ...
5
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1answer
112 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 ...
5
votes
1answer
350 views

Why is deflation not considered the opposite of inflation?

In this article from 2013 on bitcoin, the author casually states the importance of knowing that "deflation is not the opposite of inflation", without expanding or elaborating. I'm sure that there are ...
5
votes
1answer
82 views

How would Greece “temporarily” leave the Eurozone?

Amongst the negotiations between the Greece and the Eurozone leaders, there currently exists the possibility that Greece will leave the Eurozone for five years. Does this imply Greece would have to ...
5
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2answers
163 views

Why does every electronic transaction of USD legally take place on American territory?

In an article of a respected German newspaper (Die Zeit) I found the following statement (translation by me): 90 % of all foreign exchange trades are dealt in USD. Since every electronic ...
4
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2answers
943 views

Gold coins as currency?

My question is about gold standard. But not the version I always see mentioned (trading bills for gold at a set price). I mean having gold coins in circulation. For example, new currency consists ...
4
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5answers
36k views

Why do Higher Interest Rates attract Foreign Investors?

I am reading the following Article at Investopedia which states Generally, higher interest rates increase the value of a given country's currency. The higher interest rates that can be earned ...
4
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2answers
322 views

because bitcoins do not generate earnings, then (it is a ponzi scheme)?

What does the author mean with: Since Bitcoins do not generate any actual earnings, they must appreciate in value to ensure that people are willing to hold them. Why must they appreciate in ...
4
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2answers
627 views

What made The Wörgl Experiment successful?

Background: In 1932, in the midst of the Great Depression, the small town of Wörgl in Austria successfully experimented with its own local currency (in the form of a stamp scrip) ... They not only ...
4
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1answer
3k views

Benefits of a weak national currency

I often hear that developing economies can benefit from a weak national currency. For example China as exporter deliberately makes its national currency weaker, so that it gains an advantage. Are ...