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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96 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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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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86 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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104 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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1answer
36 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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73 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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151 views

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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343 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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626 views

How many US Dollars are lost or destroyed annually?

Are there any estimates on how many US Dollars are lost or destroyed annually? By "lost or destroyed", I mean permanently removed from circulation because the currency is no longer usable For ...
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1answer
239 views

How would unlimited free energy affect the global market? [closed]

What will the effect on today's global market if a new source of free unlimited energy was to be discovered? How badly will it disrupt today's global market and how badly will it affect our currency? ...
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19 views

Forecasting future currency exposures

I have a data set (about 60 observations for each variable) for monthly operating income for a Japanese company denoted in EUR, USD, and JPY, and their respective currencies. I believe there is linear ...
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35 views

In a trade imbalance does the importing country's currency become more valuable?

Suppose that country A buys freely from country B, but B uses steep tarriffs to block its citizens from buying from A. In that case country A's currency will pile up in B. Other things being equal, ...
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899 views

How will the Brexit affect the Euro and the Pound?

The question is the title: How will the brexit affect the euro and the pound? It looks like GBP is facing a tough situation. It is at its lowest value since 1985. Has GBP dropped permanently(or for a ...
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123 views

Why is devaluing your currency good for exports?

I have the typical answer: "A cheaper currency means exports will go up because it's cheaper to buy from us!" Yeah, sure, but that's obviously full of holes. Let's have a simple situation: We have ...
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968 views

What effect would converting the lowest denomination note to a coin be?

In New Zealand our lowest denomination note is a $5 note. For perspective, a can of coke costs $1.50 - $2.00, a Big Mac costs around $5. The idea of a $5 coin is on the cards. The question is - ...
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1answer
14 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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58 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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30 views

Why would oil suppliers choose a lower priced contract?

The West Texas Intermediate (WTI) futures contract has ranged from \$6 to \$20 in the last 48 hours. The May Shanghai International futures contract is 205 Yuan (CNY). At 7 CNY per USD, that comes ...
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Why did foreigners keep buying Swiss francs at -41% (not a typo) interest rate in the 1970s?

A Bloomberg (opinion) piece notes In January 1975, the Swiss government held an emergency meeting and then took the extraordinary step of slapping a 41% annual penalty on foreign deposits. But even ...
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38 views

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) Increase ...
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1answer
58 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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74 views

Gresham's Law applied to wampum and gold/silver coins in the 1600s

So I was reading an article by Nick Szabo called "Shelling Out" And in his introduction paragraph he explains how American Indians use bones and shells as a currency called "wampum". This currency ...
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60 views

Creating a currency

I have been given an assignment for creating my own currency in economics. I am curious what one should know when doing this. It doesn't have to be too elaborate but I would like some advice. I know ...
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102 views

Econometrics for currency valuation?

Different assets have different motivations and components for price determination. For example, an equity stock price might be considered to be include the value of underlying company, its potential ...
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96 views

Why is Japanese Currency tied to gold?

I was listening to a Bloomberg market update, and the journalist mentioned that the Japanese currency was down as Gold rose. I've heard that investors park their money in Yen. Is the reason the Yen ...
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1answer
262 views

What do the numbers in the ISO 4217 currency codes mean?

The International Organization for Standards (ISO) has a ISO 4217, which delineates currency codes, country codes, etc. for, well, international currency. Alongside this, each country is given a ...
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464 views

Questions on comparing GDP between various countries

What is the difference between OER vs PPP? What fundamentally drives them? Shouldnt an arb opportunity exist and wouldnt that difference then go away? My understanding of OER is the official nominal ...
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1k views

Federal Reserve Notes vs Coins

More of a two part question. In the current system (Fiat only currency), why is a Federal Reserve Note booked as a liability (on the Fed balance sheet), but a Coin is not booked as a liability by the ...
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7k views

How does an import quota affect the demand / supply of currency?

An import quota in an open economy might not have the desired affect of increasing the GDP as it increases the demand of domestic currency in the open market raising exchange rate. How does it happen ...
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62 views

How to determine the worth of a good

I've searched around the web for awhile now and I'm beginning to think this might be an unanswerable question. I want to know if there is a theoretical way to determine the worth of a particular good, ...
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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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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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48 views

Does inflation/expected inflation in a given country devalue its currency or increase its value?

I've seen both arguments. From my understanding an increase in the rate of inflation should decrease the value of the currency since it's by definition a depreciation in its purchasing power. But I've ...
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33 views

What did Jevons mean by this quote?

Jevons (1875): Currency is to the science of economy what the squaring of the circle is to geometry, or perpetual motion to mechanics. I can't make any sense of this quote. I know that the "...
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21 views

US dollar the “Safe Haven”

Could anyone give me a detailed description on how the US dollar serves as the "safe haven" of assets when there are market stresses?
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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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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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264 views

“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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21 views

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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157 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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136 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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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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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?
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In a closed system, what is the relationship, if any, between currency supply and market capitalization?

Assuming: A world in which the market value of publicly traded companies is known Any transaction to buy or sell stock of said companies can only be consummated with a new currency X, which is freely ...
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Why Yen grew stronger after North Korea's H-bomb threat? [duplicate]

Financial markets have had only a muted reaction to the dispute in recent months, but on Friday assets regarded as havens for investors jumped immediately after the news of North Korea’s latest H-...
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What are some benefits of local currencies?

Lets say that we have in my country Greece there is an Island Crete that it has big production (agriculture,small banks etc.) and produces big surplus compared with other parts of Greece and the ...
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Can a weaker currency be used to offset lower productivity of labour in an economy?

Can a weaker currency be used to offset supply-side (specifically low productivity of labour) problems of an economy to restore international competitiveness?
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Why was there a sudden rise in trade-weighted US dollar value in 2014-2015?

I was trawling the web and happened upon this graph: https://fred.stlouisfed.org/series/DTWEXM . The value of the trade-weighted US dollar was going steady until 2014-2015, rose rapidly, then it sort ...
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What's the equation of currency fluctuation?

Preamble: Today the rate of EUR is 82.09 in BDT ( Bangladeshi Currency) and two hours later it's 82.50 ( I hope, it's increasing). But why does this fluctuation just keeps happening? Looks like the ...
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How does foreign exchange settlement work?

How does the settlement of trades in foreign exchange work? For example, if I am a large company with money in dollars and I buy another currency like Deutschmarks with my dollars, how does the money ...