currency

Examples of currency in the following topics:

• The Public Debt

  • Sovereign debt usually refers to government debt that has been issued in a foreign currency.
  • Such bonds are often denominated in the country's domestic currency.
  • Investors in sovereign bonds denominated in foreign currency have the additional risk that the issuer may be unable to obtain foreign currency to redeem the bonds.
  • Governments often borrow money in currency in which the demand for debt securities is strong.
  • Usually small states with volatile economies have most of their national debt in foreign currency.

• Monetary Policy

  • Monetary policy uses a variety of tools to control one or both of these, to influence outcomes like economic growth, inflation, exchange rates with other currencies and unemployment.
  • Where currency is under a monopoly of issuance, or where there is a regulated system of issuing currency through banks which are tied to a central bank, the monetary authority has the ability to alter the money supply and thus influence the interest rate to achieve policy goals.
  • This entails managing the quantity of money in circulation through the buying and selling of various financial instruments, such as treasury bills, company bonds, or foreign currencies.
  • All of these purchases or sales result in more or less base currency entering or leaving market circulation.
  • In other instances, monetary policy might instead entail the targeting of a specific exchange rate relative to some foreign currency or else relative to gold.

• Monetary Policy

  • Monetary policy uses a variety of tools to influence outcomes like economic growth, inflation, exchange rates with other currencies and to control unemployment.
  • When currency is under a monopoly of issuance or when there is a regulated system of issuing currency through banks which are tied to a central bank, the monetary authority has the ability to alter the money supply and therefore influence the interest rate (to achieve policy goals).
  • All of these purchases or sales result in more or less base currency entering or leaving market circulation.
  • In other instances, monetary policy might entail the targeting of a specific exchange rate relative to some foreign currency or gold.
  • However, the monetary policy of China is to target the exchange rate between the Chinese renminbi and a basket of foreign currencies.

• The Goals of Economic Policy

  • For instance, there may be pressure on the government to reduce inflation, reduce unemployment, and reduce interest rates while maintaining currency stability.
  • If all of these are selected as goals for the short term, then policy is likely to be incoherent, because a normal consequence of reducing inflation and maintaining currency stability is increasing unemployment and increasing interest rates.
  • Some policy rules can be imposed by external bodies, for instance, the Exchange Rate Mechanism for currency.

• Fiscal Policy

  • To purchase bonds originating from a certain country, foreign investors must obtain that country's currency.
  • Therefore, when foreign capital flows into the country undergoing fiscal expansion, demand for that country's currency increases.
  • The increased demand causes that country's currency to appreciate.
  • Once the currency appreciates, goods originating from that country now cost more to foreigners than they did before and foreign goods now cost less than they did before.

• The Articles of Confederation

  • Several states also printed their own currency.
  • This led to much confusion relating to exchange rates and trade; some states accepted the currency of others, while other states refused to honor bills issued by their counterparts.

• China

  • In turn, the United States has criticized China's undervaluation of its currency, the Renminbi.

• Maintaining a Strong Economy

  • It prints and mints all paper currency and coins in circulation through the Bureau of Engraving and Printing and the United States Mint.

• Income Security Policy

  • Governments issue government bonds in their own currency and sovereign bonds in foreign currencies.

• Political Strife and American Independence