currencys

A currency is a system of money in general use in a country or economic region. It functions as a medium of exchange, a unit of account, and a store of value, facilitating transactions, pricing, and wealth preservation. Currencies are typically issued as coins and banknotes by a national authority and are used domestically and in international trade through exchange markets.

There are several forms of currency. Fiat currencies have value because a government decrees them legal tender; their value rests in trust and policy rather than physical commodity. Historically, many economies used commodity-backed money or gold standards, but most have moved to fiat. Digital forms include central bank digital currencies (CBDCs) issued by governments, as well as decentralized virtual currencies such as cryptocurrencies, which operate independently of central banks and use cryptography and distributed ledgers.

Issuance and control of a currency usually lies with a central bank or monetary authority, which conducts policy to influence inflation, employment, and growth. This includes setting policy interest rates, regulating money supply, and sometimes managing currency stability. Seigniorage—the profit from issuing new money—affects government finances, and exchange rate regimes influence currency value against others.

Currency values are determined in foreign exchange markets by supply and demand. Some currencies float freely, some are pegged to others, and some belong to currency unions with a shared monetary policy, such as the eurozone. Exchange rates affect trade competitiveness and capital flows.

The modern currency system evolved from commodity money to coinage, paper money, and fiat systems. Global trade and finance depend on a network of currencies and exchange markets, with a subset acting as reserve currencies. The rise of digital payments, mobile money, and cryptocurrencies continues to influence how currencies are used and valued.