kotivaluutta

Kotivaluutta is the currency legally issued and used for most domestic economic transactions within a country. It functions as the unit of account, store of value, and medium of exchange for residents and businesses. Typically, kotivaluutta is issued by the country’s central bank or monetary authority and is subject to its monetary policy, including control of money supply and interest rates.

The value of kotivaluutta relative to other currencies is determined through the country’s exchange-rate regime, which can be floating, fixed, or pegged. This exchange rate policy influences inflation, prices of imports and exports, and overall competitiveness. The currency also provides a framework for financial contracts, pricing, salaries, and taxation.

While kotivaluutta is the primary means of payment domestically, foreign currencies may be used for international trade, travel, or hedging against domestic risk. In some economies currency circulation includes foreign money or a parallel currency, and in currency unions or dollarized economies the scope of a distinct kotivaluutta may be limited or shared.

Examples: Finland’s kotivaluutta is the euro, as Finland is part of the eurozone. In the United States, the dollar serves as the kotivaluutta, while in non-euro EU countries the local currency remains the domestic unit even though monetary policy is coordinated at the European level or by other arrangements. The concept of kotivaluutta thus reflects a country’s sovereign or semi-sovereign monetary framework.