History of Currency The need for currency arose with the growth in trade.
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Historically people exchanged goods and services based on the barter system, forex convertor de valută lire a product or a service produced by one person was exchanged for a product or a service produced by another person. The need for variety in products was low during early history.
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For example, if one person made weapons like arrows, and another person was good at hunting, then exchanging food for weapons was simple, because it was easy to find someone with a need for food, as well as with a need for forex convertor de valută lire. In addition to barter, people exchanged gifts, and some researchers believe that this forex convertor de valută lire an insurance that gift receivers will reciprocate at a later time. Anthropologists debate whether gifts can be given without the expectation of reciprocity, but it seems that in most societies reciprocity happens as part of the gift-giving, whether it is expected or not.
As human needs grew and became more complicated, it was more difficult to find a person who wanted the product that one produced, and at the same time had the product that one needed.
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In addition, with the growth of agriculture, it was difficult to exchange the two crops with different harvest times. For example, a family producing spring crops could only exchange them then, even if they needed late summer crops in return, so without some kind of the third medium of exchange, they could not get what they needed.
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Currency became such a medium. Manilla Early Currency In the earlier days of currency, people started trading items that are durable but not easy to find, for example, cowry shells or ivory. When early mining developed, people traded metals, then precious metals and precious stones, as well as pearls.
In some parts of Africa, special metal bracelets called manillas were traded.
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They had a peculiar shape of an incomplete ring, with pointed edges, and were commonly associated with the slave trade. Particular kinds of manillas were only accepted at certain markets, and manillas were commonly made in Europe and exported to Africa, although some African-made manillas also exist. Some rich individuals wore manillas to display their wealth, and developed a peculiar kind of walk because of the weight of the many manillas they wore.
Such display is similar to the tradition of wearing diamonds or gold jewelry that is still practiced today in many countries. Japanese coin Coins To ensure that the value of the exchanged precious items is always equivalent, forex convertor de valută lire started to make coins with pre-determined weights.
Each coin had identifying marks, signifying its value and maker. Eventually, to avoid forgery, these coins started to be issued by the government or a special body, established just for that purpose. These coins became the currency of a given region.
Currency allowed easier trade within the region, and across different regions. In the beginning, coins were traded based on the actual weight of the precious metal forex convertor de valută lire they were made of.
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Thus countries that had larger supplies of a given metal had heavier coins. Later coins became representatives of value, regardless of the amount and the rareness of the materials that they were made out of.
They are manufactured at factories called mints. Portraits of the forex convertor de valută lire rulers often appear on the coins; this has been done since the times of Ancient Greece and Rome.
This was both heavy and dangerous. Robbers and pirates seized these coins, and merchants lost not only their merchandise but also money when ships sank, even if the crew could escape because it was not possible to rescue the heavy coins.
With the invention of the printing press it became possible to print large amounts of material, and with time printed currency called banknotes became adopted.
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Some of the first paper money was made in China and in the medieval Islamic world, and the idea was later adopted in Europe. At the beginning banknotes were a promissory agreement between the bank and the customer, stating that the banknote can be exchanged for coin currency at any time. Eventually, it became currency by itself. Some of the first banknotes were made of leather, around the 7th century in China. The market value of a banknote, considering the materials it is made of and the workmanship, is usually lower than the forex convertor de valută lire value that it is traded for.
This type of currency is called fiat money, and it is used in most countries in the world.
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Banknotes allowed for more efficient business transactions but posed a threat of inflation because a government could print as much paper currency as needed, and the increase in banknotes made them less valuable. This problem is still relevant today because some governments still continue this practice, despite the knowledge that inflation is problematic.
Historically banknotes were made from a variety of materials such as paper, wood, leather, seal skin, silk, and other fabrics.
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Even playing cards and chess pieces have been used in place of banknotes. Currently, the majority of banknotes are made of paper, but some countries use the technology developed in Australia to produce polymer banknotes.
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They are more durable and secure compared to the paper ones. One of the polymers used for these banknotes is waterproof, so these banknotes should survive machine washes. Electronic Banking and Cards With the establishment of banks, the virtual currency was introduced.
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Currently, in many countries, debit and credit cards are an acceptable form of payment. Some vendors recently started accepting another form of digital currency, cryptocurrency, in particular, Bitcoin.
However, there are still countries where cash is the only form of money accepted as payment. Credit card companies and online e-money providers charge fees for currency conversions, but it is now possible to shop in stores using one currency, while holding money or credit in another currency, making it easy to shop online and internationally.
Currency in Different Countries Most countries have their own currency, which is called legal tender, although currency other than the local one may be accepted. This may be done based on government policy or without a legal basis, simply for convenience especially in tourist areas. Besides tourism, a non-national currency is often used in the country with a less stable economy, especially when the inflation rates are high. Currently, all currencies use a three-letter code as a way to distinguish between currencies with the same name.
The first two letters refer to the country and the third is the initial of the currency name. Euro Some countries, in particular, the members of the European Union EUchoose to use the same currency across a group of countries, as the euro was chosen to be used by several member states of the European Union.
While this tactic has numerous benefits, such as allowing easier trade between the member countries, it also results in problems, because the economic problems in one or several member countries weaken the currency and cause economic problems in the other member states. In particular, during the financial crisis that started inGreece, Ireland, Portugal, and Spain, as well as several neighboring European countries that have close economic relationships with the EU members, became extremely unstable, and there was a fear that their home banking system may default, and the sovereign debt of these countries increased.
This caused the instability of the euro.
Currency exchange rates Fixed Exchange Rate Some countries fix or peg the exchange rate of their currency to an international currency, for example to the US dollar or the euro, at an exchange rate that does not change. For example, the dollar in Belize is pegged to the US dollar at a rate of two to one.
Most of the countries that do this are smaller economies, and this policy helps them control inflation.
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However, until China was also one of the countries with the exchange rate of the yuan fixed to the US dollar. This strategy is difficult to execute because it encourages the emergence of black market currency trading.