A currency basket is a portfolio of selected currencies with different weightings. A currency basket is used to minimize the risk of currency fluctuations. An example of a currency basket is the European Currency Unit, used by the European Community member states as the unit of account before being replaced by the euro. Another example is the special drawing rights of the International Monetary Fund. Basket WOCU
The franc is the currency and legal tender of Switzerland and Liechtenstein. The Swiss National Bank issues banknotes and the federal mint Swissmint issues coins; the smaller denomination, a hundredth of a franc, is a Rappen in German, centime in French, centesimo in Italian, rap in Romansh. The ISO code of the currency used by banks and financial institutions is CHF, although Fr. is widely used by businesses and advertisers. The Latinate "CH" stands for Confoederatio Helvetica. Given the different languages used in Switzerland, Latin is used for language-neutral inscriptions on its coins. Before 1798, about 75 entities were making coins in Switzerland, including the 25 cantons and half-cantons, 16 cities, abbeys, resulting in about 860 different coins in circulation, with different values and monetary systems; the local Swiss currencies included the Basel thaler, Berne thaler, Fribourg gulden, Geneva thaler, Geneva genevoise, Luzern gulden, Neuchâtel gulden, St. Gallen thaler, Schwyz gulden, Solothurn thaler, Valais thaler, Zürich thaler.
In 1798, the Helvetic Republic introduced the franc, a currency based on the Berne thaler, subdivided into 10 batzen or 100 centimes. The Swiss franc was equal to 6 3⁄4 grams of 1 1⁄2 French francs; this franc was issued until the end of the Helvetic Republic in 1803, but served as the model for the currencies of several cantons in the Mediation period. These 19 cantonal currencies were the Appenzell frank, Argovia frank, Basel frank, Berne frank, Fribourg frank, Geneva franc, Glarus frank, Graubünden frank, Luzern frank, St. Gallen frank, Schaffhausen frank, Schwyz frank, Solothurn frank, Thurgau frank, Ticino franco, Unterwalden frank, Uri frank, Vaud franc, Zürich frank. After 1815, the restored Swiss Confederacy attempted to simplify the system of currencies once again; as of 1820, a total of 8,000 distinct coins were current in Switzerland: those issued by cantons, cities and principalities or lordships, mixed with surviving coins of the Helvetic Republic and the pre-1798 Helvetic Republic.
In 1825, the cantons of Berne, Fribourg, Solothurn and Vaud formed a monetary concordate, issuing standardised coins, the so-called Konkordanzbatzen, still carrying the coat of arms of the issuing canton, but interchangeable and identical in value. The reverse side of the coin displayed a Swiss cross with the letter C in the center. Although 22 cantons and half-cantons issued coins between 1803 and 1850, less than 15% of the money in circulation in Switzerland in 1850 was locally produced, with the rest being foreign brought back by mercenaries. In addition, some private banks started issuing the first banknotes, so that in total, at least 8000 different coins and notes were in circulation at that time, making the monetary system complicated. To solve this problem, the new Swiss Federal Constitution of 1848 specified that the federal government would be the only entity allowed to issue money in Switzerland; this was followed two years by the first Federal Coinage Act, passed by the Federal Assembly on 7 May 1850, which introduced the franc as the monetary unit of Switzerland.
The franc was introduced at par with the French franc. It replaced the different currencies of the Swiss cantons, some of, using a franc, worth 1.5 French francs. In 1865, Belgium and Switzerland formed the Latin Monetary Union, in which they agreed to value their national currencies to a standard of 4.5 grams of silver or 0.290322 grams of gold. After the monetary union faded away in the 1920s and ended in 1927, the Swiss franc remained on that standard until 1936, when it suffered its sole devaluation, on 27 September during the Great Depression; the currency was devalued by 30% following the devaluations of the British pound, U. S. dollar and French franc. In 1945, Switzerland joined the Bretton Woods system and pegged the franc to the US dollar at a rate of $1 = 4.30521 francs. This was changed to $1 = 4.375 francs in 1949. The Swiss franc has been considered a safe-haven currency, with a legal requirement that a minimum of 40% be backed by gold reserves. However, this link to gold, which dated from the 1920s, was terminated on 1 May 2000 following a referendum.
By March 2005, following a gold-selling program, the Swiss National Bank held 1,290 tonnes of gold in reserves, which equated to 20% of its assets. In November 2014, the referendum on the "Swiss Gold Initiative" which proposed a restoration of 20% gold backing for the Swiss franc, was voted down. In March 2011, the franc climbed past the US$1.10 mark. In June 2011, the franc climbed past US$1.20 as investors sought safety as the Greek sovereign debt crisis continued. Continuation of the same crisis in Europe and the debt crisis in the US propelled the Swiss franc past US$1.30 as of August 2011, prompting the Swiss National Bank to boost the franc's liquidity to try to counter its "massive overvaluation". The Economist argued that its Big Mac Index in July 2011 indicated an overvaluation of 98% over the dollar, cited Swiss companies releasing profit warnings and threatening to move operations out of the country due to the strength of the franc. Demand for francs and franc-denominated assets was so strong that nominal short-term Swiss interest rates became negative.
On 6 September 2011, when the ex
The Indian rupee is the official currency of India. The rupee is subdivided into 100 paise, though as of 2018, coins of denomination of 50 paise or half rupee is the lowest value in use; the issuance of the currency is controlled by the Reserve Bank of India. The Reserve Bank manages currency in India and derives its role in currency management on the basis of the Reserve Bank of India Act, 1934. In 2012, a new rupee symbol'₹', was adopted, it was designed by D. Udaya Kumar, it was derived from the combination of the Devanagari consonant "र" and the Latin capital letter "R" without its vertical bar. The parallel lines at the top are said to make an allusion to the tricolour Indian flag, depict an equality sign that symbolises the nation's desire to reduce economic disparity; the first series of coins with the new rupee symbol started in circulation on 8 July 2011. Before this India used to use Rs for Re to depict one rupee. On 8 November 2016 the Government of India announced the demonetisation of ₹500 and ₹1000 banknotes with effect from midnight of the same day, making these notes invalid.
A newly redesigned series of ₹500 banknote, in addition to a new denomination of ₹2000 banknote is in circulation since 10 November 2016. ₹1000 has been suspended. On 25 August 2017, a new denomination of ₹200 banknote was added to Indian currency to fill the gap of notes due to high demand for this note after demonetisation. In July 2018, the Reserve Bank of India released the ₹100 banknote; the word "rupee" was derived from Hindustani rupaya. Panini characterised rūpya as a stamped rūpa. Arthashastra, written by Chanakya, prime minister to the first Maurya emperor Chandragupta Maurya, mentions silver coins as rūpyarūpa. Other types of coins including gold coins, copper coins and lead coins are mentioned; the history of the Indian rupee traces back to Ancient India in circa 6th century BCE, ancient India was one of the earliest issuers of coins in the world, along with the Chinese wen and Lydian staters. Arthashastra, written by Chanakya, prime minister to the first Maurya emperor Chandragupta Maurya, mentions silver coins as rūpyarūpa, other types including gold coins, copper coins and lead coins are mentioned.
Rūpa means example, rūpyarūpa, rūpya -- wrought silver, rūpa -- form. During his five-year rule from 1540 to 1545, Sultan Sher Shah Suri issued a coin of silver, weighing 178 grains, termed the Rupiya. During Babar's time, the brass to silver exchange ratio was 50:2; the silver coin remained in use during Maratha era as well as in British India. Among the earliest issues of paper rupees include; the rupee was a silver coin. This had severe consequences in the nineteenth century when the strongest economies in the world were on the gold standard; the discovery of large quantities of silver in the United States and several European colonies resulted in a decline in the value of silver relative to gold, devaluing India's standard currency. This event was known as "the fall of the rupee." India was unaffected by the imperial order-in-council of 1825, which attempted to introduce British sterling coinage to the British colonies. British India, at that time, was controlled by the British East India Company.
The silver rupee continued as the currency of India through the British Raj and beyond. In 1835, British India adopted a mono-metallic silver standard based on the rupee. Following the First war of Independence in 1857, the British government took direct control of British India. Since 1851, gold sovereigns were produced en masse at the Royal Mint in New South Wales. In an 1864 attempt to make the British gold sovereign the "imperial coin", the treasuries in Bombay and Calcutta were instructed to receive gold sovereigns; as the British government gave up hope of replacing the rupee in India with the pound sterling, it realised for the same reason it could not replace the silver dollar in the Straits Settlements with the Indian rupee. Since the silver crisis of 1873, a number of nations adopted the gold standard. Around 1875, Britain started paying India for exported goods in India Council Bills. "If, the India Council in London should not step in to sell bills on India, the merchants and bankers would have to send silver to make good the balances.
Thus a channel for the outflow of silver was stopped, in 1875, by the India Council in London.""The great importance of these Bills, however, is the effect they have on the Market Price of Silver: and they have in fact been one of the most potent factors in recent years in causing the diminution in the Value of Silver'as compared to Gold.""The Indian and Chinese products for which silver is paid were and are, since 1873–74 low in price, it there fore takes less silver to purchase a larger quantity of Eastern commodities. Now, on taking the several agents into united consideration, it will not seem mysterious why silv
The euro is the official currency of 19 of the 28 member states of the European Union. This group of states is known as the eurozone or euro area, counts about 343 million citizens as of 2019; the euro is the second largest and second most traded currency in the foreign exchange market after the United States dollar. The euro is subdivided into 100 cents; the currency is used by the institutions of the European Union, by four European microstates that are not EU members, as well as unilaterally by Montenegro and Kosovo. Outside Europe, a number of special territories of EU members use the euro as their currency. Additionally, 240 million people worldwide as of 2018 use currencies pegged to the euro; the euro is the second largest reserve currency as well as the second most traded currency in the world after the United States dollar. As of August 2018, with more than €1.2 trillion in circulation, the euro has one of the highest combined values of banknotes and coins in circulation in the world, having surpassed the U.
S. dollar. The name euro was adopted on 16 December 1995 in Madrid; the euro was introduced to world financial markets as an accounting currency on 1 January 1999, replacing the former European Currency Unit at a ratio of 1:1. Physical euro coins and banknotes entered into circulation on 1 January 2002, making it the day-to-day operating currency of its original members, by March 2002 it had replaced the former currencies. While the euro dropped subsequently to US$0.83 within two years, it has traded above the U. S. dollar since the end of 2002, peaking at US$1.60 on 18 July 2008. In late 2009, the euro became immersed in the European sovereign-debt crisis, which led to the creation of the European Financial Stability Facility as well as other reforms aimed at stabilising and strengthening the currency; the euro is managed and administered by the Frankfurt-based European Central Bank and the Eurosystem. As an independent central bank, the ECB has sole authority to set monetary policy; the Eurosystem participates in the printing and distribution of notes and coins in all member states, the operation of the eurozone payment systems.
The 1992 Maastricht Treaty obliges most EU member states to adopt the euro upon meeting certain monetary and budgetary convergence criteria, although not all states have done so. The United Kingdom and Denmark negotiated exemptions, while Sweden turned down the euro in a 2003 referendum, has circumvented the obligation to adopt the euro by not meeting the monetary and budgetary requirements. All nations that have joined the EU since 1993 have pledged to adopt the euro in due course. Since 1 January 2002, the national central banks and the ECB have issued euro banknotes on a joint basis. Euro banknotes do not show. Eurosystem NCBs are required to accept euro banknotes put into circulation by other Eurosystem members and these banknotes are not repatriated; the ECB issues 8% of the total value of banknotes issued by the Eurosystem. In practice, the ECB's banknotes are put into circulation by the NCBs, thereby incurring matching liabilities vis-à-vis the ECB; these liabilities carry interest at the main refinancing rate of the ECB.
The other 92% of euro banknotes are issued by the NCBs in proportion to their respective shares of the ECB capital key, calculated using national share of European Union population and national share of EU GDP weighted. The euro is divided into 100 cents. In Community legislative acts the plural forms of euro and cent are spelled without the s, notwithstanding normal English usage. Otherwise, normal English plurals are sometimes used, with many local variations such as centime in France. All circulating coins have a common side showing the denomination or value, a map in the background. Due to the linguistic plurality in the European Union, the Latin alphabet version of euro is used and Arabic numerals. For the denominations except the 1-, 2- and 5-cent coins, the map only showed the 15 member states which were members when the euro was introduced. Beginning in 2007 or 2008 the old map is being replaced by a map of Europe showing countries outside the Union like Norway, Belarus, Russia or Turkey.
The 1-, 2- and 5-cent coins, keep their old design, showing a geographical map of Europe with the 15 member states of 2002 raised somewhat above the rest of the map. All common sides were designed by Luc Luycx; the coins have a national side showing an image chosen by the country that issued the coin. Euro coins from any member state may be used in any nation that has adopted the euro; the coins are issued in denominations of €2, €1, 50c, 20c, 10c, 5c, 2c, 1c. To avoid the use of the two smallest coins, some cash transactions are rounded to the nearest five cents in the Netherlands and Ireland and in Finland; this practice is discouraged by the Commission, as is the practice of certain shops of refusing to accept high-value euro notes. Commemorative coins with €2 face value have been issued with changes to the design of the national side of the coin; these include both issued coins, such as the €2 commemorative coin for the fiftieth anniversary of the signing of the Treaty of Rome, nationally i
The pound sterling known as the pound and less referred to as sterling, is the official currency of the United Kingdom, Guernsey, the Isle of Man, South Georgia and the South Sandwich Islands, the British Antarctic Territory, Tristan da Cunha. It is subdivided into 100 pence. A number of nations that do not use sterling have currencies called the pound. Sterling is the third most-traded currency in the foreign exchange market, after the United States dollar, the euro. Together with those two currencies and the Chinese yuan, it forms the basket of currencies which calculate the value of IMF special drawing rights. Sterling is the third most-held reserve currency in global reserves; the British Crown dependencies of Guernsey and the Isle of Man produce their own local issues of sterling which are considered equivalent to UK sterling in their respective regions. The pound sterling is used in Gibraltar, the Falkland Islands, Saint Helena and Ascension Island in Saint Helena and Tristan da Cunha; the Bank of England is the central bank for the pound sterling, issuing its own coins and banknotes, regulating issuance of banknotes by private banks in Scotland and Northern Ireland.
Banknotes issued by other jurisdictions are not regulated by the Bank of England. The full official name pound sterling, is used in formal contexts and when it is necessary to distinguish the United Kingdom currency from other currencies with the same name. Otherwise the term pound is used; the currency name is sometimes abbreviated to just sterling in the wholesale financial markets, but not when referring to specific amounts. The abbreviations "ster." and "stg." are sometimes used. The term "British pound" is sometimes incorrectly used in less formal contexts, it is not an official name of the currency; the exchange rate of the pound sterling against the US dollar is referred to as "cable" in the wholesale foreign exchange markets. The origins of this term are attributed to the fact that in the 1800s, the GBP/USD exchange rate was transmitted via transatlantic cable. Forex traders of GBP/USD are sometimes referred to as "cable dealers". GBP/USD is now the only currency pair with its own name in the foreign exchange markets, after IEP/USD, known as "wire" in the forward FX markets, no longer exists after the Irish Pound was replaced by the euro in 1999.
There is apparent convergence of opinion regarding the origin of the term "pound sterling", toward its derivation from the name of a small Norman silver coin, away from its association with Easterlings or other etymologies. Hence, the Oxford English Dictionary state that the "most plausible" etymology is derivation from the Old English steorra for "star" with the added diminutive suffix "-ling", to mean "little star" and to refer to a silver penny of the English Normans; as another established source notes, the compound expression was derived: However, the perceived narrow window of the issuance of this coin, the fact that coin designs changed in the period in question, led Philip Grierson to reject this in favour of a more complex theory. Another argument that the Hanseatic League was the origin for both the origin of its definition and manufacture, in its name is that the German name for the Baltic is "Ost See", or "East Sea", from this the Baltic merchants were called "Osterlings", or "Easterlings".
In 1260, Henry III granted them a charter of protection and land for their Kontor, the Steelyard of London, which by the 1340s was called "Easterlings Hall", or Esterlingeshalle. Because the League's money was not debased like that of England, English traders stipulated to be paid in pounds of the "Easterlings", contracted to "'sterling". For further discussion of the etymology of "sterling", see sterling silver; the currency sign for the pound is £, written with a single cross-bar, though a version with a double cross-bar is sometimes seen. This symbol derives from medieval Latin documents; the ISO 4217 currency code is GBP, formed from "GB", the ISO 3166-1 alpha-2 code for the United Kingdom, the first letter of "pound". It does not stand for "Great Britain Pound" or "Great British Pound"; the abbreviation "UKP" is used but this is non-standard because the ISO 3166 country code for the United Kingdom is GB. The Crown dependencies use their own codes: GGP, JEP and IMP. Stocks are traded in pence, so traders may refer to pence sterling, GBX, when listing stock prices.
A common slang term for the pound sterling or pound is quid, singular and plural, except in the common phrase "quids in!". The term may have come via Italian immigrants from "scudo", the name for a number of coins used in Italy until the 19th century.
Bretton Woods system
The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States, Western European countries and Japan after the 1944 Bretton Woods Agreement. The Bretton Woods system was the first example of a negotiated monetary order intended to govern monetary relations among independent states; the chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained its external exchange rates within 1 percent by tying its currency to gold and the ability of the IMF to bridge temporary imbalances of payments. There was a need to address the lack of cooperation among other countries and to prevent competitive devaluation of the currencies as well. Preparing to rebuild the international economic system while World War II was still raging, 730 delegates from all 44 Allied nations gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, United States, for the United Nations Monetary and Financial Conference known as the Bretton Woods Conference.
The delegates deliberated during 1–22 July 1944, signed the Bretton Woods agreement on its final day. Setting up a system of rules and procedures to regulate the international monetary system, these accords established the International Monetary Fund and the International Bank for Reconstruction and Development, which today is part of the World Bank Group; the United States, which controlled two thirds of the world's gold, insisted that the Bretton Woods system rest on both gold and the US dollar. Soviet representatives attended the conference but declined to ratify the final agreements, charging that the institutions they had created were "branches of Wall Street"; these organizations became operational in 1945 after a sufficient number of countries had ratified the agreement. On 15 August 1971, the United States unilaterally terminated convertibility of the US dollar to gold bringing the Bretton Woods system to an end and rendering the dollar a fiat currency; this action, referred to as the Nixon shock, created the situation in which the U.
S. dollar became a reserve currency used by many states. At the same time, many fixed currencies became free-floating; the political basis for the Bretton Woods system was in the confluence of two key conditions: the shared experiences of two World Wars, with the sense that failure to deal with economic problems after the first war had led to the second. There was a high level of agreement among the powerful nations that failure to coordinate exchange rates during the interwar period had exacerbated political tensions; this facilitated. Furthermore, all the participating governments at Bretton Woods agreed that the monetary chaos of the interwar period had yielded several valuable lessons; the experience of World War II was fresh in the minds of public officials. The planners at Bretton Woods hoped to avoid a repeat of the Treaty of Versailles after World War I, which had created enough economic and political tension to lead to WWII. After World War I, Britain owed the U. S. substantial sums, which Britain could not repay because it had used the funds to support allies such as France during the War.
S. The solution at Versailles for the French and Americans seemed to entail charging Germany for the debts. If the demands on Germany were unrealistic it was unrealistic for France to pay back Britain, for Britain to pay back the US. Thus, many "assets" on bank balance sheets internationally were unrecoverable loans, which culminated in the 1931 banking crisis. Intransigent insistence by creditor nations for the repayment of Allied war debts and reparations, combined with an inclination to isolationism, led to a breakdown of the international financial system and a worldwide economic depression; the so-called "beggar thy neighbor" policies that emerged as the crisis continued saw some trading nations using currency devaluations in an attempt to increase their competitiveness, though recent research suggests this de facto inflationary policy offset some of the contractionary forces in world price levels. In the 1920s, international flows of speculative financial capital increased, leading to extremes in balance of payments situations in various European countries and the US.
In the 1930s, world markets never broke through the barriers and restrictions on international trade and investment volume – barriers haphazardly constructed, nationally motivated and imposed. The various anarchic and autarkic protectionist and neo-mercantilist national policies – mutually inconsistent – that emerged over the first half of the decade worked inconsistently and self-defeatingly to promote national import substitution, increase national exports, divert foreign investment and trade flows, prevent certain categories of cross-border trade and investment outright. Global central bankers attempted to manage the situation by meeting with each other, but their understanding of the situation as well as difficulties in communicating internationally, hindered their abilities; the lesson was that having responsible, hard-working central bankers was not enough. Britain in the 1930s had an exclusionary trading bloc with nations of the British Empire known as the "Sterling Area". If Britain imported more than it exported to nations such as South Africa, South African recipients of pounds sterling tended to put them into London banks.
This meant that th