Fixed exchange-rate system
A fixed exchange rate, sometimes called a pegged exchange rate, is a type of exchange rate regime in which a currency's value is fixed against either the value of another single currency, a basket of other currencies, or another measure of value, such as gold. There are risks to using a fixed exchange rate. A fixed exchange rate is used to stabilize the value of a currency by directly fixing its value in a predetermined ratio to a different, more stable, or more internationally prevalent currency to which the value is pegged. In doing so, the exchange rate between the currency and its peg does not change based on market conditions, unlike flexible exchange regime; this makes trade and investments between the two currency areas easier and more predictable and is useful for small economies that borrow in foreign currency and in which external trade forms a large part of their GDP. A fixed exchange-rate system can be used to control the behavior of a currency, such as by limiting rates of inflation.
However, in doing so, the pegged currency is controlled by its reference value. As such, when the reference value rises or falls, it follows that the value of any currencies pegged to it will rise and fall in relation to other currencies and commodities with which the pegged currency can be traded. In other words, a pegged currency is dependent on its reference value to dictate how its current worth is defined at any given time. In addition, according to the Mundell–Fleming model, with perfect capital mobility, a fixed exchange rate prevents a government from using domestic monetary policy to achieve macroeconomic stability. In a fixed exchange-rate system, a country’s central bank uses an open market mechanism and is committed at all times to buy and/or sell its currency at a fixed price in order to maintain its pegged ratio and, the stable value of its currency in relation to the reference to which it is pegged. To maintain a desired exchange rate, the central bank during the devaluation of the domestic money, sells its foreign money in the reserves and buys back the domestic money.
This creates an artificial demand for the domestic money. In case of an undesired appreciation of the domestic money, the central bank buys back the foreign money and thus flushes the domestic money into the market for decreasing the demand and exchange rate; the central bank from its reserves provides the assets and/or the foreign currency or currencies which are needed in order to finance any imbalance of payments. In the 21st century, the currencies associated with large economies do not fix or peg exchange rates to other currencies; the last large economy to use a fixed exchange rate system was the People's Republic of China, which, in July 2005, adopted a more flexible exchange rate system, called a managed exchange rate. The European Exchange Rate Mechanism is used on a temporary basis to establish a final conversion rate against the euro from the local currencies of countries joining the Eurozone; the gold standard or gold exchange standard of fixed exchange rates prevailed from about 1870 to 1914, before which many countries followed bimetallism.
The period between the two world wars was transitory, with the Bretton Woods system emerging as the new fixed exchange rate regime in the aftermath of World War II. It was formed with an intent to rebuild war-ravaged nations after World War II through a series of currency stabilization programs and infrastructure loans; the early 1970's saw the breakdown of the system and its replacement by a mixture of fluctuating and fixed exchange rates. Timeline of the fixed exchange rate system: The earliest establishment of a gold standard was in the United Kingdom in 1821 followed by Australia in 1852 and Canada in 1853. Under this system, the external value of all currencies was denominated in terms of gold with central banks ready to buy and sell unlimited quantities of gold at the fixed price; each central bank maintained gold reserves as their official reserve asset. For example, during the “classical” gold standard period, the U. S. dollar was defined as 0.048 troy oz. of pure gold. Following the Second World War, the Bretton Woods system replaced gold with the U.
S. dollar as the official reserve asset. The regime intended to combine binding legal obligations with multilateral decision-making through the International Monetary Fund; the rules of this system were set forth in the articles of agreement of the IMF and the International Bank for Reconstruction and Development. The system was a monetary order intended to govern currency relations among sovereign states, with the 44 member countries required to establish a parity of their national currencies in terms of the U. S. dollar and to maintain exchange rates within 1% of parity by intervening in their foreign exchange markets. The U. S. dollar was the only currency strong enough to meet the rising demands for international currency transactions, so the United States agreed both to link the dollar to gold at the rate of $35 per ounce of gold and to convert dollars into gold at that price. Due to concerns about America's deteriorating payments situation and massive flight of liquid capital from the U.
S. President Richard Nixon suspended the convertibility of the dollar into gold on 15 August 1971. In December 1971, the Smithsonian Agreement paved the way for the increase in the value of the dollar price of gold from US$35.50 to US$38 an ounce. Speculation against the dollar in March 1973 led to the birth of the independent float, thus terminating the Bretton Woods system. Since March 1973, the floating exchange rate has been followed and formally recognize
British Guianan guilder
The guilder was the currency of British Guiana between 1796 and 1839. The Guianan guilder replaced the Dutch guilder at par after the colonies were captured by the British from the Dutch; the guilder was subdivided into 20 Stuivers, in English stivers. Brazilian pecas, known locally as joes, circulated at a value of 22 guilders; the exchange rate to the British pound was fixed at 1 pound = 12 guilders. In 1836, the guilder was reduced in value to 16 pence and, in 1839, the British pound and British Guiana dollar replaced the guilder as the currency of British Guiana, at the rates of £1 = 15 guilders and $1 = 3 1⁄8 guilders; the first issue of coins from 1798 and 1799 were overstamps on Brazilian pecas. These were followed in 1808 by an issue which consisted of holed Spanish dollars, worth 3 guilders, the plugs, worth 3 bits. In 1809, regular coins were issued for Essequibo and Demerara in denominations of 1⁄4, 1⁄2, 1, 2 and 3 guilders, followed in 1813 by 1⁄2 and 1 stiver coins and 1⁄8 guilder coins from 1832.
1836 saw the introduction of a new series of coins denominated in guilders. This year saw the first production of fourpenny coins by the British Royal Mint for use in British Guiana which did not bear any indication of where the coins were to circulate. Twopenny coins were issued in the same way from 1838. In the 1830s, the colonies issued paper money denominated in guilders. There were notes of 2, 3 and 10 joes, it wasn’t until 1916 that the Government of British Guiana begin issuing dollar-denominated banknotes. Banknotes produced for British Guiana ceased in 1942, were replaced by British West Indies dollars in 1951. In 1955, the British West Indies dollar was decimalized and issued in the name of the British Caribbean Territories, Eastern Group. In 1965, the East Caribbean dollar replaced the British West Indies dollar and circulated in British Guiana for a year until, following independence in 1966, the Guyanese dollar was introduced, replacing the East Caribbean dollar at par
Guilder is the English translation of the Dutch and German gulden shortened from Middle High German guldin pfenninc "gold penny". This was the term that became current in the southern and western parts of the Holy Roman Empire for the Fiorino d'oro. Hence, the name has been interchangeable with florin; the term gulden was used in the Holy Roman Empire during the 14th to 16th centuries in generic reference to gold coins. Currency became more standardized with the imperial reform of 1559. In the early modern period, the value of a gulden was expressed in standardized form, in some instances, silver coins were minted designed to have the value corresponding to one gulden; the Rhenish gulden was issued by Trier and Mainz in the 14th and 15th centuries. Basel minted its own Apfelgulden between 1429 and 1509. Bern and Solothurn followed in the 1480s, Fribourg in 1509 and Zürich in 1510, other towns in the 17th century, resulting in a fragmented system of local currencies in the early modern Switzerland.
With standardized currencies in the early modern period, gulden or guilder became a term for various early modern and modern currencies, detached from actual gold coins, in the 17th and 18th centuries. The Netherlands Indies gulden was introduced in 1602, at the start of the United East Indies Company; the Dutch guilder originated in 1680 as a 10.61 g silver coin with a silver purity of 91.0%, minted by the States of Holland and West Friesland. The British Guianan guilder was in use in British Guiana, 1796 to 1839. In 1753, Bavaria and Austria-Hungary agreed to use the same conventions; the result was the Austro-Hungarian gulden, the Bavarian gulden. A Danzig gulden was in use 1923 to 1939; the Dutch guilder remained the national currency of the Netherlands until it was replaced by the euro on 1 January 2002. The Netherlands Antillean guilder is the only guilder in use, which after the dissolution of the Netherlands Antilles remained the currency of the new countries Curaçao and Sint Maarten and the Caribbean Netherlands.
Surinamese guilder Netherlands Indies gulden Netherlands New Guinean guldenThe Caribbean guilder is a proposed currency for Curaçao and Sint Maarten. Other coin names that are derived from the gold of which they were once made: Öre, øre Złoty Hungarian forint
Central Bank of Suriname
The Central Bank of Suriname is Suriname’s highest monetary authority and the country’s governing body in monetary and economic affairs. The Central Bank’s tasks were legislated in the Bank Act of 1956. Like other central banks, it is the principal monetary authority of the country. Other tasks include the promotion of the value and stability of the currency of Suriname, the provision of money circulation, the safeguarding of private banking and credit union activities, together with balanced socio-economic development; the Central Bank is headed by a Governor and divided into three directorates: Banking Operations and Economic Affairs and Supervision. After the start of Suriname’s political self-government from the Netherlands in 1954, changes were instigated to the country’s monetary system; until 1957, De Surinaamsche Bank, which at that time was a subsidiary of the Dutch Nederlandsche Handel-Maatschappij and the largest commercial bank in Suriname, acted as default issuer of currency. Surinamese dollar Economy of the Caribbean Economy of South America Economy of the Netherlands Antilles Netherlands Antillean gulden De Nederlandsche Bank Central Bank of Aruba Economy of Curaçao Dutch Caribbean Securities Exchange Central banks and currencies of the Caribbean Official site: Central Bank of Suriname
The forint is the currency of Hungary. It was divided into 100 fillér, but fillér coins are no longer in circulation; the introduction of the forint on 1 August 1946 was a crucial step in the post-World War II stabilisation of the Hungarian economy, the currency remained stable until the 1980s. Transition to a market economy in the early 1990s adversely affected the value of the forint. Since 2001, inflation is in single digits, the forint has been declared convertible; as a member of the European Union, the long-term aim of the Hungarian government may be to replace the forint with the euro, but that does not appear to be until some time during the 2020s. The forint's name comes from the city of Florence, where gold coins called fiorino d'oro were minted from 1252. In Hungary, florentinus a gold-based currency, was used from 1325 under Charles Robert and several other countries followed its example. Between 1868 and 1892 the forint was the name used in Hungarian for the currency of the Austro-Hungarian Empire, known in German as the gulden or florin.
It was subdivided into 100 krajczár. The forint was reintroduced on 1 August 1946, after the pengő was rendered worthless by massive hyperinflation in 1945–46: the highest recorded; the process was managed by the Hungarian Communist Party. The forint's success was exploited for political gains, contributing to the Communists' takeover of complete power in 1948–49; the forint replaced the pengő at the rate of 1 forint = 4×1029 pengő—dropping 29 zeroes from the old currency. In fact, this was an imaginary exchange rate. With the highest value note being 100 million B. pengő, the total amount of pengő in circulation had a value of less than 0.1 fillér. Of more significance was the exchange rate to the adópengő of 1 forint = 200 million adópengő; the forint was subdivided into 100 fillér, although fillér coins have been rendered useless by inflation and have not been in circulation since 1999. The Hungarian abbreviation for forint is Ft, written after the number with a space between; the name fillér, the subdivision of all Hungarian currencies since 1925, comes from the German word Heller.
The abbreviation for the fillér was f written after the number with a space in between. In 1946, a USD was worth 11.7 forints. After its 1946 introduction, the forint remained stable for the following two decades, but started to lose its purchasing power as the state-socialist economic system lost its competitiveness during the 1970s and 1980s. After the democratic change of 1989–90, the forint saw yearly inflation figures of about 35% for three years, but significant market economy reforms helped stabilize it. In 1946, coins were introduced in denominations of 10, 20 fillérs and 1, 2, 5 forints; the silver 5 forint coin was reissued only in the next year. 5 and 50 fillérs coins were issued in 1948. In 1967, a 5 forint coin was reintroduced, followed by a 10 forint in 1971 and 20 forint in 1982. In 1992, a new series of coins was introduced in denominations of 1, 2, 5, 10, 20, 50, 100 and 200 forint. Production of the 2 and 5 fillér coins ceased in 1992, with all fillér coins withdrawn from circulation by 1999.
From 1996, a bicolor 100 forint coin was minted to replace the 1992 version, since the latter was considered too big and ugly, could be mistaken for the 20 forint coin. Silver 200 forint coins were withdrawn in 1998. For cash purchases, the total price is now rounded to the nearest 5 forint. A new 200 forint coin made of base metal alloy was introduced in place of the 200 forint bank note on 15 June 2009. In 1946, 10- and 100-forint notes were introduced by the Magyar Nemzeti Bank. A new series of higher quality banknotes were introduced in 1947 and 1948. 50-forint notes were added in 1953, 500-forint notes were introduced in 1970, followed by 1,000 forints in 1983, 5,000 forints in 1991. A redesigned new series of banknotes in denominations of 200, 500, 1,000, 2,000, 5,000, 10,000 and 20,000 forints was introduced between 1997 and 2001; each banknote depicts a famous Hungarian leader or politician on the obverse and a place or event related to him on the reverse. All of the banknotes are watermarked, contain an embedded vertical security strip and are suitable for visually impaired people.
The 1,000 forints and higher denominations are protected by an interwoven holographic security strip. The notes share the common size of 154 mm × 70 mm; the banknotes are printed by the Hungarian Banknote Printing Corp. in Budapest on paper manufactured by the Diósgyőr Papermill in Miskolc. Commemorative banknotes have been issued recently: 1,000- and 2,000-forint notes to commemorate the millennium and a 500-forint note to commemorate the 50th anniversary of the 1956 revolution. Forgery of forint banknotes is not significant. However, forged 20,000-forint notes printed on the paper of 2,000-forint notes after dissolving the original ink might come up and are not easy to recognize. Another denomination preferred by counterfeiters was the 1,000-forint note until improved security features were added in 2006. Banknotes that were in c
Suriname known as the Republic of Suriname, is a country on the northeastern Atlantic coast of South America. It is bordered by the Atlantic Ocean to the north, French Guiana to the east, Guyana to the west and Brazil to the south. At just under 165,000 square kilometers, it is the smallest sovereign state in South America. Suriname has a population of 558,368, most of whom live on the country's north coast, in and around the capital and largest city, Paramaribo. Suriname was long inhabited by various indigenous people before being invaded and contested by European powers from the 16th century coming under Dutch rule in the late 17th century; as the chief sugar colony during the Dutch colonial period, it was a plantation economy dependent on African slaves and, following the abolition of slavery in 1863, indentured servants from Asia. Suriname was ruled by the Dutch-chartered company Sociëteit van Suriname between 1683 and 1795. In 1954, Suriname became one of the constituent countries of the Kingdom of the Netherlands.
On 25 November 1975, the country of Suriname left the Kingdom of the Netherlands to become an independent state, nonetheless maintaining close economic and cultural ties to its former colonizer. Suriname is considered to be a culturally Caribbean country, is a member of the Caribbean Community. While Dutch is the official language of government, business and education, Sranan Tongo, an English-based creole language, is a used lingua franca. Suriname is the only sovereign nation outside Europe where Dutch is spoken by a majority of the population; as a legacy of colonization, the people of Suriname are among the most diverse in the world, spanning a multitude of ethnic and linguistic groups. The name Suriname may derive from an indigenous people called Surinen, who inhabited the area at the time of European contact. British settlers, who founded the first European colony at Marshall's Creek along the Suriname River, spelled the name as "Surinam"; when the territory was taken over by the Dutch, it became part of a group of colonies known as Dutch Guiana.
The official spelling of the country's English name was changed from "Surinam" to "Suriname" in January 1978, but "Surinam" can still be found in English. A notable example is Surinam Airways; the older English name is reflected in the English pronunciation. In Dutch, the official language of Suriname, the pronunciation is, with the main stress on the third syllable and a schwa terminal vowel. Indigenous settlement of Suriname dates back to 3,000 BC; the largest tribes were a nomadic coastal tribe that lived from hunting and fishing. They were the first inhabitants in the area; the Carib settled in the area and conquered the Arawak by using their superior sailing ships. They settled in Galibi at the mouth of the Marowijne River. While the larger Arawak and Carib tribes lived along the coast and savanna, smaller groups of indigenous people lived in the inland rainforest, such as the Akurio, Trió, Wayana. Beginning in the 16th century, French and English explorers visited the area. A century Dutch and English settlers established plantation colonies along the many rivers in the fertile Guiana plains.
The earliest documented colony in Guiana was an English settlement named Marshall's Creek along the Suriname River. After that there was another short-lived English colony called Willoughbyland that lasted from 1650 to 1674. Disputes arose between the English for control of this territory. In 1667, during negotiations leading to the Treaty of Breda, the Dutch decided to keep the nascent plantation colony of Suriname they had gained from the English; the English were able to keep New Amsterdam, the main city of the former colony of New Netherland in North America on the mid-Atlantic coast. A cultural and economic hub in those days, they renamed it after the Duke of York: New York City. In 1683, the Society of Suriname was founded by the city of Amsterdam, the Van Aerssen van Sommelsdijck family, the Dutch West India Company; the society was chartered to defend the colony. The planters of the colony relied on African slaves to cultivate and process the commodity crops of coffee, sugar cane and cotton plantations along the rivers.
Planters' treatment of the slaves was notoriously bad—historian C. R. Boxer wrote that "man's inhumanity to man just about reached its limits in Surinam"—and many slaves escaped the plantations. With the help of the native South Americans living in the adjoining rain forests, these runaway slaves established a new and unique culture in the interior, successful in its own right, they were known collectively in English as Maroons, in French as Nèg'Marrons, in Dutch as Marrons. The Maroons developed several independent tribes through a process of ethnogenesis, as they were made up of slaves from different African ethnicities; these tribes include the Saramaka, Ndyuka or Aukan, Aluku or Boni, Matawai. The Maroons raided plantations to recruit new members from the slaves and capture women, as well as to acquire weapons and supplies, they sometimes killed their families in the raids. The colonists mounted armed campaigns against the Maroons, who escaped through the rain forest, which they knew much better than did the colonis
The złoty, the masculine form of the Polish adjective'golden', is the currency of Poland. The modern złoty is subdivided into 100 groszy; the recognised English form of the word is zloty. The currency sign, zł, is composed of the Polish lower-case letters z and ł; as a result of inflation in the early 1990s, the currency underwent redenomination. Thus, on 1 January 1995, 10,000 old złotych became one new złoty. Since the currency has been stable, with an exchange rate fluctuating between 3 and 4 złoty for a United States dollar; the predecessors of the złoty were the kopa. The grzywna was a currency, equivalent to 210 g of silver, in the 11th century, it was in use until sometime in the 14th century. At the same time, first as a complement to the grzywna, as the main currency, came the grosz and the kopa. Poland made the grosz as an imitation of the Prague groschen. A grzywna was worth 48 groszy; the złoty is a traditional Polish currency unit dating back to the late Middle Ages. In the 14th and 15th centuries, the name was used for all kinds of foreign gold coins used in Poland, most notably Venetian and Hungarian ducats.
One złoty at the beginning of their introduction cost 12–14 groszy. In 1496 the Sejm approved the creation of a national currency, the złoty, its value was set at 30 groszy, a coin minted since 1347 and modelled on the Prague groschen, a ducat, whose value was 1 1⁄2 złoty; the 1:30 proportion stayed, but the grosz became cheaper and cheaper, because the proportion of silver in the coin alloy diminished over time. In the beginning of the 16th century, 1 złoty was worth 32 groszy; the name złoty was used for a number of different coins, including the 30-groszy coin called the polski złoty, the czerwony złoty and the złoty reński, which were in circulation at the time. However, the value of the Polish złoty dropped over time relative to these foreign coins, it became a silver coin, with the foreign ducats circulating at 5 złotych; the matters were complicated by the intricate system of coins, with denominations as low as 1⁄3 groszy and as high as 12,960 groszy fit into one coin. There were no usual decimal denominations we use today: the system used 4, 6, 8, 9 and 18 groszy, which are now most uncommon.
Moreover, there was no central mint, apart from Warsaw mint, there were the Gdańsk, Elbląg and Kurland separate mints which did not produce the same denomination coins with the same materials. For example, the szeląg had 1.3g of copper while minted in either Kraków or Warsaw, but the local Gdańsk and Elbląg mints made it using only 0.63g of copper. This facilitated forgeries and wreaked havoc in the Polish monetary system Following the monetary reform carried out by King Stanisław II Augustus which aimed to simplify the system, the złoty became Poland's official currency and the exchange rate of 1 złoty to 30 copper groszy was confirmed; the king established the system, based on the Cologne mark. Each mark was divided into 10 Conventionsthaler of the Holy Roman Empire, 1 thaler was worth 8 złotych; the system was in place until 1787. Two devaluations of the currency occurred in the years before the final partition of Poland. After the third partition of Poland, the name złoty existed only in Russian lands.
Prussia had introduced the mark instead. On 8 June 1794 the decision of the Polish Supreme Council offered to make the new banknotes as well as the coins. 13 August 1794 was the date. At the day there was more than 6.65 million złotych given out by the rebels. There were banknotes with the denomination of 5, 10, 25, 50, 100, 500 and 1,000 złotych, as well as 5 and 10 groszy, 1 and 4 złoty coins However, it did not last for long: on 8 November, Warsaw was held by Russia. Russians declared them invalid. Russian coins and banknotes replaced the Kościuszko banknotes, but the division on złote and grosze stayed; this can be explained by the fact the Polish monetary system in the deep crisis, was better than the Russian stable one, as Poland used the silver standard for coins. That is why Mikhail Speransky offered to come to silver monometalism in his work План финансов in Russia, he argued that: "... at the same time... forbid any other account in Livonia and Poland, this is the only way to unify the financial system of these provinces in the Russian system, as well they will stop, at least, the damage that pulls back our finances for so long."
The złoty remained in circulation after the Partitions of Poland and the Duchy of Warsaw issued coins denominated in grosz, złoty and talar, worth 6 złoty. Talar banknotes were issued. In 1813, while Zamość was under siege, Zam