In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply. The other part of a nation's money supply consists of bank deposits (sometimes called deposit money), ownership of which can be transferred by means of cheques, debit cards, or other forms of money transfer. Deposit money and currency are money in the sense that both are acceptable as a means of payment.

Money in the form of currency has predominated throughout most of history. Usually (gold or silver) coins of intrinsic value (commodity money) have been the norm. However, nearly all contemporary money systems are based on fiat money – modern currency has value only by government order (fiat). Usually, the government declares the fiat currency (typically notes and coins issued by the central bank) to be legal tender, making it unlawful to not accept the fiat currency as a means of repayment for all debts, public and private.

== History ==

Early currency

Currency evolved from two basic innovations, both of which had occurred by 2000 BC. Originally money was a form of receipt, representing grain stored in temple granaries in Sumer in ancient Mesopotamia, then Ancient Egypt.

This first stage of currency, where metals were used to represent stored value, and symbols to represent commodities, formed the basis of trade in the Fertile Crescent for over 1500 years. However, the collapse of the Near Eastern trading system pointed to a flaw: in an era where there was no place that was safe to store value, the value of a circulating medium could only be as sound as the forces that defended that store. Trade could only reach as far as the credibility of that military. By the late Bronze Age, however, a series of international treaties had established safe passage for merchants around the Eastern Mediterranean, spreading from Minoan Crete and Mycenae in the northwest to Elam and Bahrain in the southeast. Although it is not known what functioned as a currency to facilitate these exchanges, it is thought that ox-hide shaped ingots of copper, produced in Cyprus may have functioned as a currency. It is thought that the increase in piracy and raiding associated with the Bronze Age collapse, possibly produced by the Peoples of the Sea, brought this trading system to an end. It was only with the recovery of Phoenician trade in the ninth and tenth centuries BC that saw a return to prosperity, and the appearance of real coinage, possibly first in Anatolia with Croesus of Lydia and subsequently with the Greeks and Persians. In Africa many forms of value store have been used including beads, ingots, ivory, various forms of weapons, livestock, the manilla currency, ochre and other earth oxides, and so on. The manilla rings of West Africa were one of the currencies used from the 15th century onwards to buy and sell slaves. African currency is still notable for its variety, and in many places various forms of barter still apply.

Coinage

These factors led to the shift of the store of value being the metal itself: at first silver, then both silver and gold. Metals were mined, weighed, and stamped into coins. This was to assure the individual taking the coin that he was getting a certain known weight of precious metal. Coins could be counterfeited, but they also created a new unit of account, which helped lead to banking. Archimedes' principle provided the next link: coins could now be easily tested for their fine weight of metal, and thus the value of a coin could be determined, even if it had been shaved, debased or otherwise tampered with (see Numismatics).

In most major economies using coinage, copper, silver and gold formed three tiers of coins. Gold coins were used for large purchases, payment of the military and backing of state activities. Silver coins were used for midsized transactions, and as a unit of account for taxes, dues, contracts and fealty, while copper coins represented the coinage of common transaction. This system had been used in ancient India since the time of the Mahajanapadas. In Europe, this system worked through the medieval period because there was virtually no new gold, silver or copper introduced through mining or conquest. Thus the overall ratios of the three coinages remained roughly equivalent.

Paper money

In premodern China, the need for credit and for circulating a medium that was less of a burden than exchanging thousands of copper coins led to the introduction of paper money, commonly known today as banknotes. This economic phenomenon was a slow and gradual process that took place from the late Tang Dynasty (618–907) into the Song Dynasty (960–1279). It began as a means for merchants to exchange heavy coinage for receipts of deposit issued as promissory notes from shops of wholesalers, notes that were valid for temporary use in a small regional territory. In the 10th century, the Song Dynasty government began circulating these notes amongst the traders in their monopolized salt industry. The Song government granted several shops the sole right to issue banknotes, and in the early 12th century the government finally took over these shops to produce state-issued currency. Yet the banknotes issued were still regionally valid and temporary; it was not until the mid 13th century that a standard and uniform government issue of paper money was made into an acceptable nationwide currency. The already widespread methods of woodblock printing and then Bi Sheng's movable type printing by the 11th century was the impetus for the massive production of paper money in premodern China.

At around the same time in the medieval Islamic world, a vigorous monetary economy was created during the 7th–12th centuries on the basis of the expanding levels of circulation of a stable high-value currency (the dinar). Innovations introduced by Muslim economists, traders and merchants include the earliest uses of credit, cheques, promissory notes, savings accounts, transactional accounts, loaning, trusts, exchange rates, the transfer of credit and debt, and banking institutions for loans and deposits.

In Europe, paper money was first introduced in Sweden in 1661. Sweden was rich in copper, thus, because of copper's low value, extraordinarily big coins (often weighing several kilograms) had to be made.

The advantages of paper currency were numerous: it reduced transport of gold and silver, and thus lowered the risks; it made loaning gold or silver at interest easier, since the specie (gold or silver) never left the possession of the lender until someone else redeemed the note; and it allowed for a division of currency into credit and specie backed forms. It enabled the sale of stock in joint stock companies, and the redemption of those shares in paper.

However, these advantages held within them disadvantages. First, since a note has no intrinsic value, there was nothing to stop issuing authorities from printing more of it than they had specie to back it with. Second, because it increased the money supply, it increased inflationary pressures, a fact observed by David Hume in the 18th century. The result is that paper money would often lead to an inflationary bubble, which could collapse if people began demanding hard money, causing the demand for paper notes to fall to zero. The printing of paper money was also associated with wars, and financing of wars, and therefore regarded as part of maintaining a standing army. For these reasons, paper currency was held in suspicion and hostility in Europe and America. It was also addictive, since the speculative profits of trade and capital creation were quite large. Major nations established mints to print money and mint coins, and branches of their treasury to collect taxes and hold gold and silver stock.

At this time both silver and gold were considered legal tender, and accepted by governments for taxes. However, the instability in the ratio between the two grew over the course of the 19th century, with the increase both in supply of these metals, particularly silver, and of trade. This is called bimetallism and the attempt to create a bimetallic standard where both gold and silver backed currency remained in circulation occupied the efforts of inflationists. Governments at this point could use currency as an instrument of policy, printing paper currency such as the United States Greenback, to pay for military expenditures. They could also set the terms at which they would redeem notes for specie, by limiting the amount of purchase, or the minimum amount that could be redeemed.

By 1900, most of the industrializing nations were on some form of gold standard, with paper notes and silver coins constituting the circulating medium. Private banks and governments across the world followed Gresham's Law: keeping gold and silver paid, but paying out in notes. This did not happen all around the world at the same time, but occurred sporadically, generally in times of war or financial crisis, beginning in the early part of the 20th century and continuing across the world until the late 20th century, when the regime of floating fiat currencies came into force. One of the last countries to break away from the gold standard was the United States in 1971.

No country anywhere in the world today has an enforceable gold standard or silver standard currency system.

Banknote era

A banknote (more commonly known as a bill in the United States and Canada) is a type of currency, and commonly used as legal tender in many jurisdictions. With coins, banknotes make up the cash form of all money. Mostly paper, Australia's Commonwealth Scientific and Industrial Research Organisation developed the world's first polymer currency in the 1980s that went into circulation on the nation's bicentenary in 1988. Now used in some 22 countries (over 40 if counting commemorative issues), polymer currency dramatically improves the life span of banknotes and prevents counterfeiting.

Modern currencies

To find out which currency is used in a particular country, check list of circulating currencies.

Currently, the International Organization for Standardization has introduced a three-letter system of codes (ISO 4217) to define currency (as opposed to simple names or currency signs), in order to remove the confusion that there are dozens of currencies called the dollar and many called the franc. Even the pound is used in nearly a dozen different countries, all, of course, with wildly differing values. In general, the three-letter code uses the ISO 3166-1 country code for the first two letters and the first letter of the name of the currency (D for dollar, for instance) as the third letter. United States currency, for instance is globally referred to as USD.

The International Monetary Fund uses a variant system when referring to national currencies.

Control and production

In most cases, each private central bank has monopoly control over the supply and production of its own currency. To facilitate trade between these currency zones, there are different exchange rates, which are the prices at which currencies (and the goods and services of individual currency zones) can be exchanged against each other. Currencies can be classified as either floating currencies or fixed currencies based on their exchange rate regime.

In cases where a country does have control of its own currency, that control is exercised either by a central bank or by a Ministry of Finance. In either case, the institution that has control of monetary policy is referred to as the monetary authority. Monetary authorities have varying degrees of autonomy from the governments that create them. In the United States, the Federal Reserve System operates without direct oversight by the legislative or executive branches. A monetary authority is created and supported by its sponsoring government, so independence can be reduced by the legislative or executive authority that creates it.

Several countries can use the same name for their own distinct currencies (for example,, ''dollar'' in Canada and the United States). By contrast, several countries can also use the same currency (for example,, the euro), or one country can declare the currency of another country to be legal tender. For example, Panama and El Salvador have declared U.S. currency to be legal tender, and from 1791–1857, Spanish silver coins were legal tender in the United States. At various times countries have either re-stamped foreign coins, or used currency board issuing one note of currency for each note of a foreign government held, as Ecuador currently does.

Each currency typically has a main currency unit (the dollar, for example, or the euro) and a fractional currency, often valued at of the main currency: 100 cents = 1 dollar, 100 centimes = 1 franc, 100 pence = 1 pound, although units of or are also common. Some currencies do not have any smaller units at all, such as the Icelandic króna.

Mauritania and Madagascar are the only remaining countries that do not use the decimal system; instead, the Mauritanian ouguiya is divided into 5 khoums, while the Malagasy ariary is divided into 5 iraimbilanja. In these countries, words like ''dollar'' or ''pound'' "were simply names for given weights of gold." Due to inflation khoums and iraimbilanja have in practice fallen into disuse. (See non-decimal currencies for other historic currencies with non-decimal divisions).

Currency Convertibility

Convertibility of a currency determines the ability of an individual, corporate or government to convert its local currency to another currency or vice versa with or without central bank/government intervention. Based on the above restrictions or free and readily conversion features currencies are classified as:

Fully Convertible - When there are no restrictions or limitations on the amount of currency that can be traded on the international market, and the government does not artificially impose a fixed value or minimum value on the currency in international trade. The US dollar is an example of a fully convertible currency and for this reason, US dollars are one of the major currencies traded in the FOREX market.

Partially Convertible - Central Banks control over international investments flowing in and out of the country, while most domestic trade transactions are handled without any special requirements, there are significant restrictions on international investing and special approval is often required in order to convert into other currencies. Indian Rupee is an example for partially convertible currency.

Nonconvertible - Neither participate in the international FOREX market nor allow conversion of these currencies by individuals or companies. As a result, these currencies are known as blocked currencies. e.g.: North Korean Won and the Cuban Peso

Local currencies

In economics, a local currency is a currency not backed by a national government, and intended to trade only in a small area. Advocates such as Jane Jacobs argue that this enables an economically depressed region to pull itself up, by giving the people living there a medium of exchange that they can use to exchange services and locally produced goods (In a broader sense, this is the original purpose of all money.) Opponents of this concept argue that local currency creates a barrier which can interfere with economies of scale and comparative advantage, and that in some cases they can serve as a means of tax evasion.

Local currencies can also come into being when there is economic turmoil involving the national currency. An example of this is the Argentinian economic crisis of 2002 in which IOUs issued by local governments quickly took on some of the characteristics of local currencies.

Proposed currencies

Amero: American currency union (hypothetical)

Asian Currency Unit: proposed for the ASEAN +3

Bancor: an international currency proposed by John Maynard Keynes in the negotiations that established the Bretton Woods system (never implemented)

Currency for Caribbean area—CARICOM states except the Bahamas.

East African shilling: East African Community (Burundi, Kenya, Rwanda, Tanzania, Uganda)

Eco: West African Monetary Zone (Gambia, Ghana, Guinea, Nigeria, Sierra Leone, possibly Liberia)

Khaleeji (currency): Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates)

Metica: Mozambique (never implemented)

Perun: Montenegro (never implemented)

Gaucho (currency): Currency for bilateral commerce (never implemented)

Toman: The new currency that is proposed by the Central Bank of Iran which would replace the Iranian Rial by slashing four zeros off the country's national currency.

Caribbean guilder, the new currency for Curaçao and Sint Maarten for 2012 replacing the Netherlands Antillean guilder.

See also

Related concepts

Counterfeit money

Currency transaction tax

Exchange rate

Foreign exchange

Foreign exchange reserves

History of money

Mutilated currency

Optimum currency area

Slang terms for money

World currency

Accounting units

Currency pair

Currency strength

Currency sign

European Currency Unit

Fictional currency

Franc Poincaré

Krugerrand

Local currencies

Petrocurrency

Special Drawing Rights

Lists

List of circulating currencies

List of currencies

List of fictional currencies

List of historical currencies

List of historical exchange rates

List of international trade topics

List of motifs on banknotes

References

External links

Category:Foreign exchange market

ar:عملة an:Divisa arc:ܙܘܙܐ ast:Divisa az:Valyuta be:Валюта be-x-old:Валюта bar:Wearung bs:Valuta br:Moneiz bg:Валута ca:Moneda cs:Měna cy:Arian cyfred da:Valuta de:Währung et:Valuuta el:Νόμισμα (Νομισματική μονάδα) es:Divisa eo:Valuto ext:Monea eu:Dibisa fa:یکای پول hif:Mudra fo:Gjaldoyra fr:Devise (monnaie) fy:Munt ga:Airgeadra gl:Divisa ko:통화 hi:मुद्रा (करेंसी) hr:Valuta id:Mata uang ia:Numerario os:Валютæ is:Gjaldmiðill it:Valuta he:מטבע חוץ jv:Valuta kn:ನಗದು ka:ვალუტა kk:Валюта krc:Валюта lo:ເງິນຕາ la:Moneta (pecunia) lv:Valūta lt:Valiuta hu:Valuta (fizetőeszköz) mk:Валута ml:നാണയം ms:Mata wang mn:Валют nl:Valuta new:दां ja:通貨 pih:Kurencii no:Valuta nn:Valuta nrm:Mounaie oc:Divisa (moneda) uz:Valyuta pnb:کرنسی ps:ارز nds:Geldsoort pl:Waluta pt:Moeda ro:Valută rm:Valuta qu:Kañina rue:Мена ru:Валюта sah:Валюта se:Ruhta sq:Deviza simple:Currency sk:Mena cu:Платьно срѣдьство sl:Valuta ckb:دراو sr:Валута sh:Valuta su:Mata uang fi:Valuutta sv:Valuta tl:Pananalapi (yunit ng palitan) ta:நாணயம் th:สกุลเงิน tr:Döviz uk:Валюта ur:فلس vec:Vałuta vi:Tiền tệ wa:Manoye war:Pananalapi yi:וואלוטע yo:Owóníná bat-smg:Valiota zh:通貨

name	Imran Hosein
residence	Trinidad
birth date	1942
birth place	Trinidad and Tobago
occupation	Islamic scholarAuthorPhilosopher
school tradition	Ahl as-Sunnah wa’l-Jamā‘h
title	Shaikh Maulana Aalim
religion	Sunni Islam
website	http://www.imranhosein.org
footnotes	}}

Imran Nazar Hosein is a leading International Islamic Philosopher, Scholar and author, specialising in world politics, economy, eschatology , modern socio-economic/political issues and expert on international affairs. He is best-selling author of ''Jerusalem in the Qur'an''.

Biography

Imran Nazar Hosein was born on the Caribbean island of Trinidad in 1942 to parents whose ancestors had migrated from India as indentured labourers. He studied Islam, Philosophy and International Relations at several universities and institutions of higher learning. Among them are al-Azhar University in Cairo, Egypt, the Institute of International Relations of the University of the West Indies in Trinidad, the University of Karachi in Pakistan, the Aleemiyah Institute of Islamic Studies in Karachi, Pakistan, and the Graduate Institute of International and Development Studies in Geneva, Switzerland.

He worked for several years as a Foreign Service Officer in the Ministry of Foreign Affairs of the Government of Trinidad and Tobago.

He lived in New York for ten years during which time he served as the Director of Islamic Studies for the Joint Committee of Muslim Organizations of Greater New York. He lectured on Islam in several American and Canadian universities, colleges, churches, synagogues, prisons, community halls, etc. He also participated in many inter-faith dialogues with Christian and Jewish scholars while representing Islam in USA. He was the Imam, for sometime, at Masjid Dar al-Qur'an in Long Island, New York. He also led the weekly Jumu'ah prayers and delivered the sermon at the headquarters of the United Nations Organization in Manhattan, New York, once a month for ten years continuously.

He is a former Principal of the Aleemiyah Institute of Islamic Studies in Karachi, Pakistan, Director of Research of the World Muslim Congress in Karachi, Pakistan, Director of the Islamic Institute for Education and Research in Miami, Florida, and Director of D'awah for Tanzeem-e-Islami of North America.

He has traveled continuously and extensively around the world on Islamic lecture-tours since graduating from the Aleemiyah Institute of Islamic Studies at age 29. And he has also written more than a dozen books on Islam that have invariably been received with public respect. Indeed, ''Jerusalem in the Qur'an - An Islamic View of the Destiny of Jerusalem'' has become a best seller and has been translated and published in several languages.

Prof. Dr. Malik Badri, Dean of the International Institute for Islamic Thought and Civilization in Kuala Lumpur, Malaysia, wrote the Foreword to the book.

Imran's first book, entitled ''Islam and Buddhism in the Modern World'' was written when he was just 29 and still remains the only book on the subject by a Muslim scholar. That book won high praise from such eminent scholars as Vice Chancellor of University of Karachi and renowned historian, Dr. Ishtiaq Husain Quraishi, eminent Pakistani jurist and philosopher, A. K. Brohi, and eminent Muslim sociologist, Dr. Basharat Ali.

Maulana Dr. Fazlur Rahman Ansari, an outstanding scholar of Islam of the modern age, wrote the Foreword to that book.

Imran Hosein's three new books, published in 2007, on 'Surah al-Kahf' of the Qur'an and on the subject of 'Signs of the Last Day in the Modern Age', offer rare insights into interpretation of the Qur'an and the Hadith of Muhammad insofar as they explain the modern age.

Books

'The Gold Dinar and Silver Dirham - Islam and Future of Money'

'Dreams in Islam - A Window to Truth and to the Heart

'A Muslim response to the Attack on America'

'Jerusalem in the Quran'

'The Religion of Abraham and the State of Israel - A View from the Qur'an'

'The Caliphate, the Hejaz and the Saudi-Wahhabi Nation-State'

'One Ameer, One Jamaat - The Organization of a Muslim Community in the Age of Fitan'

'Islam and Buddhism in the Modern World'

'The Prohibition of Riba in the Qur'an and Sunnah'

'The Importance of the Prohibition of Riba in Islam'

'The Strategic Importance of the Fast of Ramadan and Isra & Mi'raj'

'The Qur'anic Method of Curing Alcoholism and Drug Addiction'

'George Bernard Shaw and the Islamic Scholar'

'Surah al-Kahf: Text, Translation and Modern Commentary'

'Surah al-Kahf and the Modern Age'

'Signs of the Last Day in the Modern Age'

'The Islamic Travelogue (Two different travelogues exist)'

'An Islamic View of Gog and Magog in the Modern Age'

External links

Official web site

Imran Hosein audio and video lectures from Halal Tube

Online Books

A complete listing of his books may be found here

'A Muslim response to the Attack on America'

'Jerusalem in the Quran'

'Surah Al Kahf - Arabic text - Translation and Modern Commentary'

'Dreams in Islam'

'The Importance of the Prohibition of Riba in Islam'

'Surah Al-Kahf and the Modern Age'

'An Islamic View of Gog and Magog in the Modern World'

Online Audio

'Audio Lectures'

'Additional Lectures'

Online Video

'Video Lectures'

'Additional Video Lectures'

'Google Video Lectures'

See also

Maulana Abdul Aleem Siddiqi

References

Category:Trinidad and Tobago academics Category:Muslim scholars of Islam Category:Trinidad and Tobago diplomats Category:University of the West Indies alumni Category:University of Karachi alumni Category:Al-Azhar University alumni Category:1942 births Category:Living people Category:Muslim philosophers Category:Islamic studies scholars Category:Muslim reformers Category:Trinidad and Tobago Muslims Category:Trinidad and Tobago expatriates in Pakistan

ar:عمران نزار حسين fa:عمران نظر حسین fr:Imran Nazar Hosein