Misplaced Pages

#281718

110-445: £sd (occasionally written Lsd ), spoken as " pounds, shillings and pence ", is the popular name for the pre-decimal currencies once common throughout Europe. The abbreviation originates from the Latin currency denominations librae , solidi , and denarii . In the United Kingdom , these were referred to as pounds , shillings , and pence ( pence being the plural of penny ). Under this system, there were 12 pence in

220-434: A legal tender and accepted by governments for taxes. However, the instability in the exchange rate between the two grew over the course of the 19th century, with the increases both in the supply of these metals, particularly silver, and in trade. The parallel use of both metals is called bimetallism , and the attempt to create a bimetallic standard where both gold and silver backed currency remained in circulation occupied

330-441: A 1966 single titled "£.s.d." that highlighted the double entendre . The Chemical Defence Experimental Establishment called the first field trial with LSD as a chemical weapon "Moneybags" as a pun. The score of 26 at darts (one dart in each of the top three spaces) was sometimes called "half-a-crown" as late as the 1990s, though this did start to confuse the younger players. 26 is also referred to as "Breakfast", since 2/6 or half

440-501: A commodity under the Commodity Exchange Act . There are also branded currencies, for example 'obligation' based stores of value, such as quasi-regulated BarterCard, Loyalty Points (Credit Cards, Airlines) or Game-Credits (MMO games) that are based on reputation of commercial products. Historically, pseudo-currencies have also included company scrip , a form of wages that could only be exchanged in company stores owned by

550-423: A country has control of its own currency, that control is exercised either by a central bank or by a Ministry of Finance . 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. A monetary authority is created and supported by its sponsoring government, so independence can be reduced by

660-425: A crown was the standard cost for breakfast pre-decimalisation. Currency A currency is a standardization of money in any form, in use or circulation as a medium of exchange , for example banknotes and coins . A more general definition is that a currency is a system of money in common use within a specific environment over time, especially for people in a nation state. Under this definition,

770-445: A currency's value (the economy at large vs. the government's precious metal reserves ). Some currencies function as legal tender in certain jurisdictions , or for specific purposes, such as payment to a government ( taxes ), or government agencies (fees, fines). Others simply get traded for their economic value. The concept of a digital currency has arisen in recent years. Whether government-backed digital notes and coins (such as

880-635: 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 the trading system of oxhide ingots to an end. It was only the recovery of Phoenician trade in the 10th and 9th centuries BC that led to a return to prosperity, and the appearance of real coinage, possibly first in Anatolia with Croesus of Lydia and subsequently with

990-403: A decimal currency system based on the " as " whereby 1 denarius = 10 as . The silver denarius was the common circulation coin, but accounting was in sestercii . Later Roman Emperors undertook multiple coinage reforms, redefining weights and coins' relative values and introducing new coins and new accounting systems for them. Since most reforms were not even completed before the next one began,

1100-520: A decimal system. Although the names originated from popular coins in the classical Roman Empire , their definitions and the ratios between them were introduced and imposed across Western Europe by the Emperor Charlemagne . King Offa of Mercia adopted the Frankish silver standard of librae, solidi and denarii into Britain in the late 8th century. The £sd system was the standard across much of

1210-407: A divergence of the real value of a coin and its nominal value. This followed Gresham's law which argues that "bad money displaces good money". Pfennigs became ever lighter as the heavier coins were melted down for their greater silver content and as mints issued lighter coins to increase their profits. The fiction that 240 pfennigs made a pfund (pound of silver) was doggedly maintained into

SECTION 10

#1732905056282

1320-564: A few silver deposits in Europe north of the Alps, Charlemagne introduced a pure silver currency. The basic weight of the coin became a pfund ("pound"), from which 240 pfennigs ("pennies") could be struck. This Carolingian pound weighed approximately 408 grammes . The pfennig and its corresponding entity in other countries was the most important coin of the Middle Ages . The pfund or pound

1430-435: A freely convertible currency, domestic firms will have to compete fiercely with their foreign counterparts. The development of competition among them will affect the implementation effect of currency convertibility. In addition, microeconomics is a prerequisite for macroeconomic conditions. Since currency convertibility is the cross-border flow of goods and capital, it will have an impact on the macro economy. This requires that

1540-463: A local currency. Carolingian monetary system The currency reform carried out by Emperor Charlemagne around 793/794 was of crucial importance to the medieval monetary systems in what became the Holy Roman Empire and more generally affected European coinage for many centuries. Because gold could almost only be obtained through long-distance trade, while conversely there were quite

1650-574: A modified solidus with a value equal to 72 solidi or one pound ( libra ) of pure gold, and a new accounting for it as 1 solidus = 2 scripula = 3.33 tremisses = 4 semisses = 18 miliarenses = 24 siliquae . Numerous other introductions of new coins and changes in their value meant that in the last days of the empire and the following centuries (the Migration Period ) there was a confusion of different coins and associated weight and measure systems in circulation. Charlemagne's father, Pippin

1760-444: 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 the metal, and thus the value of a coin could be determined, even if it had been shaved, debased or otherwise tampered with (see Numismatics ). Most major economies using coinage had several tiers of coins of different values, made of copper, silver, and gold. Gold coins were

1870-427: A particular unit of account for payments to government agencies. Other definitions of the term currency appear in the respective synonymous articles: banknote , coin , and money . This article uses the definition which focuses on the currency systems of countries. One can classify currencies into three monetary systems : fiat money , commodity money , and representative money , depending on what guarantees

1980-596: A pejorative term.). To facilitate larger transactions, gold coins began to be minted in western Europe around the same time – starting in the Italian republics in the mid-13th century (" florins " and " ducats "), and in other kingdoms in the 14th century (e.g. " ecu d'or " in France, the " noble " in England). Gold coins typically represented larger nominal sums, but they also introduced a bimetallic system of currency which depended on

2090-574: A penny) were represented by the appropriate symbol ( 1 ⁄ 4 for farthing, 1 ⁄ 2 for halfpenny, or 3 ⁄ 4 for three farthings) after the whole pence. A convention frequently used in retail pricing was to list prices over one pound all in shillings, rather than in pounds and shillings; for example, £4-18-0 would be written as 98/– (£4.90 in decimal currency). This is still seen in shilling categories of Scottish beer , such as 90/– beer. Sometimes, prices of luxury goods and furniture were expressed by merchants in guineas , although

2200-507: A shilling and 20 shillings, or 240 pence, in a pound. Although the standard ledger accounting system recorded only pounds, shillings and pence, actual minted coins could represent one, several or fractions of these units. The penny was subdivided into 4 farthings until 31 December 1960, when they ceased to be legal tender in the UK, and until 31 July 1969 there was also a halfpenny ("HAYp'ny", /ˈheɪpni/) in circulation. The perceived advantage of such

2310-555: A significant impact on the generation of exchange rates. Currency convertibility is closely linked to economic development and finance. There are strict conditions for countries to achieve currency convertibility, which is a good way for countries to improve their economies. The currencies of some countries or regions in the world are freely convertible, such as the US dollar, Australian dollar and Japanese yen. The requirements for currency convertibility can be roughly divided into four parts: With

SECTION 20

#1732905056282

2420-428: A silver standard, it was a monometallic system and, as long as the silver content of the denarius was maintained constantly, any amount of money could be worked out by counting coins instead of weighing silver or gold. But the gradual exhaustion of European silver mines in the 11th century led to a shortage of silver and made it difficult to maintain the value of the coin. The continuous debasement of coins led from

2530-574: A singular monetary system for all purchases and debts in the United States, public and private. Along with the power to coin money, the United States Congress has the concurrent power to restrain the circulation of money which is not issued under its own authority in order to protect and preserve the constitutional currency. It is a violation of federal law for individuals, or organizations to create private coin or currency systems to compete with

2640-467: A small regional territory. In the 10th century, the Song dynasty government began to circulate these notes amongst the traders in its monopolized salt industry. The Song government granted several shops the 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 only locally and temporarily valid: it

2750-752: A specific country and a final letter denoting a specific monetary unit of account. Many currencies use a currency symbol . These are not subject to international standards and are not unique: the dollar sign in particular has many uses. Distinct from centrally controlled government-issued currencies, private decentralized trust-reduced networks support alternative currencies (such as Bitcoin and Ethereum's ether , which are classified as cryptocurrency since transference transactions are assured through cryptographic signatures validated by all users. With few exceptions , these currencies are not asset backed . The U.S. Commodity Futures Trading Commission has declared Bitcoin (and, by extension, similar products) to be

2860-462: A system was its use in some aspects of mental arithmetic , as it afforded many factors and hence fractions of a pound such as tenths, eighths, sixths and even sevenths and ninths if the guinea (worth 21 shillings) was used. When dealing with items in dozens, multiplication and division are straightforward; for example, if a dozen eggs cost four shillings, then each egg was priced at fourpence. Basic addition, however, could be more difficult than using

2970-609: Is a Germanic adaptation of the Latin phrase libra pondo 'a pound weight'. On the Iberian peninsula, the Kingdom of Aragon adopted the Carolingian monetary system (Catalan: lliura , sou and diners ), but those of Portugal and Castile (and subsequently Spain) retained the currency system inherited from al-Andalus . During the early Middle Ages, only the denarius was issued as an actual coin;

3080-432: Is a price at which two currencies can be exchanged against each other. This is used for trade between the two currency zones. Exchange rates can be classified as either floating or fixed . In the former, day-to-day movements in exchange rates are determined by the market; in the latter, governments intervene in the market to buy or sell their currency to balance supply and demand at a static exchange rate. In cases where

3190-697: 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. One of the best examples of a local currency is the original LETS currency, founded on Vancouver Island in the early 1980s. In 1982, the Canadian Central Bank 's lending rates ran up to 14% which drove chartered bank lending rates as high as 19%. The resulting currency and credit scarcity left island residents with few options other than to create

3300-476: Is often outlawed by governments in order to preserve the legitimacy of the constitutional currency for the benefit of all citizens. For example, Article I, section 8, clause 5 of the United States Constitution delegates to Congress the power to coin money and to regulate the value thereof. This power was delegated to Congress in order to establish and preserve a uniform standard of value and to insure

3410-466: Is too high or too low, which can easily trigger speculation and undermine the stability of macroeconomic and financial markets. Therefore, to maintain the level of exchange rate, a proper exchange rate regime is crucial. 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

£sd - Misplaced Pages Continue

3520-578: The Harry Potter books is a parody of the £sd system, with 29 knuts to a sickle and 17 sickles to a galleon. It serves as the currency of the Wizarding World, while pounds are still used by Muggles, the non-magical people. Lysergic acid diethylamide was sometimes called "pounds, shillings and pence" during the 1960s, because of the abbreviation LSD. The English rock group the Pretty Things released

3630-630: The denarius , was thus quite common for a period, but Roman accounting was based on the sestertius . During the last centuries of the Empire, numerous changes were made to the coinage system (e.g., by Augustus in 24 AD, Caracalla in 215, Aurelian in 274, Diocletian in 293, Constantine the Great in 312, etc.). Emperor Diocletian introduced the gold coin, the solidus , with its system of 1 solidus = 10 argentii = 40 nummii = 200 radiates = 500 laureates = 1,000 denarii . Emperor Constantine introduced

3740-447: The 1,000 Guineas and 2,000 Guineas at Newmarket Racecourse . South Africa and Southern Rhodesia : tickey. Australia: "deener" is likely to have derived from the Latin "dinar" or "denarius". UK: "Thick 'un" because it was thicker than a shilling. Australia: Fiddly-did was derived from word association (fiddly → fid → quid). The currency of knuts, sickles and galleons in

3850-537: The British Pound sterling (£), euros (€), Japanese yen (¥), and U.S. dollars (US$ ) are examples of (government-issued) fiat currencies . Currencies may act as stores of value and be traded between nations in foreign exchange markets , which determine the relative values of the different currencies. Currencies in this sense are either chosen by users or decreed by governments, and each type has limited boundaries of acceptance; i.e., legal tender laws may require

3960-652: The Catholic Church , not least the payment of the tax known as the Alms of St Peter or Peter's Pence , the denier having been renamed the 'penny'. In England, however, the new currency system endured long competition from the Viking coinage system, which was introduced into the Danelaw and was based on settlement in marks . Although the £sd system eventually came to dominate in England,

4070-833: The Icelandic króna and the Japanese yen . Mauritania and Madagascar are the only remaining countries that have theoretical fractional units not based on the decimal system; instead, the Mauritanian ouguiya is in theory divided into 5 khoums , while the Malagasy ariary is theoretically 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.) Subject to variation around

4180-660: The Napoleonic wars . By the mid-19th century, most of continental Europe had decimalised, leaving the United Kingdom as the only major country to continue to maintain the £sd system. All countries and territories that formerly used the £sd system have now decimalised their currency, with most decimalisations occurring after the Second World War . Malta decimalised its currency in 1972, while Nigeria decimalised in 1973. The British pound sterling and Irish pound were among

4290-556: The Vereinsthaler standard. Spain introduced its decimal currency unit, the peseta , in 1868, replacing all previous currencies. Decimalisation continued in the 20th century. For example, Cyprus decimalised the Cypriot pound in 1955, which comprised 1,000 mils, later replaced by 100 cents. The United Kingdom and Ireland decimalised the pound and punt , respectively, in 1971. (See £sd and Decimal Day .) Malta decimalised

4400-513: The cash form of a currency. Banknotes were initially mostly paper, but Australia's Commonwealth Scientific and Industrial Research Organisation developed a polymer currency in the 1980s; it went into circulation on the nation's bicentenary in 1988. Polymer banknotes had already been introduced in the Isle of Man in 1983. As of 2016, polymer currency is used in over 20 countries (over 40 if counting commemorative issues), and dramatically increases

4510-401: The denarius , of which 240 made up 1 pound of pure silver. A denar or denier thus contained 1.7 g of silver. To facilitate the handling of monetary calculations, he also introduced a unit of account, the solidus , so that 1 solidus = 12 denarii . Thus began the characteristic tripartite accountancy system (L 1 = 20s = 240d). From AD 771, the new coinage system was introduced throughout

£sd - Misplaced Pages Continue

4620-565: The digital renminbi in China, for example) will be successfully developed and implemented remains unknown. Digital currencies that are not issued by a government monetary authority , such as cryptocurrencies like Bitcoin , are different because their value is market-dependent and has no safety net . Various countries have expressed concern about the opportunities that cryptocurrencies create for illegal activities such as scams , ransomware ( extortion ), money laundering and terrorism . In 2014,

4730-613: The early modern period , but the reality was they weighed considerably less. The same problem affected the Mark which was theoretically worth 120 pfennigs but such was the debasement of the latter that the Mark rose eventually to be worth 160 pfennigs . As well as the weight, the silver content of the coins was deliberately reduced such that pfennigs minted in the Duchy of Austria in the late 15th century were nicknamed Schinderlings ("little floggers",

4840-611: The pond , schelling and penning and in England as the pound , shilling and penny . The English word 'pound' comes from the Latin libra pondo , 'a pound weight'. On the Iberian Peninsula, the Kingdom of Aragon introduced the Carolingian system, rendered in Catalan as the lliura , sou and diner , while the kingdoms of Portugal and Castile (and then Spain) retained the coinage system inherited from Islamic al-Andalus era, where

4950-570: The "mark of account" system lingered on in North Sea trade and areas of Hanseatic influence through much of the Middle Ages. Charlemagne's new monetary system prevailed across much of Western Europe including France (where the units were known as the livre , sous and denier ), Italy ( lira , soldo and denaro ), the Holy Roman Empire ( pfund , schilling and pfennig ) and in England ( pound , shilling and penny ). The English name pound

5060-497: The 13th century to the minting of larger coins. It also led to it becoming commonplace to state the origin of the coin in contracts and accounts. A denier parisis minted in Paris, for example, contained more pure silver than the corresponding denier tournois minted in Tours. The unity of the pound weight and the currency pound, achieved under Charlemagne, was increasingly undermined and led to

5170-578: The 1960s – occasionally came with special support for the £sd system in the form of a fixed-point currency datatype. The IBM 1401 is one such machine; on Sterling models with £sd support, it had a switch for selecting between IBM and BSI data layouts of £sd on its auxiliary console (see image). The ICT 1301 and the PL/I language also had £sd support. There were several ways to represent amounts of money in writing and speech, with no formal convention; for example: Halfpennies and farthings (quarter of

5280-528: The 1960s and 1970s, with Nigeria being the last to abandon it in the form of the Nigerian pound on 1 January 1973. Historically, similar systems based on Roman coinage were used elsewhere; e.g., the division of the livre tournois in France and other pre-decimal currencies such as Spain , which had 20 maravedís to 1 real and 20 reales to 1 duro or 5 pesetas . The classical Roman Empire originally used

5390-631: The 1990s. France introduced the franc and the centime in 1795, replacing the livre , sou , and denier , abolished during the French Revolution . France introduced decimalisation in a number of countries that it invaded during the Napoleonic period . In the 19th century, more countries switched to decimal currencies. The Netherlands led the way when the Dutch guilder was decimalised in 1817. Hitherto it had been worth 20 stuivers = 160 duiten = 320 penningen. These coins were scrapped in favour of

5500-634: The Bank of England. The last £sd coins to cease being legal tender in the UK after Decimal Day were the sixpence (withdrawn 1980), the shilling (withdrawn 1991) and the florin (withdrawn 1993). Commemorative crowns minted post decimalisation (worth either 25p or £5) are still legal tender, but are rarely, if ever, spent. The last £sd banknote to cease to be legal tender anywhere was the Isle of Man ten shilling note, which ceased to be legal tender there in 2013. Computers and calculators sold pre-decimalisation – mostly in

5610-683: The Carolingian Frankish Empire , which at that time extended across modern France, the Benelux , and most of Germany and Italy. The majority of denar coins of this period had a standard design with, on one side, the name of the Emperor on two lines thus: C A R o / L U S. On the other side gave the location of the mint, for example, for Liège: L E o / D I C o. In around 793 or 794, the Carolingian pound , or Karlspfund ( Latin : ponus Caroli ),

SECTION 50

#1732905056282

5720-539: The European continent for over a thousand years, until the decimalisations of the 18th and 19th centuries. The United Kingdom remained one of the few countries retaining it into the 20th century, resulting in the system becoming particularly associated with Britain. For much of the 20th century, £sd remained the monetary system of most of the British Commonwealth , the major exceptions being Canada and India , until

5830-543: 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 , shell money , and ochre and other earth oxides. The manilla rings of West Africa were one of the currencies used from the 15th century onwards to sell slaves. African currency is still notable for its variety, and in many places, various forms of barter still apply. The prevalence of metal coins possibly led to

5940-614: The Half-penny scheme, the Alb scheme, etc. – but all were determined to have deficiencies, and transition would be too difficult and expensive. The £sd system was maintained in Britain until 1971. As countries of the British Empire became independent, some abandoned the £sd system quickly, while others retained it almost as long as the UK itself. The United States of America was among the first to drop

6050-453: The UK did. The UK abandoned the old penny on Decimal Day , 15 February 1971, when one pound sterling became divided into 100 new pence . This was a change from the system used in the earlier wave of decimalisations in Australia, New Zealand , Rhodesia and South Africa , in which the pound was replaced with a new major currency called either the "dollar" or the "rand". The British shilling

6160-448: The UK, larger denomination notes (£5, £10, £20, £50, £100, £200, £500, and £1,000) printed from the 18th century to 1943 were called "white notes" because they were printed on lightweight white paper (on one side only) in black ink. United Kingdom pre-decimal banknotes are no longer legal tender, but are exchangeable for their face value (regardless of the possible greater worth if sold or auctioned) if they are taken directly (or posted) to

6270-654: The United States IRS advised that virtual currency is treated as property for federal income-tax purposes, and it provides examples of how long-standing tax principles applicable to transactions involving property apply to virtual currency. Originally, currency was a form of receipt, representing grain stored in temple granaries in Sumer in ancient Mesopotamia and in Ancient Egypt . In this first stage of currency, metals were used as symbols to represent value stored in

6380-634: The United States. At various times countries have either re-stamped foreign coins or used currency boards , 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 unit, often defined as 1 ⁄ 100 of the main unit: 100 cents  = 1  dollar , 100 centimes  = 1  franc , 100 pence = 1  pound , although units of 1 ⁄ 10 or 1 ⁄ 1000 occasionally also occur. Some currencies do not have any smaller units at all, such as

6490-523: The Younger , began the overhaul of these systems by closing the mints of the great magnates and prelates of the Empire and establishing minting rights as an exclusively royal privilege. However, there were still 22 schillings to the imperial pound, the extra 2 schillings going to the mintmaster and the Imperial Treasury, leaving 20 to be issued into circulation. This subsequently gave Charlemagne

6600-516: The cent and there were now 100 centen to the guilder. The last pre-decimal coins were withdrawn from circulation in 1848. Sweden introduced decimal currency in 1855. The riksdaler was divided into 100 öre . The riksdaler was renamed the krona in 1873. The Austrian Empire decimalised the Austro-Hungarian florin in 1857, concurrent with its transition from the Conventionsthaler to

6710-412: The changes in the international exchange rate. Fiscal policies , such as transfer payments, taxation ratios, and other factors, dominate the profitability of capital and economic development, and the ratio of national debt issuance to deficit determines the repayment capacity and credit rating of the country. Such policies determine the mechanism of linking domestic and foreign currencies and therefore have

SECTION 60

#1732905056282

6820-400: The circulating medium. Private banks and governments across the world followed Gresham's law : keeping the gold and silver they received 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 20th century and continuing across the world until the late 20th century, when

6930-532: The commission was the same number of shillings. Tattersalls , the main auctioneer of racehorses in the United Kingdom and Ireland, continues this tradition of conducting auctions in guineas at its UK sales (in Ireland, auctions are conducted in euros). The vendor's commission is 5%. The word "guineas" is still found in the names of some British horse races, even though their prize funds are now fixed in pounds – such as

7040-526: The continental example. A parliamentary select committee was set up in 1821 to inquire into decimalisation, but ended up recommending retaining the £sd system. However, pressure groups were formed inside Britain advocating the adoption of decimalisation of the currency, and Parliament returned to the matter in the 1850s. Various decimalisation schemes were considered – the Pound-and-Mil scheme, the Farthing scheme,

7150-581: 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 that time, both silver and gold were considered

7260-490: 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

7370-454: The employers. Modern token money , such as the tokens operated by local exchange trading systems (LETS), is a form of barter rather than being a true currency. The currency may be Internet-based and digital, for instance, Bitcoin is not tied to any specific country, or the IMF's SDR that is based on a basket of currencies (and assets held). Possession and sale of alternative forms of currencies

7480-527: The form of commodities. This 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. A trade could only reach as far as the credibility of that military. By

7590-421: The global capital inflows and outflows of countries around the world, and exchange rates will fluctuate accordingly. National policies The country's foreign trade, monetary and fiscal policies affect the exchange rate fluctuations. Foreign trade includes policies such as tariffs and import standards for commodity exports. The impact of monetary policy on the total amount and yield of money directly determines

7700-419: The guinea coin had not been struck since 1799. A guinea was 21 shillings (£1.05 in decimal currency). Professionals such as lawyers and physicians, art dealers, and some others stated their fees in guineas rather than pounds, while, for example, salaries were stated in pounds per annum. Historically, at some auctions, the purchaser would bid and pay in guineas but the seller would receive the same number of pounds;

7810-420: The last to be decimalised, on 15 February 1971 . In places where £sd was used, there were several approaches to decimalisation: The following table shows the conversion of common denominations of coins of the £sd systems. The following coins were not in common circulation in the UK at the time of decimalisation, though the ten shilling note and the pound note were. The farthing , at 1 ⁄ 4 penny,

7920-516: The late Bronze Age , however, a series of 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. It is not known what was used as a currency for these exchanges, but it is thought that oxhide-shaped ingots of copper, produced in Cyprus , may have functioned as

8030-540: The late 8th century, King Offa of Mercia imported the system into Britain to facilitate transactions (notably " Peter's pence ") with the Roman Catholic Church (which used the Carolingian coinage system). But it was not the sole system in Britain – the £sd system would have to compete for a while with the Viking " mark " accounting system, introduced into Danelaw regions. Although £sd ultimately prevailed in Britain,

8140-416: The late Roman Empire had a veritable mess of multiple overlapping systems of weights and currencies. Around the 780s, the Frankish emperor Charlemagne cut through the mess by creating a new uniform system. He defined the "libra" as a new measure of weight equivalent to around 408 grams (substantially larger than the old Roman pound of 328.9g), and ordered 240 silver units known as denarii to be struck from

8250-696: The legislative or executive authority that creates it. Several countries can use the same name for their own separate currencies (for example, a dollar in Australia , Canada , and the United States ). By contrast, several countries can also use the same currency (for example, the euro or the CFA franc ), or one country can declare the currency of another country to be legal tender . For example, Panama and El Salvador have declared US currency to be legal tender, and from 1791 to 1857, Spanish dollars were legal tender in

8360-406: The libra and solidus were merely units of account. But over time, the silver resources were gradually exhausted and the coins became repeatedly debased by mediaeval monarchs, prompting the minting of larger coins from the 13th century. It also led to specification of currencies by mint of origin in contracts and accounting (e.g. a denier parisis , of the Paris mint, contained more actual silver than

8470-474: The life span of banknotes and reduces counterfeiting. The currency used is based on the concept of lex monetae ; that a sovereign state decides which currency it shall use. (See Fiat currency .) In 1978 the International Organization for Standardization published a system of three-digit alphabetic codes ( ISO 4217 ) to denote currencies. These codes are based on two initial letters allocated to

8580-653: The mark-based system continued to be used in the North Sea region and areas with Hanseatic influence for most of the Middle Ages. The new three-part system came to dominate most of Europe. In French the three units became known as livre , sous and denier , in Italia as the lira , soldo and denaro , in the German states as the Pfund , Schilling and Pfennig , in the Low Countries as

8690-411: The metal itself being the store of value: first copper, then both silver and gold, and at one point also bronze. Today other non-precious metals are used for coins. Metals were mined, weighed, and stamped into coins. This was to assure the individual accepting the coin that he was getting a certain known weight of precious metal. Coins could be counterfeited, but the existence of standard coins also created

8800-459: The most valuable and were used for large purchases, payment of the military, and backing of state activities. Units of account were often defined as the value of a particular type of gold coin. Silver coins were used for midsized transactions, and sometimes also defined a unit of account, while coins of copper or silver, or some mixture of them (see debasement ), might be used for everyday transactions. This system had been used in ancient India since

8910-434: The national economy be in a normal and orderly state, that is, there is no serious inflation and economic overheating. In addition, the government should use macro policies to make mature adjustments to deal with the impact of currency exchange on the economy. The maintainability of international balance of payments is the main performance of reasonable economic structure. Currency convertibility not only causes difficulties in

9020-420: The need to transport gold and silver, which was risky; it facilitated loans of gold or silver at interest, since the underlying specie (money in the form of gold or silver coins rather than notes) never left the possession of the lender until someone else redeemed the note; and it allowed a division of currency into credit- and specie-backed forms. It enabled the sale of investment in joint-stock companies and

9130-430: The new Carolingian pound of pure silver, each denarius containing 22.5 grains of silver. To help accounting, Charlemagne also decreed that the pound was divisible into 20 solidi each of 12 denarii . Thus began the Carolingian monetary system (1 l . = 20 s . = 240 d .). The new coinage and accounting system was imposed uniformly across the vast Carolingian Empire and also infiltrated countries on its periphery. In

9240-428: The official coinage and currency of the United States. Commonly a central bank has the exclusive power to issue all forms of currency, including coins and banknotes ( fiat money ), and to restrain the circulation alternative currencies for its own area of circulation (a country or group of countries); it regulates the production of currency by banks ( credit ) through monetary policy . An exchange rate

9350-546: The only reason affecting the exchange rate. The large number of international tourists and overseas students has resulted in the flow of services and goods at home and abroad. It also represents that the competitiveness of global goods and services directly affects the change of international exchange rates. Capital flows National currencies will be traded on international markets for investment purposes. Investment opportunities in each country attract other countries into investment programs, so that these foreign currencies become

9460-438: 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 that 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

9570-580: The pound and the schilling remained purely units of weight or accounting and were not issued as coins. Although some gold coins appeared under Louis the Pious , the denarius remained the most important coin of the Middle Ages . The new currency also spread to neighbouring countries. At the end of the 8th century, King Offa of Mercia introduced the system into the British Isles to facilitate transactions with

9680-418: The power to put an end to the currency confusion by introducing a new standardised system that was the most wide-ranging and long-lasting of all the reforms, but was part of a much broader standardisation intended to make the Empire more governable. He defined the Carolingian pound ( libra ) as a new unit of weight, significantly larger than the old Roman pound of 328.9 g. He introduced a new silver coin called

9790-424: The predominant coin was the maravedi with its various multiples and subdivisions. In the Holy Roman Empire, the name denarius or denar was superseded by pfennig during the 10th century. In the early Middle Ages, only the denarius was physically minted and issued into circulation as an actual coin, while the libra and solidus were purely units of account. Since the coins were initially based solely on

9900-503: The redemption of those shares in a paper. But there were also disadvantages. First, since a note has no intrinsic value, there was nothing to stop issuing authorities from printing more notes than they had specie to back them with. Second, because this increased the money supply, it increased inflationary pressures, a fact observed by David Hume in the 18th century. Thus paper money would often lead to an inflationary bubble, which could collapse if people began demanding hard money, causing

10010-477: 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, an action which was known as the Nixon shock . No country has an enforceable gold standard or silver standard currency system. A banknote or a bill is a type of currency and it is commonly used as legal tender in many jurisdictions. Together with coins , banknotes make up

10120-420: The reserves of the central banks of each country. The exchange rate mechanism, in which currencies are quoted continuously between countries, is based on foreign exchange markets in which currencies are invested by individuals and traded or speculated by central banks and investment institutions. In addition, changes in interest rates, capital market fluctuations and changes in investment opportunities will affect

10230-439: The supply-demand relationship of different currencies determines the exchange ratio between currencies. Trade in goods and services Through cost transfer, goods and services circulating in the country (such as hotels, tourism, catering, advertising, household services) will indirectly affect the trade cost of goods and services and the price of export trade. Therefore, services and goods involved in international trade are not

10340-432: The sustainability of international balance of payments but also affects the government's direct control over international economic transactions. To eliminate the foreign exchange shortage, the government needs adequate international reserves. The level of exchange rate is an important factor in maintaining exchange rate stability, both before and after currency convertibility. The exchange rate of freely convertible currency

10450-576: The time of the Mahajanapadas . The exact ratios between the values of the three metals varied greatly between different eras and places; for example, the opening of silver mines in the Harz mountains of central Europe made silver relatively less valuable, as did the flood of New World silver after the Spanish conquests . However, the rarity of gold consistently made it more valuable than silver, and likewise silver

10560-472: The values of two precious metals. The French " franc ", introduced in 1360, was the first coin anywhere to represent exactly 1 pfund or "pound". The gold " sovereign ", first minted in 1489, was the first English £1 coin. Having long abandoned the decimal currency structure of the Roman Empire in favour of Carolingian coinage systems, Europe began to return to decimal currencies in the 18th century. Russia

10670-409: The variety of new coins of various multiples and qualities led to common expression of quantities in terms of number of coins (guineas, crowns, farthings, etc.) But they would all have to be converted into formal £sd units in accounts. The £sd system continued in much of Western Europe for nearly a thousand years, until the " decimalisations " of the 18th and 19th centuries. Britain considered following

10780-400: The very debased denier tournois of the Tours mint). To facilitate larger transactions, gold coins began to be minted in western Europe around the same time. The French " franc ", introduced in 1360, was the first coin anywhere to represent exactly £1 and the gold " sovereign ", first minted in 1489, was the first English £1 coin. Although the £sd system remained intact in ledger accounting,

10890-399: The world, local currency can be converted to another currency or vice versa with or without central bank/government intervention. Such conversions take place in the foreign exchange market . Based on the above restrictions or free and readily conversion features, currencies are classified as: According to the three aspects of trade in goods and services , capital flows and national policies,

11000-405: The £sd system and adopt a decimal currency in 1792, 10 years after independence from the British Empire, but retains many other aspects of the customary units for length and weight. Australia, on the other hand, only changed to using a decimal currency on 14 February 1966, 65 years after independence. New Zealand followed suit on 10 July 1967. Still others, notably Ireland , decimalised only when

11110-458: Was already a unit of weight and within this system also became a currency unit. The schilling , like the pfund , was not minted for a long time, but used only as a unit of account worth 12 pfennigs . The coinage system of the classical Roman Empire was originally based on the copper coin, the as (later made of bronze) and multiples of this such as denarius = 10 as , quinarius = 5 as , sestertius = 2½ as etc. The silver coin,

11220-559: Was consistently worth more than copper. In premodern China , the need for lending and for a medium of exchange that was less physically cumbersome than large numbers of copper coins led to the introduction of paper money , i.e. banknotes . Their introduction was a gradual process that lasted 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 by wholesalers ' shops. These notes were valid for temporary use in

11330-480: 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 , transaction accounts , loaning , trusts , exchange rates , the transfer of credit and debt , and banking institutions for loans and deposits . In Europe, paper currency

11440-523: Was first introduced on a regular basis in Sweden in 1661 (although Washington Irving records an earlier emergency use of it, by the Spanish in a siege during the Conquest of Granada ). As Sweden was rich in copper, many copper coins were in circulation, but its relatively low value necessitated extraordinarily big coins, often weighing several kilograms. The advantages of paper currency were numerous: it reduced

11550-508: Was introduced as the basis of the system of weights and coinage in the Empire. At some point Charlemagne scrapped the old 22 schilling system and the Treasury and mintmasters were now paid from taxes. Thus 1 Pfund generated 20 schillings , each worth 12 denarii . In 794 a decree was issued that the novi denarii were to be used and accepted throughout the Empire; they would be of pure silver and display Charlemagne's name on them. So on one side

11660-404: Was never converted, as it ceased to be legal tender a decade prior to decimalisation. In 1971, a new penny would have been worth 9.6 farthings (making a farthing slightly more than 0.1 new pence). Similarly, the old halfpenny and the half-crown were not converted in the UK either, having been withdrawn in the run-up to decimalisation, although the half-crown was worth exactly 12 1/2 new pence. In

11770-423: Was not until the mid 13th century that a standard and uniform government issue of paper money became an acceptable nationwide currency. The already widespread methods of woodblock printing and then Bi Sheng 's movable type printing by the 11th century were the impetus for the mass production of paper money in premodern China. At around the same time in the medieval Islamic world , a vigorous monetary economy

11880-552: Was replaced by a 5 new pence coin worth one-twentieth of a pound. In Europe, decimalisation of currency (as well as other weights and measures) began in Revolutionary France with the law of 1795 ("Loi du 18 germinal an III", 7 April 1795), replacing the £sd accounting system of the Ancien régime with a system of 1 franc = 10 decimes = 100 centimes. Decimalisation was carried by French armies to neighboring European countries during

11990-400: Was the first country to adopt a decimal currency during the reign of Tsar Peter the Great in 1704, under whom the rouble was worth 100 kopecks. The rouble was thus the world's first decimal currency since Roman times. However, there were still non-decimal coins in circulation, the 3 kopeck and 15 kopeck denominations, and these would remain part of Russian, and later Soviet , currency until

12100-510: Was the inscription CARLVS REX FR ("Charles, King of the Franks") and, on the other, as before, the place where the mint was located, e.g. DORESTADO (" Dorestad "). There were around sixty mints. Even after Charlemagne was crowned as Holy Roman Emperor in 800, denarii continued to bear his old title except for what appear to be a small number of "specials" which bear his bust and the inscription KAROLUS IMP AVG ("Charles, Emperor Augustus"). Meanwhile,

#281718