Reviewed by Aug 27, 2020| Updated on
What is Currency?
Currency refers to a medium of exchange for the supply of goods and services. In a nutshell, it is money in paper or coins that are usually issued by a government and mostly accepted as a payment mode at its face value.
Currency is the main medium of exchange in the modern world that replaced the barter system long ago as a means of trading goods and services.
Currency in any form is as old as at least 3,000 years. Money, generally in the form of coins, proved to be critical for trade facilitation across the globe.
In the 21st century, the virtual currency is a new form of currency which has entered the vocabulary. Virtual currencies, traded and stored in an electronic form, such as the bitcoins or the litcoins, do not have physical existence or government support.
A key feature of modern money is that it is uniformly insignificant in itself. That is, bills are bits of paper instead of coins made of gold, silver, or bronze. The idea of using paper as a currency was developed in China around 1000 BC, but it took a long time to receive a paper in return for something of real value, before coming into prominence. Modern currencies are published on paper in various denominations, with fractional copies in the form of coins.
The WorldAtlas.com indicates that there are 180 national currencies recognised by the United Nations currently in circulation. Further, 66 countries either peg their currencies directly to the U.S. dollar or use it directly. Most of the countries issue their currencies.
For instance, Switzerland's official currency is the Swiss franc, and Japan's is the yen. Most of the countries who are members of the European Union adopt the euro as its currency, as an exception.
In addition to its currency, there are certain countries which accept the U.S. dollar also as a legal tender. These include El Salvador, Costa Rica, and Ecuador. It is interesting to note that the Americans were using Spanish coins for some time in 1792 after the founding of the U.S. Mint since these were heavier and probably felt more valuable.
Brand currencies, such as the airline and credit card points and Disney Dollars, exist. Companies issue them to be used only to pay for the products or services to which they are linked.
Currency in India
The Indian rupee, depicted as ₹ and having global currency code as INR, is the official currency of India. One rupee can be partitioned into 100 paise. As of 2019, 1 rupee coin is the lowest value in use. The currency issue and its circulation are monitored and controlled by the Reserve Bank of India. The Central Bank manages currency in India and assumes its role in currency management under the Reserve Bank of India Act, 1934.
In 2010, a new rupee sign (₹) was formally adopted replacing the sign 'Rs' from the 8th of July 2011. The parallel lines that run at the top allude to the tricolour Indian flag and also depict an equality sign that expresses the nation's desire to reduce economic disparity.