monetary system of any country is a historically established and fixed by legislation form of currency used in the sovereign territory of the country.Types of systems allocate money based on the kind of money, which is a measure of value.Based on this criterion, there are credit, paper money and metal systems.
The elements that determine the form of monetary circulation in the country include:
- currencies;
- their shape;
- exchange rate.
term "currency" in itself is not unique, and has three main meanings.Firstly, it is a national currency in each country.Secondly, this unit of account and the funds of foreign countries.Thirdly, we must not forget the international settlement units like the euro.In the most general form of the following types of currencies:
- foreign currency (hard currency), which has full external and internal convertibility, as defined in the legislation of the country for which she is a national.For example, the US dollar, British pound, Swiss franc.
- PCI (partially-convertible currency), which can be exchanged outside of the country with certain restrictions.
- IEC (nonconvertible).If other currencies can operate outside of the state, which are issued, the IEC is exchanged for foreign currency only in the national market.
also in the global economy there is a concept of clearing and reserve currency.These types of currencies in their function associated with the processes of globalization and internationalization of the economy.Clearing currency exists only in non-cash form and is used exclusively for payment within a specified integration association.As for the reserve currency, its role is in the calculation of foreign trade operations and the establishment of world prices.To date, this is the function of the US dollar.
great impact on international trade have kinds of exchange rates.The state determines the most favorable for its domestic and foreign policy course, setting its mode: fixed, floating, or "currency corridor".The easiest to regulate and control, of course, is a fixed rate.This currency is not subject to inflation, but on the other hand, she does not react to market changes.The floating exchange rate, in contrast, is determined entirely on the basis of supply and demand, and the government can influence it only with the help of foreign exchange intervention."Currency corridor" is the middle ground between the above exchange rate regimes, combining their advantages and disadvantages.However, different currencies require a different approach in setting their course, or may suffer foreign economic relations of the country, and ultimately - and the well-being of its population.
