Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. Other definitions of the term “currency” are discussed in their respective synonymous articles banknote, coin, and money. The latter definition, pertaining to the currency systems of nations, is the topic of this article. This article needs additional citations for verification. Cowry shells being used as money by an Arab trader. Originally money was a form of receipt, representing grain stored in temple granaries in Sumer in ancient Mesopotamia and later in Ancient Egypt.
In this first stage of currency, metals were used as symbols to represent value stored in the form of commodities. This formed the basis of trade in the Fertile Crescent for over 1500 years. 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. These factors led to the metal itself being the store of value: first silver, then both silver and gold, and at one point also bronze. Now we have copper coins and other non-precious metals as coins. 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.
Most major economies using coinage had several tiers of coins, using a mix of copper, silver and gold. In premodern China, the need for credit 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. Song dynasty Jiaozi, the world’s earliest paper money. 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 it increased the money supply, it increased inflationary pressures, a fact observed by David Hume in the 18th century. At that 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 increases both in supply of these metals, particularly silver, and in trade.
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 the gold and silver they received, but paying out in notes. With coins, banknotes make up the cash form of all money. Name of currency units by country. Strength of currencies relative to USD as of April 2016. For a list of which currency or currencies are used by present-day countries or regions, see List of circulating currencies.