Currency Do We Need?

Introduction of Currency

A currency, in the most specific use of the word, refers to money in any form when in actual use or circulation as a medium of exchange, especially circulating banknotes and coins. A more general definition is that a currency is a system of money (monetary units) in common use, especially in a nation. These various currencies are recognized stores of value and are traded between nations in foreign exchange markets, which determine the relative values of the different currencies. Currencies in this sense are defined by governments, and each type has limited boundaries of acceptance.

Money is often defined in terms of the three functions or services that it provides. Money serves as a medium of exchange, as a store of value, and as a unit of account. Medium of exchange. Money's most important function is as a medium of exchange to facilitate transactions. No one knows for sure who first invented such money, but historians believe metal objects were first used as money as early as 5,000 B.C. Around 700 B.C., the Lydians became the first Western culture to make coins. Using coins with set values made it easier to compare values and trade money for goods and services.

Barter system to present the use of currency in India

Since ages currencies are being used to buy or sell goods. Either the currency in form of banknotes or a good in exchange of goods is used to buy and sell objects. In the earlier times, the kings and merchants used to trade with gold and silver coins and now we all trade with banknotes and coins.

In ancient times if someone wanted to buy rice he/she had to give grains in exchange for it. The value of currency differs from country to country.

Currency Do We Need?

We Will see this by the following example:-

Following the Asian financial crisis in late 1997, Hong Kong experienced a long period of deflation which did not end until the 4th quarter of 2004. Many East Asian currencies devalued following the crisis. The Hong Kong dollar, however, was pegged to the US dollar, leading to an adjustment instead by a deflation of consumer prices. The situation was worsened by the increasingly cheap exports from Mainland China, and "weak consumer confidence" in Hong Kong. This deflation was accompanied by an economic slump that was more severe and prolonged than those of the surrounding countries that devalued their currencies in the wake of the Asian financial crisis.

Nothing has changed from that time except the banknotes for trading in exchange of things.