Sunday, July 13, 2008

Indian rupee


The rupee (Hindi: रुपया) is the currency of India. The issuance of the currency is controlled by the Reserve Bank of India. The most commonly used symbols for the rupee are Rs, ₨ and रू. The ISO 4217 code for the Indian rupee is INR. The modern rupee is subdivided into 100 paise (singular paisa).

In most parts of India, the rupee is known as the rupee, roopayi (రూపాయి) (ರೂಪಾಯಿ), rupaye, rubai (ரூபாய்) or one of the other terms derived from the Sanskrit rupyakam (Devnagari: रूप्यकं), raupya meaning silver; rupyakam meaning (coin) of silver. However, in West Bengal, Tripura, Orissa, and Assam, the Indian rupee is officially known by names derived from the Sanskrit ṭanka. Thus, the rupee is called টাকা ṭaka in Bengali, টকা tôka in Assamese, and ଟଙ୍କା ṭôngka in Oriya, with the symbol ৳, and is written as such on Indian banknote

Dollar


The dollar (often represented by the dollar sign: "$") is the name of the official currency in several countries, dependencies and other world regions.


The German name Thaler came from the Bohemian coin minted from the silver from a rich mine at Joachimsthal - Jáchymov (St. Joachim's Valley) in Bohemia (a member of the Holy Roman Empire beginning in 1515, since 1945 part of the Czech Republic). Not long after issuance, these coins gained the name Joachimsthalers. From there, coins gained the name "thaler" regardless of the issuing authority. The basis of "thaler" comes from Joachimsthaler. The name is historically related to the tolar, in Germany Reichsthaler, Slovenia (Slovenian tolar) and Bohemia, the daalder in the Netherlands and daler in Sweden, Denmark, and Norway. "Guildiner" can be traced to 1486 when Archduke Sigismund of Tyrol, a small state north of Venice, issued a dollar-sized coin which was referred to as a "guildiner". Silver supplies were small which limited coinage.

The Dutch lion dollar circulated throughout the Middle East and was imitated in several German and Italian cities. It was also popular in the Dutch East Indies as well as in the Dutch New Netherlands Colony (New York). The lion dollar also has circulated throughout the English colonies during the 17th and early 18th centuries. Examples circulating in the colonies were usually fairly well worn so that the design was not fully distinguishable, thus they were sometimes referred to as "dog dollars." This Dutch currency made its way to the east coast due to the increased trading by colonial ships with other nations. By the mid-1700s, it was replaced by the Spanish 8 reales.

The name "Spanish dollar" was used for a Spanish coin, the "real de a ocho" and later peso, worth eight reals (hence the nickname "pieces of eight"), which was widely circulated during the 18th century in the Spanish colonies in the New World and in Spanish territories in Asia, namely in the Philippines.The use of the Spanish dollar and the Maria Theresa thaler as legal tender for the early United States and its fractions were the mainstay of commerce. They are the reasons for the name of the nation's currency.[citation needed] By the American Revolution in 1775, these Spanish currency became even more important. They were backed by paper money authorized by the individual colonies and the Continental Congress. However, the word dollar was in use in the English language as slang or mis-pronunciation for the thaler for about 200 years before the American Revolution, with many quotes in the plays of Shakespeare referring to dollars as money. Spanish dollars were in circulation in the Thirteen Colonies that became the United States, and were legal tender in Virginia.

Coins known as dollars were also in use in Scotland during the 17th century, and there is a claim that the use of the English word, and perhaps even the use of the coin, began at the University of St Andrews. This explains the sum of 'Ten thousand dollars' mentioned in Macbeth (Act I, Scene II), although the real Macbeth upon whom the play was based lived in the 11th century, making the reference anachronistic; however this is not rare in Shakespeare's work.

In the early 19th century, a British five-shilling piece, or crown, was sometimes called a dollar, probably because its appearance was similar to the Spanish dollar. This expression appeared again in the 1940s, when U.S. troops came to the UK during World War II. At the time a U.S. dollar was worth about 5s., so some of the U.S. soldiers started calling it a dollar. Consequently, they called the half crown "half a dollar", and the expression caught on among some locals and could be heard into the 1960s.

In the early days of the United States, the term "Dollar" was commonly known as a coin minted by Spain called the Spanish Milled Dollar. These coins were the standard money then in use in the country. On April 2, 1792 Alexander Hamilton, then the Secretary of the Treasury, made a report to congress that were the result of his task to scientifically determine the amount of silver in the Spanish Milled Dollar coins that were then in current use by the people. As a result of this report, the Dollar was defined (See the Act of April 2, A.D. 1792 of the Senate and House of Representatives of the United States of America in Congress assembled, Section 9) as a unit of measure of 371 4/16th grains of pure silver or 416 grains of standard silver. (Standard silver being defined as 1,485 parts fine silver to 179 parts alloy; See Section 13 of the Act.). Therefor paper is not the dollar, instead, it is 'worth', not 'is', 1 dollar (U.S Silver certificate.) In section 20 the Act, it is specified that the "money of account" of the United States shall be expressed in those same "dollars" or parts thereof. All of the minor coins were also defined in terms of percentages of the primary coin the dollar such that a half dollar contained 1/2 as much silver as a dollar, quarter dollars, 1/4th etc. In an act passed on January 18, 1837 the alloy was changed to 10% thus having the effect of containing the same amount of silver but being reduced in weight to 412 1/4 grains of standard silver which was changed to 90% pure and 10% alloy. On February 21, 1853 the amount of silver in the fractional coins was reduced so that it was no longer possible to combine the fractional coins to come up with the same amount of silver that was in the dollar. Various acts have been passed over the years that affected the amount and type of metal in the coins minted by the United States such that today, there is no legal definition of the term "Dollar" to be found in any Statute of the United States. [Sources for this paragraph include the United States Statutes at Large, A Guide Book of United States Coins by R.S. Yeoman, MONEY - Ye shall have honest weights and measures by James E. Ewart.

Today the closest definition to a dollar comes from the United States code Title 31, Section 5116, paragraph b, subsection 2, "The Secretary [of the Treasury] shall sell silver under conditions the Secretary considers appropriate for at least $1.292929292 a fine troy ounce." However Federal Reserve banks are only prejudiced to deliver tax credits instead of money. The silver content of U.S. coinage was mostly removed in 1965 and the dollar essentially became a baseless free-floating fiat currency; though the U.S. Mint continues to make silver $1 bullion coins at this weight. It is believed that the original green color and other specific designs of a paper dollar were introduced by 2 Armenian brothers from Massachusetts who were Near-Eastern immigrants

History


The origin of currency is the creation of a circulating medium of exchange based on a unit of account which quickly becomes a store of value. Currency evolved from two basic innovations: the use of counters to assure that shipments arrived with the same goods that were shipped, and later with the use of silver ingots to represent stored value in the form of grain. Both of these developments had occurred by 2000 BC. Originally money was a form of receipting grain stored in temple granaries in ancient Egypt and Mesopotamia.

This first stage of currency, where metals were used to represent stored value, and symbols to represent commodities, 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. Trade could only reach as far as the credibility of that military. By the late Bronze Age, however, a series of international treaties had established safe passage for merchants around the Eastern Mediterranean, spreading from Minoan Crete and Mycenae in the North West to Elam and Bahrein in the South East. Although it is not known what functioned as a currency to facilitate these exchanges, it is thought that ox-hide shaped ingots of copper, produced in Cyprus may have functioned as 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 this trading system to an end. It was only with the recovery of Phoenician trade in the ninth and tenth centuries, that saw a return to prosperity, and the appearance of real coinage, possibly first in Anatolia with Croesus of Lydia and subsequently with 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, ochre and other earth oxides, and so on. The manilla rings of West Africa were one of the currencies used from the 15th century onwards to buy and sell slaves. African currency is still notable for its variety, and in many places various forms of barter still apply.Coinage

These factors led to the shift of the store of value being the metal itself: at first silver, then both silver and gold. 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. Coins could be counterfeited, but they also created a new unit of account, which helped lead to banking. Archimedes' principle was that the next link in currency occurred: coins could now be easily tested for their fine weight of metal, and thus the value of a coin could be determined, even if it had been shaved, debased or otherwise tampered with (see Numismatics).

In most major economies using coinage, copper, silver and gold formed three tiers of coins. Gold coins were used for large purchases, payment of the military and backing of state activities. Silver coins were used for large, but common, transactions, and as a unit of account for taxes, dues, contracts and fealty, while copper coins represented the coinage of common transaction. This system had been used in ancient India since the time of the Mahajanapadas. In Europe, this system worked through the medieval period because there was virtually no new gold, silver or copper introduced through mining or conquest. Thus the overall ratios of the three coinages remained roughly equivalent.
Era of hard and credit money

In premodern China, the need for credit and for circulating a medium that was less of a burden than exchanging thousands of copper coins led to the introduction of paper money, commonly known today as banknotes. This economic phenomenon was a slow and gradual process that took place 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 from shops of wholesalers, notes that were valid for temporary use in a small regional territory. In the 10th century, the Song Dynasty government began circulating these notes amongst the traders in their monopolized salt industry. The Song government granted several shops the sole 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 regionally-valid and temporary; it was not until the mid 13th century that a standard and uniform government issue of paper money was made into an acceptable nationwide currency. The already widespread methods of woodblock printing and then Bi Sheng's movable type printing by the 11th century was the impetus for the massive production of paper money in premodern China.

At around the same time in the medieval Islamic world, a vigorous monetary economy 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,[1] cheques, promissory notes,[2] savings accounts, transactional accounts, loaning, trusts, exchange rates, the transfer of credit and debt,[3] and banking institutions for loans and deposits.[4]

In Europe paper money was first introduced in Sweden in 1661. Sweden was rich in copper, thus, because of copper's low value, extraordinarily big coins (often weighing several kilograms) had to be made. Because the coin was so big, it was probably more convenient to carry a note stating your possession of such a coin than to carry the coin itself.

The advantages of paper currency were numerous: it reduced transport of gold and silver, and thus lowered the risks; it made loaning gold or silver at interest easier, since the specie (gold or silver) never left the possession of the lender until someone else redeemed the note; and it allowed for a division of currency into credit and specie backed forms. It enabled the sale of stock in joint stock companies, and the redemption of those shares in paper.

However, these advantages held within them disadvantages. First, since a note has no intrinsic value, there was nothing to stop issuing authorities from printing more of it than they had specie to back it with. Second, because it created money that did not exist, it increased inflationary pressures, a fact observed by David Hume in the 18th century. The result is that paper money would often lead to an inflationary bubble, which could collapse if people began demanding hard money, causing 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.
Legal tender era
With the creation of central banks, currency underwent several significant changes. During both the coinage and credit money eras the number of entities which had the ability to coin or print money was quite large. One could, literally, have "a license to print money"; many nobles had the right of coinage. Royal colonial companies, such as the Massachusetts Bay Company or the British East India Company could issue notes of credit—money backed by the promise to pay later, or exchangeable for payments owed to the company itself. This led to continual instability of the value of money. The exposure of coins to debasement and shaving, however, presented the same problem in another form: with each pair of hands a coin passed through, its value grew less.

The solution which evolved beginning in the late 18th century and through the 19th century was the creation of a central monetary authority which had a virtual monopoly on issuing currency, and whose notes had to be accepted for "all debts public and private". The creation of a truly national currency, backed by the government's store of precious metals, and enforced by their military and governmental control over an area was, in its time, extremely controversial. Advocates of the old system of Free Banking repealed central banking laws, or slowed down the adoption of restrictions on local currency. (See Gold standard for a fuller discussion of the creation of a standard gold based currency).

At this 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 increase both in supply of these metals, particularly silver, and of trade. This is called bimetallism and the attempt to create a bimetallic standard where both gold and silver backed currency remained in circulation occupied 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 the circulating medium. Governments too followed Gresham's Law: keeping gold and silver paid, but paying out in notes.

Paper money era

Currency need to satisfy 3 functions to become true representation of transactions between living beings.

1. Medium of exchange 2. Store of value 3. Delivery of value (energy)

For paper currencies to be valid the issuer should be able to deliver "value / energy" on redemption of currency, otherwise paper currency has no mechanism to satisfy the "3. Delivery of value" function to be real currency. This means that Reserve Banks should have "energy reserves" to be called Reserve Banks. Reserve banks without energy reserves is the biggest scam in the modern economic scenario.

Main articles: Banknote and Fiat currency

A banknote (more commonly known as a bill in the United States and Canada) is a type of currency, and commonly used as legal tender in many jurisdictions. With coins, banknotes make up the cash form of all modern money

Modern currencies

To find out which currency is used in a particular country, check list of circulating currencies.

Currently, the International Organization for Standardization has introduced a three-letter system of codes (ISO 4217) to define currency (as opposed to simple names or currency signs), in order to remove the confusion that there are dozens of currencies called the dollar and many called the franc. Even the pound is used in nearly a dozen different countries, all, of course, with wildly differing values. In general, the three-letter code uses the ISO 3166-1 country code for the first two letters and the first letter of the name of the currency (D for dollar, for instance) as the third letter.

The International Monetary Fund uses a variant system when referring to national currencies.

Currency


A currency is a unit of exchange, facilitating the transfer of goods and/or services. It is one form of money, where money is anything that serves as a medium of exchange, a store of value, and a standard of value. A currency is the dominant medium of exchange. To facilitate trade between currency zones, there are exchange rates, which are the prices at which currencies (and the goods and services of individual currency zones) can be exchanged against each other. Currencies can be classified as either floating currencies or fixed currencies based on their exchange rate regime. In common usage, currency sometimes refers to only paper money, as in coins and currency, but this is misleading. Coins and paper money are both forms of currency.

In most cases, each country has monopoly control over the supply and production of its own currency. Member countries of the European Union's Economic and Monetary Union are a notable exception to this rule, as they have ceded control of monetary policy to the European Central Bank.

In cases where a country does have control of its own currency, that control is exercised either by a central bank or by a Ministry of Finance. In either case, 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. In the United States, the Federal Reserve System operates without direct interference from the legislative or executive branches. It is important to note that a monetary authority is created and supported by its sponsoring government, so independence can be reduced or revoked by the legislative or executive authority that creates it. However, in practical terms, the revocation of authority is not likely. In almost all Western countries, the monetary authority is largely independent from the government.

Several countries can use the same name, each for their own currency (e.g. Canadian dollars and United States dollars), several countries can use the same currency (e.g. the euro), or a country can declare the currency of another country to be legal tender. For example, Panama and El Salvador have declared U.S. currency to be legal tender, and from 1791–1857, Spanish silver coins were legal tender in the United States. At various times countries have either re-stamped foreign coins, or used currency board issuing one note of currency for each note of a foreign government held, as Ecuador currently does.

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