The most widely used currencies in the world include the United States dollar ($), the euro (€), the Chinese yuan (¥), the Japanese yen (¥) and the British pound (£). A currency is a standard medium of exchange. Almost all widely used currencies can be exchanged using coins, banknotes or electronically. To date, all widespread currencies are overseen and managed by a central bank or a national government.Continue Reading
These currencies are held by governments and other institutions as foreign currency reserves. Such reserves are assets held in order to back liabilities. The U.S. dollar is by far the most common currency used for foreign exchange reserves. For this reason, it is known as the global reserve currency.
The factors that drive changes in the value of a country's currency domestically or relative to other currencies are immensely complex. These include interest rates, debt, inflation, the balance of payments, political stability and the rate of GDP growth. Currencies are exchanged through international markets in volumes worth trillions of U.S. Dollars every day.
Digital currencies have begun to enter widespread use as of 2015. The most popular of these is Bitcoin. A key difference between digital currencies and physical currencies is that digital currencies are not regulated or managed by a central bank or government. Most digital currencies facilitate anonymity, instantaneous transactions and the absence of fees. Their value relative to physical currencies is often highly volatile, and the anonymity they offer is sometimes used to facilitate illegal activities.Learn more about Currency & Conversions