Monetary system

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A currency system (also currency order ) is understood to be the entire regulatory framework that encloses a currency . The monetary constitution , currency reserves , the exchange rate system and economic monetary and currency policy are all subsumed under the term.

A currency system thus has a decisive influence both on the economic development of a currency area and on the international role of a reserve currency .

The history and development of the different historical currencies is completely tailored to the special currency systems that were in effect at the time. This also applies to current currencies. The monetary system or parts of it can be reformed and the respective system changed at any time .

Monetary Constitution

The constitution of the currency is one of the points to be regulated within the framework of the currency system .

It includes currency law . This legally records the emission of currencies , their coins and banknotes , and thus the means of payment . The extent to which complementary currencies or free currencies are allowed is recorded.

As a rule, a currency monopoly is established and this is transferred to privileged central banks . They are thus entitled to issue legal tender .

Furthermore, the right to mint as well as the circulation of coins and banknotes are specified. There are also regulations on seigniorage .

Currency reserve

In the event that the monetary value exceeds the material value, purchasing power can only be maintained through a credible currency reserve .

Coins whose face value is covered by the material value are called Kurant coins . For most circulating today coins is small coins whose nominal value is above the material value. In the case of banknotes, the material value is usually below the nominal value. Fiat money no longer has a promise of redemption (e.g. in gold ).

Currencies whose coverage is precisely regulated are called "pegged" currencies. The bond with precious metals such as gold and silver was particularly historical . A gold standard or silver standard was characterized by a fixed exchange obligation. In addition, a fixed link can also be made to currency reserves or as a mixed form, so-called gold foreign currency currencies .

If no redemption obligation is built into the currency constitution, the coverage by assets and credit claims is determined in the balance sheet of the responsible monetary authority .

A distinction is made in particular between minimum reserve systems and full reserve systems as well as different monetary theoretical concepts with regard to the value of money.

Exchange rate system

Another determinant in the context of the currency system is the exchange rate system of a currency. This refers to the way in which the exchange rate , i.e. the exchange ratio between two currencies, is formed.

Two basic forms can be distinguished: If the exchange rate is formed freely by the supply and demand behavior on the foreign exchange market , there is a system of flexible exchange rates. In systems of fixed exchange rates, on the other hand , it is set at a certain value through government intervention, usually through foreign exchange market intervention . There are also numerous intermediate forms.

Monetary and currency policy

The regulations in the context of the monetary system include economic policy , which includes monetary and currency policy .

In the context of monetary policy, the determinants here are instruments ( e.g. key interest rates ), strategies ( e.g. direct inflation targeting or money supply control ) and goals ( e.g. price level stability or economic growth ).

The most important determinant of monetary policy is the size of the currency reserves. A determinant for both economic policy measures is the degree of independence of the central bank from other political actors, especially the government. If there is little independence, monetary policy can also be used to achieve monetary policy.

See also

Individual evidence

  1. Eurosystem collateral framework: Inclusion of non-marketable collateral in the uniform list of collateral , European Central Bank , press release of July 22, 2005