Currency can be defined as a system of money issued by a State on a national territory, used by people in that nation, allowing to carry out monetary exchanges.
Issued by public authorities, currency is a unit of account and a store of value. In the commercial and trade sector, currency represents the main process by which purchases, and sales of goods or services are made. Each currency is therefore a means of payment within a given zone. Currencies can act as stories of value and are traded between nations in foreign exchange markets.
Some common currencies used today are: U.S dollars, Euros, Rupees, Yen, Pounds Sterling, etc. Under the ISO 4217 Standard, all international currencies are assigned a three-letter code: EUR for euro, GBP for pounds sterling, USD for U.S. dollars, JPY for yen, etc.
The central bank of each country has the power to circulate the currency throughout its territory. The Federal Reserve is the central bank of the United States. In some cases, a currency is used by a group of countries, as is the case with the euro, in which case the currency is issued by an international organization, here the European Central Bank (ECB). On another note, some countries abandoned their currency in favor of a foreign currency. It is oftentimes the case with the U.S. dollar, which was adopted by countries like Panama, Ecuador or El Salvador. The euro was also adopted by countries outside the European Union, such as Monaco or Andorra.
[Last updated in April of 2022 by the Wex Definitions Team]