Currency Definition: Type, Metal, Paper, Characteristics, Advantages, Disadvantages

What is Currency

Currency is money issued by the central bank. This type of money is used in everyday life as a tool used to make transactions. Currency in the form of paper or metal. According to the Central Bank Act No. 13 of 1968 article 26 paragraph 1, it states that Bank Indonesia has the sole right to issue coins and paper.

Types of Money According to the Institution That Issued It

there are two types of currency, namely as follows:

1. State Money

is money issued by the government, which is made of plastic?

Features of state money:

1. Issued by the government
2. Guaranteed by law
3. Write the name of the country that issued it
4. Signed by the minister of finance

However, since the enactment of Law no. 13.1968, the circulation of state money has been stopped and replaced with bank money.

2. Bank Money

Namely money issued by the Central Bank in the form of coins and paper money.

Bank money characteristics:

1. Issued by the central bank
2. Guaranteed with gold or foreign currency deposited in the Central Bank
3. Write the name of the central bank of the country concerned
4. Signed by the governor of the central bank

Types of Currency According to the Material of Manufacture

1. Coin

Coins are usually made of gold or silver because gold and silver meet the requirements of efficient money. Because the price of gold and silver tends to be high and stable, gold and silver are easily recognized and accepted by people. In addition, gold and silver are not easily destroyed. Gold and silver are also easily broken down into smaller units. In this day and age, coins are not valued by the weight of the gold, but by their face value. The face value is a statement that a certain amount of gold with a certain weight is contained in it.

1. Intrinsic Value

namely the value of the material to make currency, for example how much gold and silver are used for currency. Historically, gold and silver coins were used as money. There are several reasons why gold and silver are used as money because they are durable and not easily damaged (Rp. 100.00), or five hundred rupees (Rp. 500.00).

2. Exchange Rates

The exchange rate is the ability of money to be exchanged for goods (purchasing power of money). For example, Rp. 500.00 can only be exchanged for a candy, while Rp. 10,000.00 can be exchanged for a bowl of meatballs).

Advantages of coins

1. Its advantages are Strong and Durable
2. The quality is easy to control
3. Smaller, simple and easy to carry
4. Can make a sound when it falls

Lack of Coins

1. Heavier than Banknotes
2. If there are a lot of them, it’s quite a burden on the pocket
3. Limited Metal Stock

Currency Trading

The exchange rate is the current value of any currency as exchanged for another currency. These rates are constantly fluctuating in response to economic and political events.

Such fluctuations create a market for currency trading. The foreign exchange market in which this trade is conducted is one of the largest markets in the world in large numbers. All trades are in large numbers, with a standard minimum lot of 100,000. Most currency traders are professionals who invest for themselves or for institutional clients including banks and large corporations.

The foreign exchange market has no physical address. Trading is completely electronic and runs 24 hours a day to accommodate traders in each time zone.

Currency Exchange

For the rest of us, currency trading is mostly done at airport kiosks or banks while on the go.

Consumer advocates say that travelers get the best value by exchanging cash at banks or at ATMs in the network. Other options may have higher fees and weaker exchange rates.

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