The term currency describes the form of money of a concrete state. A state´s currency is usually the only monetary form which is accepted by the state and which circulates within the country or within a currency (monetary) union. There are, however, a number of exceptions to this; there are states which use two (or more currencies). A currency usually has set rules for its emission, its protection and use. A state´s monetary policy regulates the emission and the circulation of money in its economy.
Currencies are usually reciprocally exchangeable (convertible) – the ratio of conversion is called the exchange rate(currency rate). Each currency has its own three-letter-acronym (e.g. EUR, USD, INR), which has been determined in an international agreement and is anchored through ISO 4217.
Currency in practice: A state´s currency and its exchange rate via other currencies significantly influence the behaviour of the economy. Any trade activities between the individual subjects inside the state take place in the concrete currency of the given state. In all international business transactions the value of the transaction has to be recalculated with the help of the current exchange rate.
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