The main elements of monetary systems: types of currencies and their rates

The monetary system of any country is ahistorically formed and fixed by the law form of monetary circulation, used in the sovereign territory of the country. Types of monetary systems are allocated on the basis of the type of money, which is a measure of value. On the basis of this criterion, there are credit, paper-money and metal systems.

The number of elements that determine the form of monetary circulation in the state include:

types of currencies;
their form;
exchange rate.

The notion of "currency" is not in itselfand has three main values. Firstly, it is the national monetary unit of a particular country. Secondly, these are the units of account and the funds of foreign countries. Thirdly, we must not forget about international accounting units like the euro. In the most general form, the following types of currencies are distinguished:

SCR (freely convertible currency), whichis characterized by complete external and internal convertibility, as defined in the legislation of the country for which it is national. For example, the American dollar, the British pound sterling, the Swiss franc.
PCI (partially-convertible currency), which can be exchanged outside the country with certain restrictions.
NKV (non-convertible). If other types of currencies can operate outside the state in which they are issued, the IRB is exchanged for foreign currency only in the national market.

Also in the world economy there is a conceptclearing and reserve monetary units. These types of currencies in their functional purpose are associated with the processes of globalization and internationalization of the economy. The clearing currency exists exclusively in non-cash form and is used exclusively for settlements within a certain integration association. As for the reserve currency, its role is to calculate foreign trade transactions and establish world prices. To date, this function is performed by the US dollar.

Great influence on international tradeprovide types of exchange rates. The state determines the most favorable course for its foreign and domestic policy, establishing its regime: a fixed, floating or "currency corridor." The easiest for regulation and control, of course, is a fixed rate. Such a monetary unit is not subject to inflation, but on the other hand, it does not react to changes in the market situation. The floating exchange rate, on the other hand, is determined entirely on the basis of supply and demand, and the state can influence it only through foreign exchange interventions. "Currency Corridor" is the golden mean between the above-mentioned currency regimes, combining their main advantages and disadvantages. However, different types of currencies need a different approach in setting their course, otherwise foreign economic relations of the country may suffer, and, of course, the well-being of its population.