Currency self development

Definition of currency :a system of money in general use in a particular country.
"the dollar was a strong currency"
Similar Currency :

money

legal tender

medium of exchange

cash

banknotes

notes

paper money

coins

coinage

bills

specie

the fact or quality of being generally accepted or in use.
"the term gained wider currency after the turn of the century"
Creations of currency :
Money creation, or money issuance, is the process by which the money supply of a country, or of an economic or monetary region, is increased.The Fixed Fiduciary System:

This is one of the oldest systems of con­trolling note-issues. Under this system, a country can issue a certain quantity of notes without any reserve, i. e., without gold or silver backing.

The upper limit to this quantity is called fiduciary limit beyond which there has to be a hundred percent metallic reserve. Over the years the system was followed by more and more countries. However, the fiduciary limit had to be raised from time to time in order to meet the growing needs of trade and industry. The system has both advan­tages and disadvantages.
Advantages:

Three main advantages of the method are:

(i) Economy:

The chief advantage of the system is that it is economic. The reason is that a part of the reserve can be held in the form of (foreign) interest-bearing securities.

(ii) Elasticity:

It is highly elastic in nature.

ADVERTISEMENTS:

(iii) Exchange rate stability:

Finally, the system enables the central bank to maintain stability in the external value of the country’s currency. When, for instance, a country suffers from a deficit in the balance of payments the external value of its currency tends to fall.

This can be prevented by selling foreign currencies. In contrast, when a country enjoys a surplus in its balance of payments, the external value of the country’s currency tends to rise. In such a situation the rate of ex­change can be kept steady by purchasing foreign currencies.
An ideal system is one which seeks to secure four major objectives:

(1) Economy

(2) Elasticity

(3) Safety

(4) Stability

The emerging trend today in most developing countries is toward the adoption of a reserve system which is sufficiently flexible to meet their develop­mental needs.