Currency competition

From Wikipedia, the free encyclopedia

Currency competition is a monetary system in which private entities print money (usually backed by a valuable, exchangeable commodity such as gold or silver) in order to satisfy the demand for a simple, low-cost method of trading goods and services. Competition in currency is relatively rare as most countries have a fiat currency system in which there is a single, nationalized currency that is controlled by a central bank as a policy tool of the national government to attempt to control an economy.

The term currency competition is also used to describe the relationship between separate fiat currencies in the global economy. In this sense, two or more government-issued currencies, such as the United States dollar and the Euro of the Eurozone, retain domestic monopoly status but compete with each other across international borders.