What is credit currency? What is the credit currency system?
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What is credit currency? What is the credit currency system?
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Credit Money (Credit Money) is stipulated by national laws, and compulsory circulation does not exert currency functions based on independent currency functions. At present, the currency issued by countries in the world is basically a credit currency. Credit currency is a credit device provided by banks.
The credit currency is guaranteed by credit, which is issued and created through credit procedures. Credit currency is the product of further development of currency. At present, it has become a currency form used by almost all countries in the world. The banknote system is the currency system based on the unspeakable banknotes as the currency
The characteristics of the credit currency system
(1) It uses the unswerving banknotes as its Generally, the
(2) Do not cash with the banknote does not represent any precious metals, and cannot be exchanged for precious metals such as gold.
(4) The nature of credit currency enables the requirements of circulating currency to meet the demand for economic growth.
The advantages and disadvantages are the same. There is no enough precious metal as a reserve when the currency is issued, and only national credit is guaranteed. (Of course, there are regulatory units, but at the critical time, they are all rushing self -theft. For example, the French currency is issued in the late Republic of China, and the golden coupons implemented) The advantages obviously use the principle of leverage to overflow a lot of (virtual) wealth, and the central bank can also use monetary policy more flexibly Regulate macroeconomics. At the same time, the credit is questioned in a large scale, or severe inflation caused by abuse currency. For large -scale crowding in banks, credit currency will lack complete payment capacity, so currency will inevitably depreciate, and the national economy will also be severely damaged.
Is the direction of future currency development and evolution, and within the current view, electronic money is likely to replace credit currency to perform currency functions (developed countries have taken the first step). However, there are still many obstacles to the globalization of electronic currency. Electronic currencies are essentially credit currencies, and they have the advantages and disadvantages of credit currencies.