Currency competition

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 today, as most countries have a fiat currency system in which there is a single, nationalized currency that is controlled by a central bank.

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.

Zimbabwe has adopted currency competition of several fiat currencies as a response to years of hyperinflation.^[1]

See also

• Complementary currency
• Alternative currency
• Electronic money
• Private currency
• Free banking

References

1. ^ Reynolds, Neil (23 August 2011). "A choice of currency leads to a choice for security". The Globe and Mail. http://www.theglobeandmail.com/report-on-business/commentary/neil-reynolds/a-choice-of-currency-leads-to-a-choice-for-security/article2138978/. Retrieved 26 August 2011.