World money: their essence and functions

Since ancient times, world money has provided for the payment of goods and services produced in a foreign country. Thus, they are the basis for the development of international agreements. For a long time, world money was expressed in metal, that is, only metal coins, especially those made of precious kinds, were considered as such.

But in the process of evolution of economic relations, the coinage of coins as the basis of the currency ceased, due to inexpediency and high cost. That is why the release of paper money, the production of which was less expensive, was welcomed, and the value practically did not diminish.

Currently, world money is a currency used in international settlements. The most widespread was the US dollar, followed by the euro and the Japanese yen. At the same time, experts believe that in connection with the crisis, the US dollar will not be able to retain its leadership position. Most likely, in a decade, he will be replaced by the Chinese yuan. But so far these are just forecasts of economists from different countries.

Modern world money takes the following forms:

1. The currency most often used in credit relations. Earlier in this form were bills. However, their drawback was that they could not serve as a means of settlement in transactions with foreign partners. And with the creation of national credit money and the definition of specific international currency units, operations of representatives of different countries have become much simpler.
2. The international monetary unit, which is applied collectively. So far no single currency has been able to win the US dollar. Great hopes are placed on the euro, a common currency in European countries. But, as noted above, the US dollar is circulating everywhere and has no analogues.
3. More recently, a form such as slogans has appeared. They are non-cash money used in settlements with foreign counterparties. As such documents can be allocated letters of credit, payment orders, checks, securities, bills.

In addition, world money performs certain functions.

It is worth noting the fact that, first of all, world money performs economic functions. Relations between counterparties of different countries were to a great extent complicated by the need to convert national currencies, that is, the settlement of transactions required an additional agreement on a specific currency. With the advent of world money, economic entities were able to offset mutual claims and liabilities and pay only the balance of arrears. Currently, such transactions are not unusual, and large commercial banks conduct netting transactions on a daily basis.

But in addition to economic, it is worth mentioning the political function of world money. They are an instrument serving to achieve specific political goals. For example, interstate loans and loans in some cases force the borrowing country to be loyal or to act contrary to its own interests. And some major political associations clamp the participants in the organization, obliging them to provide financial assistance to a state experiencing temporary difficulties.

In connection with defaults and crises, some business entities still trust only gold and other precious metals. And this can be understood, because for a long time the single world currency was exactly the gold coin. Over time, it was replaced by international payments, and hard currency (for example, the dollar or the euro) came to replace it. If earlier in the reserve fund of developed countries there were about 80% of gold, now this figure has significantly decreased and is no more than 17%. This is due to the development of non-cash settlements, and to the artificial decline in gold prices on the part of the leading states.