Today, the dollar is the guarantor of trade operations all over the world. Its credibility is based on the American economy, which has established itself as a powerful financial machine.
World currencies
The history of money circulation has a long and very rich history. Since the emergence of money as a payment element, each independent state considers it obligatory to have its own national monetary unit - currency.
The dominant states in the world conduct trade relations by means of their national currency. This is how the concept of world currency was born.
The world currency is nothing more than a generally accepted payment instrument. Such a currency is trusted and in demand. Countries with less developed economies trade goods using not national money, those monetary units that can be paid off with any other state.
The first world currencies
Since ancient times, precious metals have been accepted as a monetary equivalent. Of these, coins were minted with which one could pay for any product. The most widespread were silver and gold, but due to the fact that gold is a rarer metal, gold coins were much more expensive than silver ones. For this reason, states began to create their own gold reserves. With the advent of paper money, gold as a payment unit faded into the background, but continued to play an important role in the financial system of any state, because it provided a guarantee of the value of paper notes issued by countries.
At all times in the world there have been countries with a dominant position. Therefore, the currencies of such countries were in a special position and were in great demand among other states, as a guarantor of security in trade relations. During the domination of England and Spain, the monetary units of these particular states were world currencies. Behind them were not only armies, but also the developed economies of these states. In addition, these countries traded all over the world, which contributed to the promotion of English and Spanish money in the economies of other countries.
The dollar as the world currency
From the moment the United States of America appeared on the political map of the world, the monetary unit of this country began its path to world domination. The dollar, and this is how the monetary unit of the young country began to be called, was silver. But with the discovery of rich gold deposits, a large number of gold 10-dollar coins began to be minted. The dollar's attachment to gold has helped the currency to dominate the global market.
During the world wars that took place on the territory of many states, the economies of the countries fell into decay due to the destroyed production and agriculture. Unlike such states, the US economy did not experience such difficulties, but, on the contrary, began to develop intensively against the background of the development of production. Consumer goods and weapons supplied by the United States to allied countries were exchanged for dollars or gold. Dollars, in turn, could also be purchased only for gold.
Thus, the US economy developed where other states had ruin and decline. Many countries began to store their gold reserves in the United States in exchange for dollar bills, which at that time were pegged to gold. The dollar has become widespread in the trade turnover of various countries.
In the post-war decades, the US economy only increased its momentum, thereby contributing to the advancement of the dollar as a world currency. In addition, this status was assigned to the dollar in 1944 at the Bretton Woods conference.
Since then and to this day, the dollar has been the guarantor of trade transactions around the world. Many states trust him with their financial security, based on the fact that the American economy is the largest in the world.
