The "world currency" as the US dollar is popularly known, is one of the most important pillars of the world economy. It's not just a coin; it's a symbol of stability, reliability and global economic connectivity. For these reasons, we will consider its meaning below, his story, its integrity over the years, its use in countries other than the US and the reasons why it is so popular.
The importance of the dollar in the world economy
The dollar has been the official currency of the United States since 1792, when enacted by the Mint Act (Coinage Act). Today, it is the most used currency in international transactions, while it forms the basis of foreign exchange reserves for most countries. About the 60% of world foreign exchange reserves are in dollars, and the currency is used in over the 80% of international transactions. The reasons that make it so popular are: the stability of the US economy, the liquidity it offers to the markets and the country's position as a global economic superpower.
Dollar: A currency without borders
You knew that, although it is the official currency of the USA, the dollar is widely used in many countries worldwide, both formally and informally? THE Panama, the Equator and the El Salvador have adopted the dollar as their official currency, replacing the local, while in other countries, like the Caribbean, the Cambodia and the Lebanon, the dollar is informally used in everyday transactions because of its stability. In Africa, countries such as Zimbabwe they rely on the dollar to avoid the volatility of their local currency. Even in Russia, the dollar remains the primary currency for high-value savings and transactions.
The stability of the dollar over the years
The dollar has proven to be very resilient to economic turmoil over the years and this makes it a very reliable currency. Since its establishment, the dollar has survived wars, economic crises and major reforms, maintaining his position as one of the most stable currencies in the world. THE linking the dollar to gold through the Bretton Woods Agreement the 1944 boosted international confidence in the currency. Although the validity of this agreement ended on 1971, the dollar continues to dominate markets thanks to the strong US economy.
Both investors and central banks worldwide, they use it as reserve currency because of its stability and reliability. In times of economic instability, the dollar acts as a "safe haven", protecting investors from the uncertainty of other markets.
Historical moments of the dollar
Let's take a little look back at the rich history of the coin. The first dollar, known as the “Flowing Hair Dollar”, it was cut off 1794 made of silver and today it is one of the most collectible coins. With the Bretton Woods agreement during World War II, the dollar was established as the main reserve currency, making it the most trusted currency on the planet. Another interesting element is the symbols on his banknote 1 dollar, such as the "all-seeing eye" and the pyramid, which have fueled countless conspiracy theories more than once.
Why is the dollar so strong?
The strength of the dollar is due to three main factors:
1.Stability and reliability: The US economy remains strong, boosting confidence in its currency.
2.Liquidity in markets: Dollar transactions are easy and fast, which makes it ideal for international markets.
3.Reserve currency regime: The dollar is the base currency for most central banks, making it the "heart" of world trade.
Practical tips for travelers
If you have planned a trip to a country where the dollar is used as a transaction currency, please note the following:
- Find out about the exchange rate: Check the current exchange rate to get the best possible deal.
- Avoid airports: Airport exchange fees are usually high.
- Check the condition of the banknotes: Some countries do not accept old or worn banknotes.
The dollar is much more than just a currency. His story, its stability and its use around the world, make it necessary tool for every traveler and investor.
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