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 enforce fiat currency monopolies in which single, nationalized currencies controlled by central banks is declared legal tender. In such uncompetitive environments, critics argue there is no separation of money and state.
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.
Famous quotes containing the words currency and/or competition:
“One of the reforms to be carried out during the incoming administration is a change in our monetary and banking laws, so as to secure greater elasticity in the forms of currency available for trade and to prevent the limitations of law from operating to increase the embarrassment of a financial panic.”
—William Howard Taft (1857–1930)
“All adults who care about a baby will naturally be in competition for that baby.... Each adult wishes that he or she could do each job a bit more skillfully for the infant or small child than the other.”
—T. Berry Brazelton (20th century)