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:
“There is no legislation—I care not what it is—tariff, railroads, corporations, or of a general political character, that all equals in importance the putting of our banking and currency system on the sound basis proposed in the National Monetary Commission plan.”
—William Howard Taft (1857–1930)
“So long as the system of competition in the production and exchange of the means of life goes on, the degradation of the arts will go on; and if that system is to last for ever, then art is doomed, and will surely die; that is to say, civilization will die.”
—William Morris (1834–1896)