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:
“Money is the worst currency that ever grew among mankind. This sacks cities, this drives men from their homes, this teaches and corrupts the worthiest minds to turn base deeds.”
—Sophocles (497–406/5 B.C.)
“Mothers seem to be in subtle competition with teachers. There is always an underlying fear that teachers will do a better job than they have done with their child.... But mostly mothers feel that their areas of competence are very much similar to those of the teacher. In fact they feel they know their child better than anyone else and that the teacher doesn’t possess any special field of authority or expertise.”
—Sara Lawrence Lightfoot (20th century)