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The United States dollar (
symbol A symbol is a mark, sign, or word that indicates, signifies, or is understood as representing an idea, object, or relationship. Symbols allow people to go beyond what is known or seen by creating linkages between otherwise very different ...
: $;
code In communications and information processing, code is a system of rules to convert information—such as a letter (alphabet), letter, word, sound, image, or gesture—into another form, sometimes data compression, shortened or secrecy, secret ...
: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official
currency A currency, "in circulation", from la, Wikt:currens, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or currency in circulation, circulation as a medium of exchange, for example ba ...
of the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
and several other countries. The
Coinage Act of 1792 The Coinage Act of 1792 (also known as the Mint Act; officially: ''An act establishing a mint, and regulating the Coins of the United States''), passed by the United States Congress on April 2, 1792, created the United States dollar as the countr ...
introduced the U.S. dollar at par with the Spanish silver dollar, divided it into 100 cents, and authorized the minting of coins denominated in dollars and cents. U.S. banknotes are issued in the form of
Federal Reserve Note Federal Reserve Notes, also United States banknotes, are the currently issued banknotes of the United States dollar. The United States Bureau of Engraving and Printing produces the notes under the authority of the Federal Reserve Act of 1 ...
s, popularly called greenbacks due to their predominantly green color. The
monetary policy of the United States Monetary policy of The United States concerns those policies related to the Minting coins, minting & Federal Reserve Note, printing of money, policies governing the legal exchange of currency, demand deposits, the money supply, etc. In the Unite ...
is conducted by the
Federal Reserve System The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after ...
, which acts as the nation's
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial bank, commercial banking system. In contrast to a commercial ba ...
. The U.S. dollar was originally defined under a bimetallic standard of (0.7735 troy ounces) fine silver or, from 1837, fine gold, or $20.67 per
troy ounce Troy weight is a system of Physical unit, units of mass that originated in 15th-century England, and is primarily used in the precious metals industry. The troy weight units are the Grain (unit), grain, the pennyweight (24 grains), the troy oun ...
. The Gold Standard Act of 1900 linked the dollar solely to gold. From 1934, its equivalence to gold was revised to $35 per
troy ounce Troy weight is a system of Physical unit, units of mass that originated in 15th-century England, and is primarily used in the precious metals industry. The troy weight units are the Grain (unit), grain, the pennyweight (24 grains), the troy oun ...
. Since 1971, all links to gold have been repealed. The U.S. dollar became an important international
reserve currency A reserve currency (or anchor currency) is a foreign currency that is held in significant quantities by central banks or other monetary authorities as part of their foreign exchange reserves. The reserve currency can be used in international t ...
after the
First World War World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...
, and displaced the
pound sterling Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United King ...
as the world's primary reserve currency by the
Bretton Woods Agreement The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or Am ...
towards the end of the
Second World War World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the World War II by country, vast majority of the world's countries—including all of the great power ...
. The dollar is the most widely used currency in international transactions, and a free-floating currency. It is also the official currency in several countries and the ''de facto'' currency in many others, with Federal Reserve Notes (and, in a few cases, U.S. coins) used in circulation. As of February 10, 2021, currency in circulation amounted to , of which is in Federal Reserve Notes (the remaining is in the form of
coins A coin is a small, flat (usually depending on the country or value), round piece of metal or plastic used primarily as a medium of exchange or legal tender. They are standardized in weight, and produced in large quantities at a mint (facility), ...
and older-style
United States Note A United States Note, also known as a Legal Tender Note, is a type of Banknote, paper money that was issued from 1862 to 1971 in the U.S. Having been current for 109 years, they were issued for longer than any other form of U.S. paper money. T ...
s).


Overview


In the Constitution

Article I, Section 8 of the U.S. Constitution provides that
Congress A congress is a formal meeting of the Representative democracy, representatives of different countries, constituent states, organizations, trade unions, political party, political parties, or other groups. The term originated in Late Middle Eng ...
has the power " coin money." Laws implementing this power are currently codified in Title 31 of the U.S. Code, under Section 5112, which prescribes the forms in which the United States dollars should be issued.''Denominations, specifications, and design of coins''. . These coins are both designated in the section as "
legal tender Legal tender is a form of money that Standard of deferred payment, courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which wh ...
" in payment of debts. The Sacagawea dollar is one example of the
copper alloy Copper alloys are metal alloys that have copper as their principal component. They have high resistance against corrosion. The best known traditional types are bronze Bronze is an alloy consisting primarily of copper, commonly with about 12 ...
dollar, in contrast to the American Silver Eagle which is pure
silver Silver is a chemical element with the Symbol (chemistry), symbol Ag (from the Latin ', derived from the Proto-Indo-European wikt:Reconstruction:Proto-Indo-European/h₂erǵ-, ''h₂erǵ'': "shiny" or "white") and atomic number 47. A soft, whi ...
. Section 5112 also provides for the minting and issuance of other coins, which have values ranging from one cent ( U.S. Penny) to 100 dollars. These other coins are more fully described in
Coins of the United States dollar Coins of the United States dollar (aside from those of the earlier Continental currency) were first minted in 1792. New coins have been produced annually and they make up a valuable aspect of the United States United States currency, currency syste ...
. Article I, Section 9 of the Constitution provides that "a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time," which is further specified by Section 331 of Title 31 of the U.S. Code. The sums of money reported in the "Statements" are currently expressed in U.S. dollars, thus the U.S. dollar may be described as the
unit of account In economics, unit of account is one of the money functions. A unit of account is a standard numerical monetary unit of measurement of the market value of goods, services, and other transactions. Also known as a "measure" or "standard" of rela ...
of the United States. "Dollar" is one of the first words of Section 9, in which the term refers to the Spanish milled dollar, or the coin worth eight
Spanish real The ''real'' (English: /ɹeɪˈɑl/ Spanish: /reˈal/) (meaning: "royal", plural: ''reales'') was a unit of currency in Spanish Empire, Spain for several centuries after the mid-14th century. It underwent several changes in value relative to o ...
es.


The Coinage Act

In 1792, the
U.S. Congress The United States Congress is the legislature of the federal government of the United States. It is Bicameralism, bicameral, composed of a lower body, the United States House of Representatives, House of Representatives, and an upper body, ...
passed the Coinage Act, of which Section 9 authorized the production of various coins, including:
U.S. Congress The United States Congress is the legislature of the federal government of the United States. It is Bicameralism, bicameral, composed of a lower body, the United States House of Representatives, House of Representatives, and an upper body, ...
. 1792.
Coinage Act of 1792
'. 2nd Congress, 1st Session. Sec. 9, ch. 16. Retrieved June 6, 2020.
Section 20 of the Act designates the United States dollar as the unit of currency of the United States:


Decimal units

Unlike the Spanish milled dollar, the
Continental Congress The Continental Congress was a series of legislature, legislative bodies, with some executive function, for thirteen of British America, Britain's colonies in North America, and the newly declared United States just before, during, and after the ...
and the Coinage Act prescribed a decimal system of units to go with the unit dollar, as follows: the mill, or one-thousandth of a dollar; the cent, or one-hundredth of a dollar; the dime, or one-tenth of a dollar; and the eagle, or ten dollars. The current relevance of these units: * Only the cent (¢) is used as everyday division of the dollar. * The dime is used solely as the name of the
coin A coin is a small, flat (usually depending on the country or value), round piece of metal A metal (from ancient Greek, Greek μέταλλον ''métallon'', "mine, quarry, metal") is a material that, when freshly prepared, polished, or ...
with the value of 10 cents. * The mill (₥) is relatively unknown, but before the mid-20th century was familiarly used in matters of sales taxes, as well as gasoline prices, which are usually in the form of $ΧΧ.ΧΧ9 per
gallon The gallon is a unit of measurement, unit of volume in imperial units and United States customary units. Three different versions are in current use: *the imperial gallon (imp gal), defined as , which is or was used in the United Kingdom, Ire ...
(e.g., $3.599, commonly written as $). * The eagle is also largely unknown to the general public. This term was used in the ''Coinage Act of 1792'' for the denomination of ten dollars, and subsequently was used in naming gold coins. The Spanish peso or dollar was historically divided into eight reales (colloquially, ''bits'') – hence ''pieces of eight''. Americans also learned counting in non-decimal ''bits'' of cents before 1857 when Mexican ''bits'' were more frequently encountered than American cents; in fact this practice survived in
New York Stock Exchange The New York Stock Exchange (NYSE, nicknamed "The Big Board") is an American stock exchange in the Financial District of Lower Manhattan in New York City New York, often called New York City or NYC, is the List o ...
quotations until 2001. In 1854,
Secretary of the Treasury The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...
James Guthrie proposed creating $100, $50, and $25 gold coins, to be referred to as a '' union'', '' half union'', and ''quarter union'', respectively, thus implying a denomination of 1 Union = $100. However, no such coins were ever struck, and only patterns for the $50 half union exist. When currently issued in circulating form, denominations less than or equal to a dollar are emitted as U.S. coins, while denominations greater than or equal to a dollar are emitted as
Federal Reserve Note Federal Reserve Notes, also United States banknotes, are the currently issued banknotes of the United States dollar. The United States Bureau of Engraving and Printing produces the notes under the authority of the Federal Reserve Act of 1 ...
s, disregarding these special cases: * Gold coins issued for circulation until the 1930s, up to the value of $20 (known as the ''
double eagle A double eagle is a gold coin of the United States with a denomination of $20. (Its gold content of 0.9675 Troy weight, troy oz (30.0926 grams) was worth $20 at the 1849 official price of $20.67/oz.) The coins are 34 mm x 2 mm and ...
'') * Bullion or commemorative
gold Gold is a chemical element with the Symbol (chemistry), symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a Brightness, bright, slightly orange-yellow, dense, s ...
,
silver Silver is a chemical element with the Symbol (chemistry), symbol Ag (from the Latin ', derived from the Proto-Indo-European wikt:Reconstruction:Proto-Indo-European/h₂erǵ-, ''h₂erǵ'': "shiny" or "white") and atomic number 47. A soft, whi ...
,
platinum Platinum is a chemical element with the Symbol (chemistry), symbol Pt and atomic number 78. It is a density, dense, malleable, ductility, ductile, highly unreactive, precious metal, precious, silverish-white transition metal. Its name origina ...
, and palladium coins valued up to $100 as legal tender (though worth far more as
bullion Bullion is non-ferrous metal that has been refined to a high standard of chemical element, elemental purity. The term is ordinarily applied to bulk metal used in the production of coins and especially to precious metals such as gold and silver. ...
). * Civil War paper currency issue in denominations below $1, i.e. fractional currency, sometimes pejoratively referred to as ''
shinplaster Shinplaster was paper money of low denomination, typically less than one dollar, List of circulating currencies, circulating widely in the economies of the 19th century where there was a shortage of circulating coinage. The shortage of circul ...
s''.


Etymology

In the 16th century, Count Hieronymus Schlick of
Bohemia Bohemia ( ; cs, Čechy ; ; hsb, Čěska; szl, Czechy) is the westernmost and largest historical region of the Czech Republic. Bohemia can also refer to a wider area consisting of the historical Lands of the Bohemian Crown ruled by the List o ...
began minting coins known as ''joachimstalers'', named for Joachimstal, the valley in which the silver was mined. In turn, the valley's name is titled after Saint Joachim, whereby ''thal'' or ''tal'', a cognate of the English word , is German for 'valley.'"Ask US." ''
National Geographic ''National Geographic'' (formerly the ''National Geographic Magazine'', sometimes branded as NAT GEO) is a popular American monthly magazine published by National Geographic Partners. Known for its photojournalism, it is one of the most widely ...
''. June 2002. p. 1.
The ''joachimstaler'' was later shortened to the German '' taler'', a word that eventually found its way into many languages, including: ''tolar'' ( Czech, Slovak and Slovenian); ''daler'' ( Danish and Swedish); ''dalar'' and ''daler'' ( Norwegian); ''daler'' or ''daalder'' ( Dutch); '' talari'' (
Ethiopian Ethiopians are the native inhabitants of Ethiopia, as well as the global diaspora of Ethiopia. Ethiopians constitute #Ethnicity, several component ethnic groups, many of which are closely related to ethnic groups in neighboring Eritrea and othe ...
); ''tallér'' ( Hungarian); ''tallero'' ( Italian); ''دولار'' (
Arabic Arabic (, ' ; , ' or ) is a Semitic languages, Semitic language spoken primarily across the Arab world.Semitic languages: an international handbook / edited by Stefan Weninger; in collaboration with Geoffrey Khan, Michael P. Streck, Janet C ...
); and ''
dollar Dollar is the name of more than 20 Currency, currencies. They include the Australian dollar, Brunei dollar, Canadian dollar, Hong Kong dollar, Jamaican dollar, Liberian dollar, Namibian dollar, New Taiwan dollar, New Zealand dollar, Singapore d ...
'' ( English). Though the Dutch pioneered in modern-day New York in the 17th century the use and the counting of money in silver dollars in the form of German-Dutch ''
reichsthaler The ''Reichsthaler'' (; modern spelling Reichstaler), or more specifically the ''Reichsthaler specie'', was a standard thaler silver coin introduced by the Holy Roman Empire The Holy Roman Empire was a Polity, political entity in Western Eur ...
s'' and native Dutch ''
leeuwendaalder A thaler (; also taler, from german: Taler) is one of the large silver coins minted in the states and territories of the Holy Roman Empire and the Habsburg monarchy during the Early Modern period. A ''thaler'' size silver coin has a diameter of ...
s'' ('lion dollars'), it was the ubiquitous
Spanish America Spanish America refers to the Spanish territories in the Americas during the Spanish colonization of the Americas. The term "Spanish America" was specifically used during the territories' Spanish Empire, imperial era between 15th century, 15th ...
n eight-real coin which became exclusively known as the ''dollar'' since the 18th century.


Nicknames

The
colloquialism Colloquialism (), also called colloquial language, everyday language or general parlance, is the style (sociolinguistics), linguistic style used for casual (informal) communication. It is the most common functional style of speech, the idiom norm ...
'' buck(s)'' (much like the British ''quid'' for the
pound sterling Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United King ...
) is often used to refer to dollars of various nations, including the U.S. dollar. This term, dating to the 18th century, may have originated with the colonial
leather Leather is a strong, flexible and durable material obtained from the tanning (leather), tanning, or chemical treatment, of animal skins and hides to prevent decay. The most common leathers come from cattle, sheep, goats, equine animals, buff ...
trade, or it may also have originated from a
poker Poker is a family of comparing card games in which players wager over which hand is best according to that specific game's rules. It is played worldwide, however in some places the rules may vary. While the earliest known form of the game ...
term. ''Greenback'' is another nickname, originally applied specifically to the 19th-century
Demand Note A Demand Note is a type of United States banknote, paper money that was issued between August 1861 and April 1862 during the American Civil War in denominations of United States five-dollar bill, 5, United States ten-dollar bill, 10, and Unite ...
dollars, which were printed black and green on the backside, created by
Abraham Lincoln Abraham Lincoln ( ; February 12, 1809 – April 15, 1865) was an American lawyer, politician, and statesman who served as the 16th president of the United States from 1861 until his assassination in 1865. Lincoln led the nation throu ...
to finance the
North North is one of the four compass points or cardinal directions. It is the opposite of south and is perpendicular to east and west. ''North'' is a noun, adjective, or adverb indicating Direction (geometry), direction or geography. Etymology T ...
for the
Civil War A civil war or intrastate war is a war between organized groups within the same Sovereign state, state (or country). The aim of one side may be to take control of the country or a region, to achieve independence for a region, or to change go ...
. It is still used to refer to the U.S. dollar (but not to the dollars of other countries). The term ''greenback'' is also used by the financial press in other countries, such as
Australia Australia, officially the Commonwealth of Australia, is a sovereign country comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands. With an area of , Australia is the largest country by ...
,
New Zealand New Zealand ( mi, Aotearoa ) is an island country in the southwestern Pacific Ocean. It consists of two main landmasses—the North Island () and the South Island ()—and over 700 List of islands of New Zealand, smaller islands. It is the ...
,
South Africa South Africa, officially the Republic of South Africa (RSA), is the Southern Africa, southernmost country in Africa. It is bounded to the south by of coastline that stretch along the Atlantic Ocean, South Atlantic and Indian Oceans; to the ...
, and
India India, officially the Republic of India (Hindi: ), is a country in South Asia. It is the List of countries and dependencies by area, seventh-largest country by area, the List of countries and dependencies by population, second-most populous ...
. Other well-known names of the dollar as a whole in denominations include ''greenmail'', ''green'', and ''dead presidents'', the latter of which referring to the deceased presidents pictured on most bills. Dollars in general have also been known as ''bones'' (e.g. "twenty bones" = $20). The newer designs, with portraits displayed in the main body of the obverse (rather than in cameo insets), upon paper color-coded by denomination, are sometimes referred to as ''bigface'' notes or ''
Monopoly A monopoly (from Greek language, Greek el, μόνος, mónos, single, alone, label=none and el, πωλεῖν, pōleîn, to sell, label=none), as described by Irving Fisher, is a market with the "absence of competition", creating a situati ...
money''. ''
Piastre The piastre or piaster () is any of a number of units of currency. The term originates from the Italian for "thin metal plate". The name was applied to Spanish and Hispanic American pieces of eight, or pesos, by Venice, Venetian traders in the ...
'' was the original French word for the U.S. dollar, used for example in the French text of the
Louisiana Purchase The Louisiana Purchase (french: Vente de la Louisiane, translation=Sale of Louisiana) was the acquisition of the Louisiana (New France), territory of Louisiana by the United States from the French First Republic in 1803. In return for fifteen ...
. Though the U.S. dollar is called ''dollar'' in Modern French, the term ''piastre'' is still used among the speakers of
Cajun French Louisiana French ( frc, français de la Louisiane; lou, françé la lwizyàn) is an umbrella term for the dialects and varieties of French, varieties of the French language spoken traditionally by French Louisianians in colonial Lower Louisiana. ...
and
New England French New England French (french: français de Nouvelle-Angleterre) is a variety of French spoken in the New England New England is a region comprising six states in the Northeastern United States: Connecticut, Maine, Massachusetts Massac ...
, as well as speakers in
Haiti Haiti (; ht, Ayiti ; French: ), officially the Republic of Haiti (); ) and formerly known as Hayti, is a country located on the island of Hispaniola in the Greater Antilles archipelago of the Caribbean Sea, east of Cuba and Jamaica, and ...
and other French-speaking Caribbean islands. Nicknames specific to denomination: * The quarter dollar coin is known as ''two bits'', betraying the dollar's origins as the "piece of eight" (bits or ''reales''). * The $1 bill is nicknamed ''buck'' or ''single''. * The infrequently-used $2 bill is sometimes called ''deuce'', ''Tom'', or ''Jefferson'' (after
Thomas Jefferson Thomas Jefferson (April 13, 1743 – July 4, 1826) was an American statesman, diplomat, lawyer, architect, philosopher, and Founding Fathers of the United States, Founding Father who served as the third president of the United States from 18 ...
). * The $5 bill is sometimes called ''Lincoln'', ''fin'', ''fiver'', or ''five-spot''. * The $10 bill is sometimes called ''sawbuck'', ''ten-spot'', or ''Hamilton'' (after
Alexander Hamilton Alexander Hamilton (January 11, 1755 or 1757July 12, 1804) was an American military officer, statesman, and Founding Fathers of the United States, Founding Father who served as the first United States secretary of the treasury from 1789 to ...
). * The $20 bill is sometimes called ''double sawbuck'', ''Jackson'' (after
Andrew Jackson Andrew Jackson (March 15, 1767 – June 8, 1845) was an American lawyer, planter, general, and statesman who served as the seventh president of the United States The president of the United States (POTUS) is the head of state and ...
), or ''
double eagle A double eagle is a gold coin of the United States with a denomination of $20. (Its gold content of 0.9675 Troy weight, troy oz (30.0926 grams) was worth $20 at the 1849 official price of $20.67/oz.) The coins are 34 mm x 2 mm and ...
''. * The $50 bill is sometimes called a ''yardstick'', or a ''grant'', after President
Ulysses S. Grant Ulysses S. Grant (born Hiram Ulysses Grant ; April 27, 1822July 23, 1885) was an American military officer and politician who served as the 18th president of the United States from 1869 to 1877. As Commanding General of the United States ...
. * The $100 bill is called ''Benjamin'', ''Benji'', ''Ben'', or ''Franklin'', referring to its portrait of
Benjamin Franklin Benjamin Franklin ( April 17, 1790) was an American polymath who was active as a writer, scientist, Invention, inventor, Statesman (politician), statesman, diplomat, printer (publishing), printer, publisher, and Political philosophy, politi ...
. Other nicknames include ''C-note'' (C being the
Roman numeral Roman numerals are a numeral system that originated in ancient Rome and remained the usual way of writing numbers throughout Europe well into the Late Middle Ages. Numbers are written with combinations of letters from the Latin alphabet, eac ...
for 100), ''century note'', or ''bill'' (e.g. ''two bills'' = $200). * Amounts or multiples of $1,000 are sometimes called ''
grand Grand may refer to: People with the name * Grand (surname) * Grand L. Bush (born 1955), American actor * Grand Mixer DXT, American turntablist * Grand Puba (born 1966), American rapper Places * Grand, Oklahoma * Grand, Vosges, village and commun ...
'' in colloquial speech, abbreviated in written form to ''G'', ''K'', or ''k'' (from ''kilo''; e.g. $10k = $10,000). Likewise, a ''large'' or ''stack'' can also refer to a multiple of $1,000 (e.g. "fifty large" = $50,000).


Dollar sign

The symbol , usually written before the numerical amount, is used for the U.S. dollar (as well as for many other currencies). The sign was the result of a late 18th-century evolution of the
scribal abbreviation Scribal abbreviations or sigla (grammatical number, singular: siglum) are abbreviations used by ancient and medieval scribes writing in various languages, including Latin, Greek language, Greek, Old English and Old Norse. In modern manuscrip ...
''ps'' for the
peso The peso is the monetary unit of several countries in the Americas, and the Philippines. Originating in the Spanish Empire, the word translates to "weight". In most countries the peso uses the Dollar sign, same sign, "$", as many currencies na ...
, the common name for the Spanish dollars that were in wide circulation in the
New World The term ''New World'' is often used to mean the majority of Earth's Western Hemisphere, specifically the Americas."America." ''The Oxford Companion to the English Language'' (). McArthur, Tom, ed., 1992. New York: Oxford University Press, p. 3 ...
from the 16th to the 19th centuries. The ''p'' and the ''s'' eventually came to be written over each other giving rise to ''$''. Another popular explanation is that it is derived from the
Pillars of Hercules The Pillars of Hercules ( la, Columnae Herculis, grc, Ἡράκλειαι Στῆλαι, , ar, أعمدة هرقل, Aʿmidat Hiraql, es, Columnas de Hércules) was the phrase that was applied in Classical antiquity, Antiquity to the promo ...
on the
Spanish Coat of arms The coat of arms of Spain represents Spain and the Spanish nation, including its national sovereignty Westphalian sovereignty, or state sovereignty, is a principle in international law that each Sovereign state, state has exclusive sovereignty ove ...
of the
Spanish dollar The Spanish dollar, also known as the piece of eight ( es, Real de a ocho, , , or ), is a silver coin of approximately diameter worth eight Spanish reales. It was minted in the Spanish Empire following a monetary reform in 1497 with content ...
. These
Pillars of Hercules The Pillars of Hercules ( la, Columnae Herculis, grc, Ἡράκλειαι Στῆλαι, , ar, أعمدة هرقل, Aʿmidat Hiraql, es, Columnas de Hércules) was the phrase that was applied in Classical antiquity, Antiquity to the promo ...
on the silver Spanish dollar coins take the form of two vertical bars (, , ) and a swinging cloth band in the shape of an ''S''. Yet another explanation suggests that the dollar sign was formed from the capital letters ''U'' and ''S'' written or printed one on top of the other. This theory, popularized by novelist
Ayn Rand Alice O'Connor (born Alisa Zinovyevna Rosenbaum;, . Most sources transliterate her given name as either ''Alisa'' or ''Alissa''. , 1905 – March 6, 1982), better known by her pen name Ayn Rand (), was a Russian-born American writer and p ...
in '' Atlas Shrugged'', does not consider the fact that the symbol was already in use before the formation of the United States.


History


Origins: the Spanish dollar

The U.S. dollar was introduced at par with the Spanish-American silver dollar (or ''Spanish peso'', ''Spanish milled dollar'', ''eight-real coin'', ''piece-of-eight''). The latter was produced from the rich silver mine output of
Spanish America Spanish America refers to the Spanish territories in the Americas during the Spanish colonization of the Americas. The term "Spanish America" was specifically used during the territories' Spanish Empire, imperial era between 15th century, 15th ...
; minted in
Mexico City Mexico City ( es, link=no, Ciudad de México, ; abbr.: CDMX; Nahuatl: ''Altepetl Mexico'') is the capital city, capital and primate city, largest city of Mexico, and the List of North American cities by population, most populous city in North Amer ...
,
Potosí Potosí, known as Villa Imperial de Potosí in the colonial period, is the capital city and a municipality of the Potosí Department, Department of Potosí in Bolivia. It is one of the list of highest cities in the world, highest cities in the wo ...
(Bolivia),
Lima Lima ( ; ), originally founded as Ciudad de Los Reyes (City of The Kings) is the capital and the largest city of Peru. It is located in the valleys of the Chillón River, Chillón, Rímac River, Rímac and Lurín Rivers, in the desert zone of t ...
(Peru) and elsewhere; and was in wide circulation throughout the Americas, Asia and Europe from the 16th to 19th centuries. The minting of machine-milled Spanish dollars since 1732 boosted its worldwide reputation as a trade coin and positioned it to be model for the new currency of the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
. Even after the
United States Mint The United States Mint is a bureau of the United States Department of the Treasury, Department of the Treasury responsible for producing currency, coinage for the United States to conduct its trade and commerce, as well as controlling the movemen ...
commenced issuing coins in 1792, locally minted ''dollars'' and ''cents'' were less abundant in circulation than
Spanish America Spanish America refers to the Spanish territories in the Americas during the Spanish colonization of the Americas. The term "Spanish America" was specifically used during the territories' Spanish Empire, imperial era between 15th century, 15th ...
n ''pesos'' and ''reales''; hence Spanish, Mexican and American dollars all remained legal tender in the United States until the
Coinage Act of 1857 The Coinage Act of 1857 (Act of Feb. 21, 1857, Chap. 56, 34th Cong., Sess. III, 11 Stat. 163) was an act of the United States Congress The United States Congress is the legislature of the federal government of the United States. It is Bi ...
. In particular, Colonists' familiarity with the Spanish two-''real quarter peso'' was the reason for issuing a quasi-decimal 25-cent quarter dollar coin rather than a 20-cent coin. For the relationship between the
Spanish dollar The Spanish dollar, also known as the piece of eight ( es, Real de a ocho, , , or ), is a silver coin of approximately diameter worth eight Spanish reales. It was minted in the Spanish Empire following a monetary reform in 1497 with content ...
and the individual state colonial currencies, see Connecticut pound, Delaware pound, Georgia pound, Maryland pound,
Massachusetts pound The pound was the currency of the Commonwealth of Massachusetts and its colonial predecessors until 1793. The Massachusetts pound used the £sd currency system of 1 pound divided into 20 shillings, each of 12 penny, pence. Initially, Pound sterli ...
, New Hampshire pound, New Jersey pound, New York pound, North Carolina pound, Pennsylvania pound, Rhode Island pound, South Carolina pound, and Virginia pound.


Coinage Act of 1792

On July 6, 1785, the
Continental Congress The Continental Congress was a series of legislature, legislative bodies, with some executive function, for thirteen of British America, Britain's colonies in North America, and the newly declared United States just before, during, and after the ...
resolved that the money unit of the United States, the dollar, would contain 375.64 grains of fine silver; on August 8, 1786, the Continental Congress continued that definition and further resolved that the money of account, corresponding with the division of coins, would proceed in a decimal ratio, with the sub-units being mills at 0.001 of a dollar, cents at 0.010 of a dollar, and dimes at 0.100 of a dollar. After the adoption of the
United States Constitution The Constitution of the United States is the supreme law of the United States of America. It superseded the Articles of Confederation, the nation's first constitution, in 1789. Originally comprising seven articles, it delineates the nat ...
, the U.S. dollar was defined by the
Coinage Act of 1792 The Coinage Act of 1792 (also known as the Mint Act; officially: ''An act establishing a mint, and regulating the Coins of the United States''), passed by the United States Congress on April 2, 1792, created the United States dollar as the countr ...
. It specified a "dollar" based on the Spanish milled dollar to contain
grain A grain is a small, hard, dry fruit (caryopsis) – with or without an attached husk, hull layer – harvested for human or animal consumption. A grain crop is a grain-producing plant. The two main types of commercial grain crops are cereals and l ...
s of fine silver, or of "standard silver" of fineness 371.25/416 = 89.24%; as well as an "eagle" to contain grains of fine gold, or of 22
karat The fineness of a precious metal object (coin, bar, jewelry, etc.) represents the weight of ''fine metal'' therein, in proportion to the total weight which includes alloying base metals and any impurity, impurities. Alloy metals are added to incre ...
or 91.67% fine gold.
Alexander Hamilton Alexander Hamilton (January 11, 1755 or 1757July 12, 1804) was an American military officer, statesman, and Founding Fathers of the United States, Founding Father who served as the first United States secretary of the treasury from 1789 to ...
arrived at these numbers based on a treasury assay of the average fine silver content of a selection of worn
Spanish dollar The Spanish dollar, also known as the piece of eight ( es, Real de a ocho, , , or ), is a silver coin of approximately diameter worth eight Spanish reales. It was minted in the Spanish Empire following a monetary reform in 1497 with content ...
s, which came out to be 371 grains. Combined with the prevailing gold-silver ratio of 15, the standard for gold was calculated at 371/15 = 24.73 grains fine gold or 26.98 grains 22K gold. Rounding the latter to 27.0 grains finalized the dollar's standard to 24.75 grains of fine gold or 24.75*15 = 371.25 grains = 24.0566 grams = 0.7735 troy ounces of fine silver. The same coinage act also set the value of an eagle at 10 dollars, and the dollar at eagle. It called for silver coins in denominations of 1, , , , and dollar, as well as gold coins in denominations of 1, and eagle. The value of gold or silver contained in the dollar was then converted into relative value in the economy for the buying and selling of goods. This allowed the value of things to remain fairly constant over time, except for the influx and outflux of gold and silver in the nation's economy. Though a
Spanish dollar The Spanish dollar, also known as the piece of eight ( es, Real de a ocho, , , or ), is a silver coin of approximately diameter worth eight Spanish reales. It was minted in the Spanish Empire following a monetary reform in 1497 with content ...
freshly minted after 1772 theoretically contained 417.7 grains of silver of fineness 130/144 (or 377.1 grains fine silver), reliable assays of the period in fact confirmed a fine silver content of for the average Spanish dollar in circulation. The new U.S. silver dollar of therefore compared favorably and was received at par with the Spanish dollar for foreign payments, and after 1803 the
United States Mint The United States Mint is a bureau of the United States Department of the Treasury, Department of the Treasury responsible for producing currency, coinage for the United States to conduct its trade and commerce, as well as controlling the movemen ...
had to suspend making this coin out of its limited resources since it failed to stay in domestic circulation. It was only after Mexican independence in 1821 when their peso's fine silver content of 377.1 grains was firmly upheld, which the U.S. later had to compete with using a heavier Trade dollar coin.


Design

The early currency of the United States did not exhibit faces of presidents, as is the custom now; although today, by law, only the portrait of a deceased individual may appear on United States currency. In fact, the newly formed government was against having portraits of leaders on the currency, a practice compared to the policies of European monarchs. The currency as we know it today did not get the faces they currently have until after the early 20th century; before that "heads" side of coinage used profile faces and striding, seated, and standing figures from Greek and Roman mythology and composite Native Americans. The last coins to be converted to profiles of historic Americans were the dime (1946) and the Dollar (1971).


Continental currency

After the
American Revolution The American Revolution was an ideological and political revolution that occurred in British America between 1765 and 1791. The Americans in the Thirteen Colonies formed independent states that defeated the British in the American Revolut ...
, the
thirteen colonies The Thirteen Colonies, also known as the Thirteen British Colonies, the Thirteen American Colonies, or later as the United Colonies, were a group of Kingdom of Great Britain, British Colony, colonies on the Atlantic coast of North America. Fo ...
became
independent Independent or Independents may refer to: Arts, entertainment, and media Artist groups * Independents (artist group), a group of modernist painters based in the New Hope, Pennsylvania, area of the United States during the early 1930s * Independen ...
. Freed from British monetary regulations, they each issued £sd paper money to pay for military expenses. The
Continental Congress The Continental Congress was a series of legislature, legislative bodies, with some executive function, for thirteen of British America, Britain's colonies in North America, and the newly declared United States just before, during, and after the ...
also began issuing "Continental Currency" denominated in Spanish dollars. For its value relative to states' currencies, see
Early American currency Early American currency went through several stages of development during the colonial and post-Revolutionary history of the United States. John Hull (merchant), John Hull was authorized by the Massachusetts legislature to make the earliest coina ...
. Continental currency
depreciated In accountancy, depreciation is a term that refers to two aspects of the same concept: first, the actual decrease of fair value In accounting and in most schools of economic thought, fair value is a rational and unbiased Prediction, estim ...
badly during the war, giving rise to the famous phrase "not worth a continental". A primary problem was that monetary policy was not coordinated between Congress and the states, which continued to issue bills of credit. Additionally, neither Congress nor the governments of the several states had the will or the means to retire the bills from circulation through taxation or the sale of bonds. The currency was ultimately replaced by the silver dollar at the rate of 1 silver dollar to 1000 continental dollars. It gave rise to the phrase "not worth a continental", and was responsible for the clause in article 1, section 10 of the
United States Constitution The Constitution of the United States is the supreme law of the United States of America. It superseded the Articles of Confederation, the nation's first constitution, in 1789. Originally comprising seven articles, it delineates the nat ...
which reads: "No state shall... make anything but gold and silver coin a tender in payment of debts".


Silver and gold standards, 19th century

From implementation of the 1792
Mint Act The Coinage Act of 1792 (also known as the Mint Act; officially: ''An act establishing a mint, and regulating the Coins of the United States''), passed by the United States Congress on April 2, 1792, created the United States dollar as the countr ...
to the 1900 implementation of the
gold standard A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from th ...
the dollar was on a bimetallic silver-and-gold standard, defined as either 371.25 grains (24.056 g) of fine silver or 24.75 grains of fine gold (gold-silver ratio 15). Subsequent to the Coinage Act of 1834 the dollar's fine gold equivalent was revised to 23.2 grains; it was slightly adjusted to in 1837 (gold-silver ratio ~16). The same act also resolved the difficulty in minting the "standard silver" of 89.24% fineness by revising the dollar's alloy to 412.5 grains, 90% silver, still containing 371.25 grains fine silver. Gold was also revised to 90% fineness: 25.8 grains gross, 23.22 grains fine gold. Following the rise in the price of silver during the
California Gold Rush The California Gold Rush (1848–1855) was a gold rush that began on January 24, 1848, when gold was found by James W. Marshall at Sutter's Mill in Coloma, California. The news of gold brought approximately 300,000 people to California ...
and the disappearance of circulating silver coins, the Coinage Act of 1853 reduced the standard for silver coins less than $1 from 412.5 grains to , 90% silver per 100 cents (slightly revised to 25.0 g, 90% silver in 1873). The Act also limited the
free silver Free silver was a major economic policy issue in the United States in the late 19th-century. Its advocates were in favor of an expansionary monetary policy featuring the unlimited coinage of silver into money on-demand, as opposed to strict adhe ...
right of individuals to convert
bullion Bullion is non-ferrous metal that has been refined to a high standard of chemical element, elemental purity. The term is ordinarily applied to bulk metal used in the production of coins and especially to precious metals such as gold and silver. ...
into only one coin, the silver dollar of 412.5 grains; smaller coins of lower standard can only be produced by the
United States Mint The United States Mint is a bureau of the United States Department of the Treasury, Department of the Treasury responsible for producing currency, coinage for the United States to conduct its trade and commerce, as well as controlling the movemen ...
using its own bullion. Summary and links to coins issued in the 19th century: * In base metal: 1/2 cent, 1 cent, 5 cents. * In silver: half dime, dime, quarter dollar, half dollar, silver dollar. * In gold: gold $1, $2.50 quarter eagle, $5 half eagle, $10 eagle, $20 double eagle * Less common denominations: bronze 2 cents, nickel 3 cents, silver 3 cents, silver 20 cents, gold $3.


Note issues, 19th century

In order to finance the
War of 1812 The War of 1812 (18 June 1812 – 17 February 1815) was fought by the United States, United States of America and its Indigenous peoples of the Americas, indigenous allies against the United Kingdom of Great Britain and Ireland, United Kingdom ...
, Congress authorized the issuance of
Treasury Note United States Treasury securities, also called Treasuries or Treasurys, are government bond, government debt instruments issued by the United States Department of the Treasury to finance government spending as an alternative to taxation. Sin ...
s, interest-bearing short-term debt that could be used to pay public dues. While they were intended to serve as debt, they did function "to a limited extent" as money. Treasury Notes were again printed to help resolve the reduction in public revenues resulting from the
Panic of 1837 The Panic of 1837 was a financial crisis in the United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North A ...
and the
Panic of 1857 The Panic of 1857 was a financial panic in the United States caused by the declining international economy and over-expansion of the domestic economy. Because of the invention of the telegraph by Samuel F. Morse in 1844, the Panic of 1857 was ...
, as well as to help finance the
Mexican–American War The Mexican–American War, also known in the United States as the Mexican War and in Mexico as the (''United States intervention in Mexico''), was an armed conflict between the United States and Second Federal Republic of Mexico, Mexico f ...
and the
Civil War A civil war or intrastate war is a war between organized groups within the same Sovereign state, state (or country). The aim of one side may be to take control of the country or a region, to achieve independence for a region, or to change go ...
. Paper money was issued again in 1862 without the backing of precious metals due to the
Civil War A civil war or intrastate war is a war between organized groups within the same Sovereign state, state (or country). The aim of one side may be to take control of the country or a region, to achieve independence for a region, or to change go ...
. In addition to Treasury Notes, Congress in 1861 authorized the Treasury to borrow $50 million in the form of Demand Notes, which did not bear interest but could be redeemed on demand for precious metals. However, by December 1861, the Union government's supply of specie was outstripped by demand for redemption and they were forced to suspend redemption temporarily. In February 1862 Congress passed the ''Legal Tender Act of 1862'', issuing
United States Notes A United States Note, also known as a Legal Tender Note, is a type of Banknote, paper money that was issued from 1862 to 1971 in the U.S. Having been current for 109 years, they were issued for longer than any other form of U.S. paper money. T ...
, which were not redeemable on demand and bore no interest, but were
legal tender Legal tender is a form of money that Standard of deferred payment, courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which wh ...
, meaning that creditors had to accept them at face value for any payment except for public debts and import tariffs. However, silver and gold coins continued to be issued, resulting in the depreciation of the newly printed notes through
Gresham's Law In economics, Gresham's law is a monetary principle stating that "bad money drives out good". For example, if there are two forms of commodity money in circulation, which are accepted by law as having similar face value, the more valuable com ...
. In 1869, Supreme Court ruled in Hepburn v. Griswold that Congress could not require creditors to accept United States Notes, but overturned that ruling the next year in the Legal Tender Cases. In 1875, Congress passed the ''
Specie Payment Resumption Act The Specie Payment Resumption Act of January 14, 1875 was a law in the United States that restored the nation to the gold standard through the redemption of previously-unbacked United States Notes and reversed inflationary government policies promot ...
'', requiring the Treasury to allow U.S. Notes to be redeemed for gold after January 1, 1879.


Gold standard, 20th century

Though the dollar came under the
gold standard A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from th ...
''de jure'' only after 1900, the bimetallic era was ended ''de facto'' when the
Coinage Act of 1873 The Coinage Act of 1873 or Mint Act of 1873, was a general revision of laws relating to the United States Mint, Mint of the United States. By ending the right of holders of silver bullion to have it coined into standard Dollar_coin_(United_States ...
suspended the minting of the standard silver dollar of 412.5 grains (26.73 g = 0.8595 oz t), the only fully legal tender coin that individuals could convert bullion into in unlimited (or
Free silver Free silver was a major economic policy issue in the United States in the late 19th-century. Its advocates were in favor of an expansionary monetary policy featuring the unlimited coinage of silver into money on-demand, as opposed to strict adhe ...
) quantities, and right at the onset of the
silver rush A silver rush is the silver mining, silver-mining equivalent of a gold rush, where the discovery of silver-bearing ore sparks a mass migration of individuals seeking wealth in the new mining region. Notable silver rushes have taken place in Mexico ...
from the
Comstock Lode The Comstock Lode is a lode of silver ore located under the eastern slope of Mount Davidson (Nevada), Mount Davidson, a peak in the Virginia Range in Virginia City, Nevada (then western Utah Territory), which was the first major discovery of s ...
in the 1870s. This was the so-called "Crime of '73". The '' Gold Standard Act'' of 1900 repealed the U.S. dollar's historic link to silver and defined it solely as of fine gold (or $20.67 per
troy ounce Troy weight is a system of Physical unit, units of mass that originated in 15th-century England, and is primarily used in the precious metals industry. The troy weight units are the Grain (unit), grain, the pennyweight (24 grains), the troy oun ...
of 480 grains). In 1933, gold coins were confiscated by Executive Order 6102 under Franklin D. Roosevelt, and in 1934 the standard was changed to $35 per troy ounce fine gold, or per dollar. After 1968 a series of revisions to the gold peg was implemented, culminating in the Nixon Shock of August 15, 1971, which suddenly ended the convertibility of dollars to gold. The U.S. dollar has since floated freely on the
foreign exchange market The foreign exchange market (Forex, FX, or currency market) is a global decentralization, decentralized or Over-the-counter (finance), over-the-counter (OTC) Market (economics), market for the trading of currency, currencies. This market d ...
s.


Federal Reserve Notes, 20th century to present

Congress continued to issue paper money after the Civil War, the latest of which is the
Federal Reserve Note Federal Reserve Notes, also United States banknotes, are the currently issued banknotes of the United States dollar. The United States Bureau of Engraving and Printing produces the notes under the authority of the Federal Reserve Act of 1 ...
that was authorized by the Federal Reserve Act of 1913. Since the discontinuation of all other types of notes (Gold Certificates in 1933, Silver Certificates in 1963, and United States Notes in 1971), U.S. dollar notes have since been issued exclusively as
Federal Reserve Note Federal Reserve Notes, also United States banknotes, are the currently issued banknotes of the United States dollar. The United States Bureau of Engraving and Printing produces the notes under the authority of the Federal Reserve Act of 1 ...
s.


Emergence as reserve currency

The U.S. dollar first emerged as an important international
reserve currency A reserve currency (or anchor currency) is a foreign currency that is held in significant quantities by central banks or other monetary authorities as part of their foreign exchange reserves. The reserve currency can be used in international t ...
in the 1920s, displacing the British
pound sterling Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United King ...
as it emerged from the
First World War World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...
relatively unscathed and since the United States was a significant recipient of wartime gold inflows. After the United States emerged as an even stronger global
superpower A superpower is a Sovereign state, state with a dominant position characterized by its extensive ability to exert Sphere of influence, influence or Power projection, project power on a global scale. This is done through the combined means of econ ...
during the
Second World War World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the World War II by country, vast majority of the world's countries—including all of the great power ...
, the
Bretton Woods Agreement The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or Am ...
of 1944 established the U.S. dollar as the world's primary reserve currency and the only post-war currency linked to gold. Despite all links to gold being severed in 1971, the dollar continues to be the world's foremost reserve currency for international trade to this day. The Bretton Woods Agreement of 1944 also defined the post-World War II monetary order and relations among modern-day independent states, by setting up a system of rules, institutions, and procedures to regulate the
international monetary system An international monetary system is a set of internationally agreed rules, conventions and supporting institutions that facilitate international trade, Foreign direct investment, cross border investment and generally the redistribution (economics ...
. The agreement founded the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
and other institutions of the modern-day
World Bank Group The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries. It is the largest and best-known development bank in the world and an observer at the United Nations Development Group ...
, establishing the infrastructure for conducting international payments and accessing the global capital markets using the U.S. dollar. The
monetary policy of the United States Monetary policy of The United States concerns those policies related to the Minting coins, minting & Federal Reserve Note, printing of money, policies governing the legal exchange of currency, demand deposits, the money supply, etc. In the Unite ...
is conducted by the
Federal Reserve System The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after ...
, which acts as the nation's
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial bank, commercial banking system. In contrast to a commercial ba ...
. It was founded in 1913 under the Federal Reserve Act in order to furnish an elastic currency for the United States and to supervise its banking system, particularly in the aftermath of the
Panic of 1907 The Panic of 1907, also known as the 1907 Bankers' Panic or Knickerbocker Crisis, was a financial crisis that took place in the United States over a three-week period starting in mid-October, when the New York Stock Exchange fell almost 50% from ...
. For most of the post-war period, the U.S. government has financed its own spending by borrowing heavily from the dollar-lubricated global capital markets, in debts denominated in its own currency and at minimal interest rates. This ability to borrow heavily without facing a significant
balance of payments crisis A currency A currency, "in circulation", from la, Wikt:currens, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or currency in circulation, circulation as a medium of exchange, f ...
has been described as the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
's exorbitant privilege.


Coins

The
United States Mint The United States Mint is a bureau of the United States Department of the Treasury, Department of the Treasury responsible for producing currency, coinage for the United States to conduct its trade and commerce, as well as controlling the movemen ...
has issued legal tender coins every year from 1792 to the present. From 1934 to the present, the only denominations produced for circulation have been the familiar penny, nickel, dime, quarter, half dollar, and dollar. Gold and silver coins have been previously minted for general circulation from the 18th to the 20th centuries. The last gold coins were minted in 1933. The last 90% silver coins were minted in 1964, and the last 40% silver half dollar was minted in 1970. The
United States Mint The United States Mint is a bureau of the United States Department of the Treasury, Department of the Treasury responsible for producing currency, coinage for the United States to conduct its trade and commerce, as well as controlling the movemen ...
currently produces circulating coins at the
Philadelphia Philadelphia, often called Philly, is the List of municipalities in Pennsylvania#Municipalities, largest city in the Commonwealth (U.S. state), Commonwealth of Pennsylvania, the List of United States cities by population, sixth-largest city i ...
and
Denver Mint The Denver Mint is a branch of the United States Mint that struck its first coins on February 1, 1906. The mint is still operating and producing coins for circulation, as well as United States Mint coin sets, mint sets and commemorative coins. Coi ...
s, and commemorative and proof coins for collectors at the
San Francisco San Francisco (; Spanish language, Spanish for "Francis of Assisi, Saint Francis"), officially the City and County of San Francisco, is the commercial, financial, and cultural center of Northern California. The city proper is the List of Ca ...
and West Point Mints. Mint mark conventions for these and for past mint branches are discussed in '' Coins of the United States dollar#Mint marks''. The one-dollar coin has never been in popular circulation from 1794 to present, despite several attempts to increase their usage since the 1970s, the most important reason of which is the continued production and popularity of the one-dollar bill. Half dollar coins were commonly used currency since inception in 1794, but has fallen out of use from the mid-1960s when all silver half dollars began to be hoarded. The
nickel Nickel is a chemical element with Chemical symbol, symbol Ni and atomic number 28. It is a silvery-white lustrous metal with a slight golden tinge. Nickel is a hard and Ductility, ductile transition metal. Pure nickel is chemically reactive bu ...
is the only coin whose size and composition (5 grams, 75% copper, and 25% nickel) is still in use from 1865 to today, except for wartime 1942-1945
Jefferson nickel The Jefferson nickel has been the nickel (United States coin), five-cent coin struck by the United States Mint since 1938, when it replaced the Buffalo nickel. From 1938 until 2004, the copper-nickel coin's Obverse and reverse, obverse featured ...
s which contained silver. Due to the penny's low value, some efforts have been made to eliminate the penny as circulating coinage. For a discussion of other discontinued and canceled denominations, see '' Obsolete denominations of United States currency#Coinage'' and '' Canceled denominations of United States currency#Coinage''.


Collector coins

Collector coins are technically legal tender at face value but are usually worth far more due to their numismatic value or for their precious metal content. These include: * American Eagle bullion coins ** American Silver Eagle $1 (1 troy oz) Silver bullion coin 1986–present **
American Gold Eagle The American Gold Eagle is an official gold bullion coin of the United States. Authorized under the Gold Bullion Coin Act of 1985, it was first released by the United States Mint in 1986. Because the term "Eagle (United States coin), eagle" a ...
$5 ( troy oz), $10 ( troy oz), $25 ( troy oz), and $50 (1 troy oz) Gold bullion coin 1986–present ** American Platinum Eagle $10 ( troy oz), $25 ( troy oz), $50 ( troy oz), and $100 (1 troy oz) Platinum bullion coin 1997–present ** American Palladium Eagle $25 (1 troy oz) Palladium bullion coin 2017–present * United States commemorative coins—special issue coins, among these: ** $50.00 (Half Union) minted for the Panama-Pacific International Exposition (1915) **Silver proof sets minted since 1992 with dimes, quarters and half-dollars made of silver rather than the standard copper-nickel ** Presidential dollar coins proof sets minted since 2007


Banknotes

The U.S. Constitution provides that Congress shall have the power to "borrow money on the credit of the United States." Congress has exercised that power by authorizing Federal Reserve Banks to issue Federal Reserve Notes. Those notes are "obligations of the United States" and "shall be redeemed in lawful money on demand at the Treasury Department of the United States, in the city of Washington, District of Columbia, or at any Federal Reserve bank". Federal Reserve Notes are designated by law as "
legal tender Legal tender is a form of money that Standard of deferred payment, courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which wh ...
" for the payment of debts. Congress has also authorized the issuance of more than 10 other types of banknotes, including the
United States Note A United States Note, also known as a Legal Tender Note, is a type of Banknote, paper money that was issued from 1862 to 1971 in the U.S. Having been current for 109 years, they were issued for longer than any other form of U.S. paper money. T ...
and the Federal Reserve Bank Note. The Federal Reserve Note is the only type that remains in circulation since the 1970s. Federal Reserve Notes are printed by the
Bureau of Engraving and Printing The Bureau of Engraving and Printing (BEP) is a government agency within the United States Department of the Treasury that designs and produces a variety of security products for the Federal Government of the United States, United States governmen ...
and are made from cotton fiber paper (as opposed to wood fiber used to make common paper). The " large-sized notes" issued before 1928 measured , while small-sized notes introduced that year measure . The dimensions of the modern (small-size) U.S. currency is identical to the size of
Philippine peso The Philippine peso, also referred to by its Tagalog name ''piso'' (Philippine English: , , plural pesos; tl, piso ; currency sign, sign: ₱; ISO 4217, code: PHP), is the official currency of the Philippines. It is subdivided into 100 ''s ...
banknotes issued under United States administration after 1903, which had proven highly successful. The American large-note bills became known as "horse blankets" or "saddle blankets." Currently printed denominations are $1, $2, $5, $10, $20, $50, and $100. Notes above the $100 denomination stopped being printed in 1946 and were officially withdrawn from circulation in 1969. These notes were used primarily in inter-bank transactions or by
organized crime Organized crime (or organised crime) is a category of transnational organized crime, transnational, national, or local groupings of highly centralized enterprises run by criminals to engage in illegal activity, most commonly for profit. While o ...
; it was the latter usage that prompted President
Richard Nixon Richard Milhous Nixon (January 9, 1913April 22, 1994) was the 37th president of the United States, serving from 1969 to 1974. A member of the Republican Party (United States), Republican Party, he previously served as a United States House ...
to issue an executive order in 1969 halting their use. With the advent of electronic banking, they became less necessary. Notes in denominations of $500, $1,000, $5,000, $10,000, and $100,000 were all produced at one time; see large denomination bills in U.S. currency for details. With the exception of the $100,000 bill (which was only issued as a Series 1934 Gold Certificate and was never publicly circulated; thus it is illegal to own), these notes are now collectors' items and are worth more than their face value to collectors. Though still predominantly green, the post-2004 series incorporate other colors to better distinguish different denominations. As a result of a 2008 decision in an accessibility lawsuit filed by the American Council of the Blind, the
Bureau of Engraving and Printing The Bureau of Engraving and Printing (BEP) is a government agency within the United States Department of the Treasury that designs and produces a variety of security products for the Federal Government of the United States, United States governmen ...
is planning to implement a raised tactile feature in the next redesign of each note, except the $1 and the current version of the $100 bill. It also plans larger, higher-contrast numerals, more color differences, and distribution of currency readers to assist the visually impaired during the transition period.


Countries that use US dollar


Formal

* * * * * * * * * *


Informal

* * * * * * * * * * *


Monetary policy

The Federal Reserve Act created the
Federal Reserve System The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after ...
in 1913 as the
central bank A central bank, reserve bank, or monetary authority is an institution that manages the currency and monetary policy of a country or monetary union, and oversees their commercial bank, commercial banking system. In contrast to a commercial ba ...
of the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
. Its primary task is to conduct the nation's
monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for federal funds, very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money s ...
to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy. It is also tasked to promote the stability of the financial system and regulate financial institutions, and to act as
lender of last resort A lender of last resort (LOLR) is the institution in a financial system that acts as the provider of Accounting liquidity, liquidity to a financial institution which finds itself unable to obtain sufficient liquidity in the interbank lending m ...
. The
Monetary policy of the United States Monetary policy of The United States concerns those policies related to the Minting coins, minting & Federal Reserve Note, printing of money, policies governing the legal exchange of currency, demand deposits, the money supply, etc. In the Unite ...
is conducted by the
Federal Open Market Committee The Federal Open Market Committee (FOMC), a committee within the Federal Reserve System The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. ...
, which is composed of the
Federal Reserve Board of Governors The Board of Governors of the Federal Reserve System, commonly known as the Federal Reserve Board, is the main governing body of the Federal Reserve, Federal Reserve System. It is charged with overseeing the Federal Reserve Banks and with helping ...
and 5 out of the 12 Federal Reserve Bank presidents, and is implemented by all twelve regional
Federal Reserve Bank A Federal Reserve Bank is a regional bank of the Federal Reserve System, the central banking system of the United States. There are twelve in total, one for each of the twelve Federal Reserve Districts that were created by the Federal Reserve A ...
s.
Monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for federal funds, very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money s ...
refers to actions made by central banks that determine the size and growth rate of the
money supply In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include Circulation (curren ...
available in the economy, and which would result in desired objectives like low inflation, low unemployment, and stable financial systems. The economy's aggregate
money supply In macroeconomics, the money supply (or money stock) refers to the total volume of currency held by the public at a particular point in time. There are several ways to define "money", but standard measures usually include Circulation (curren ...
is the total of * M0 money, or Monetary Base - "dollars" in currency and
bank money Demand deposits or checkbook money are funds held in demand accounts in commercial banks. These account balances are usually considered money and form the greater part of the narrowly defined money supply of a country. Simply put, these are depo ...
balances credited to the central bank's depositors, which are backed by the central bank's assets, * plus M1, M2, M3 money - "dollars" in the form of
bank money Demand deposits or checkbook money are funds held in demand accounts in commercial banks. These account balances are usually considered money and form the greater part of the narrowly defined money supply of a country. Simply put, these are depo ...
balances credited to banks' depositors, which are backed by the bank's assets and investments. The FOMC influences the level of money available to the economy by the following means: * Reserve requirements - specifies a required minimum percentage of deposits in a
commercial bank A commercial bank is a financial institution which accepts deposit (finance), deposits from the public and gives loans for the purposes of consumption and investment to make profit (economics), profit. It can also refer to a bank, or a division ...
that should be held as a reserve (i.e. as deposits with the Federal Reserve), with the rest available to loan or invest. Higher requirements mean less money loaned or invested, helping keep inflation in check. Raising the
federal funds rate In the United States, the federal funds rate is the interest rate at which depository institutions (banks and credit unions) lend reserve balances to other depository institutions overnight on an collateral (finance), uncollateralized basis ...
earned on those reserves also helps achieve this objective. * Open market operations - the Federal Reserve buys or sells US Treasury bonds and other securities held by banks in exchange for reserves; more reserves increase a bank's capacity to loan or invest elsewhere. * Discount window lending - banks can borrow from the Federal Reserve.
Monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for federal funds, very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money s ...
directly affects interest rates; it indirectly affects stock prices, wealth, and currency exchange rates. Through these channels, monetary policy influences spending, investment, production, employment, and inflation in the United States. Effective
monetary policy Monetary policy is the policy adopted by the monetary authority of a nation to control either the interest rate payable for federal funds, very short-term borrowing (borrowing by banks from each other to meet their short-term needs) or the money s ...
complements
fiscal policy In economics and political science, fiscal policy is the use of government revenue collection (taxes or tax cuts) and Government spending, expenditure to influence a country's economy. The use of government revenue expenditures to influence macr ...
to support economic growth. The adjusted monetary base has increased from approximately $400 billion in 1994, to $800 billion in 2005, and to over $3 trillion in 2013. When the Federal Reserve makes a purchase, it credits the seller's reserve account (with the Federal Reserve). This money is not transferred from any existing funds—it is at this point that the Federal Reserve has created new high-powered money. Commercial banks then decide how much money to keep in deposit with the Federal Reserve and how much to hold as physical currency. In the latter case, the Federal Reserve places an order for printed money from the U.S. Treasury Department. The Treasury Department, in turn, sends these requests to the Bureau of Engraving and Printing (to print new dollar bills) and the Bureau of the Mint (to stamp the coins). The Federal Reserve's monetary policy objectives to keep prices stable and unemployment low is often called the ''dual mandate''. This replaces past practices under a
gold standard A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from th ...
where the main concern is the gold equivalent of the local currency, or under a gold exchange standard where the concern is fixing the exchange rate versus another gold-convertible currency (previously practiced worldwide under the
Bretton Woods Agreement The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or Am ...
of 1944 via fixed exchange rates to the U.S. dollar).


International use as reserve currency


Ascendancy

The primary currency used for global trade between
Europe Europe is a large peninsula conventionally considered a continent in its own right because of its great physical size and the weight of its history and traditions. Europe is also considered a Continent#Subcontinents, subcontinent of Eurasia ...
,
Asia Asia (, ) is one of the world's most notable geographical regions, which is either considered a continent in its own right or a subcontinent of Eurasia, which shares the continental landmass of Afro-Eurasia with Africa Africa is ...
, and
the Americas The Americas, which are sometimes collectively called America, are a landmass comprising the totality of North America, North and South America. The Americas make up most of the land in Earth's Western Hemisphere and comprise the New World. ...
has historically been the Spanish-American silver dollar, which created a global
silver standard The silver standard is a monetary system in which the standard economics, economic unit of account is a fixed weight of silver. Silver was far more widespread than gold as the monetary standard worldwide, from the Sumerians 3000 BC until 1873. ...
system from the 16th to 19th centuries, due to abundant silver supplies in
Spanish America Spanish America refers to the Spanish territories in the Americas during the Spanish colonization of the Americas. The term "Spanish America" was specifically used during the territories' Spanish Empire, imperial era between 15th century, 15th ...
. The U.S. dollar itself was derived from this coin. The
Spanish dollar The Spanish dollar, also known as the piece of eight ( es, Real de a ocho, , , or ), is a silver coin of approximately diameter worth eight Spanish reales. It was minted in the Spanish Empire following a monetary reform in 1497 with content ...
was later displaced by the British
pound sterling Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United King ...
in the advent of the international
gold standard A gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold. The gold standard was the basis for the international monetary system from the 1870s to the early 1920s, and from th ...
in the last quarter of the 19th century. The U.S. dollar began to displace the
pound sterling Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United King ...
as international
reserve currency A reserve currency (or anchor currency) is a foreign currency that is held in significant quantities by central banks or other monetary authorities as part of their foreign exchange reserves. The reserve currency can be used in international t ...
from the 1920s since it emerged from the
First World War World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...
relatively unscathed and since the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
was a significant recipient of wartime gold inflows. After the U.S. emerged as an even stronger global
superpower A superpower is a Sovereign state, state with a dominant position characterized by its extensive ability to exert Sphere of influence, influence or Power projection, project power on a global scale. This is done through the combined means of econ ...
during the
Second World War World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the World War II by country, vast majority of the world's countries—including all of the great power ...
, the
Bretton Woods Agreement The Bretton Woods system of monetary management established the rules for commercial and financial relations among the United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or Am ...
of 1944 established the post-war international monetary system, with the U.S. dollar ascending to become the world's primary
reserve currency A reserve currency (or anchor currency) is a foreign currency that is held in significant quantities by central banks or other monetary authorities as part of their foreign exchange reserves. The reserve currency can be used in international t ...
for international trade, and the only post-war currency linked to gold at $35 per
troy ounce Troy weight is a system of Physical unit, units of mass that originated in 15th-century England, and is primarily used in the precious metals industry. The troy weight units are the Grain (unit), grain, the pennyweight (24 grains), the troy oun ...
.


As international reserve currency

The U.S. dollar is joined by the world's other major currencies - the
euro The euro (currency symbol, symbol: euro sign, €; ISO 4217, code: EUR) is the official currency of 19 out of the Member state of the European Union, member states of the European Union (EU). This group of states is known as the eurozone o ...
,
pound sterling Sterling (abbreviation: stg; Other spelling styles, such as STG and Stg, are also seen. ISO code: GBP) is the currency of the United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United King ...
,
Japanese yen The is the official currency of Japan. It is the third-most traded currency in the foreign exchange market, after the United States dollar (US$) and the euro. It is also widely used as a third reserve currency after the US dollar and the e ...
and Chinese
renminbi The renminbi (; currency symbol, symbol: ¥; ISO 4217, ISO code: CNY; abbreviation: RMB) is the official currency of the China, People's Republic of China and one of the world's most traded currencies, ranking as the fifth Template:Most trade ...
- in the currency basket of the
special drawing rights Special drawing rights (SDRs, code ) are supplementary foreign exchange reserve assets defined and maintained by the International Monetary Fund (IMF). SDRs are units of account for the IMF, and not a currency ''per se''. They represent a cla ...
of the
International Monetary Fund The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is "working to foster globa ...
. Central banks worldwide have huge reserves of U.S. dollars in their holdings and are significant buyers of U.S. treasury bills and notes. Foreign companies, entities, and private individuals hold U.S. dollars in foreign deposit accounts called
eurodollar Eurodollars are U.S. dollars held in time deposit accounts in bank A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be dire ...
s (not to be confused with the
euro The euro (currency symbol, symbol: euro sign, €; ISO 4217, code: EUR) is the official currency of 19 out of the Member state of the European Union, member states of the European Union (EU). This group of states is known as the eurozone o ...
), which are outside the jurisdiction of the
Federal Reserve System The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after ...
. Private individuals also hold dollars outside the banking system mostly in the form of US$100 bills, of which 80% of its supply is held overseas. The
United States Department of the Treasury The Department of the Treasury (USDT) is the Treasury, national treasury and finance department of the federal government of the United States, where it serves as an United States federal executive departments, executive department. The departme ...
exercises considerable oversight over the SWIFT financial transfers network, and consequently has a huge sway on the global
financial transaction A financial transaction is an Contract, agreement, or communication, between a buyer and seller to exchange goods, Service (economics), services, or Asset, assets for payment. Any transaction involves a change in the status of the finances of two ...
s systems, with the ability to impose sanctions on foreign entities and individuals.


In the global markets

The U.S. dollar is predominantly the standard currency unit in which goods are quoted and traded, and with which payments are settled in, in the global commodity markets. The U.S. Dollar Index is an important indicator of the dollar's strength or weakness versus a basket of six foreign currencies. The
United States Government The federal government of the United States (U.S. federal government or U.S. government) is the Federation#Federal governments, national government of the United States, a federal republic located primarily in North America, composed of 50 ...
is capable of borrowing trillions of dollars from the global capital markets in U.S. dollars issued by the
Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
, which is itself under U.S. government purview, at minimal interest rates, and with virtually zero default risk. In contrast, foreign governments and corporations incapable of raising money in their own local currencies are forced to issue debt denominated in U.S. dollars, along with its consequent higher interest rates and risks of default. The United States's ability to borrow in its own currency without facing a significant balance of payments crisis has been frequently described as its exorbitant privilege. A frequent topic of debate is whether the strong dollar policy of the United States is indeed in America's own best interests, as well as in the best interest of the
international community The international community is an imprecise phrase used in geopolitics and international relations to refer to a broad group of people and governments of the world. As a rhetorical term Aside from its use as a general descriptor, the term is t ...
.


Currencies fixed to the U.S. dollar

For a more exhaustive discussion of countries using the U.S. dollar as official or customary currency, or using currencies which are pegged to the U.S. dollar, see '' International use of the U.S. dollar#Dollarization and fixed exchange rates'' and '' Currency substitution#US dollar''. Countries using the U.S. dollar as their official currency include: * In the Americas:
Panama Panama ( , ; es, link=no, Panamá ), officially the Republic of Panama ( es, República de Panamá), is a List of transcontinental countries#North America and South America, transcontinental country spanning the Central America, southern ...
,
Ecuador Ecuador ( ; ; Quechuan languages, Quechua: ''Ikwayur''; Shuar language, Shuar: ''Ecuador'' or ''Ekuatur''), officially the Republic of Ecuador ( es, República del Ecuador, which literally translates as "Republic of the Equator"; Quechuan ...
,
El Salvador El Salvador (; , meaning "The Saviour"), officially the Republic of El Salvador ( es, República de El Salvador), is a country in Central America. It is bordered on the northeast by Honduras Honduras, officially the Republic of Honduras ...
,
British Virgin Islands ) , anthem = "God Save the King" , song_type = Territorial song , song = "Oh, Beautiful Virgin Islands" , image_map = File:British Virgin Islands on the globe (Americas centered).svg , map_caption = , mapsize = 290px , image_map2 = Brit ...
,
Turks and Caicos Islands The Turks and Caicos Islands (abbreviated TCI; and ) are a British Overseas Territories, British Overseas Territory consisting of the larger Caicos Islands and smaller Turks Islands, two groups of Island#Tropical islands, tropical islands i ...
, and the
Caribbean Netherlands ) , image_map = BES islands location map.svg , map_caption = Location of the Caribbean Netherlands (green and circled). From left to right: Bonaire, Saba, and Sint Eustatius , elevation_max_m = 887 , elevation_max_footnotes = , demograph ...
. * The constituent states of the former
Trust Territory of the Pacific Islands The Trust Territory of the Pacific Islands (TTPI) was a United Nations trust territory in Micronesia Micronesia (, ) is a subregion of Oceania, consisting of about 2,000 small islands in the western Pacific Ocean. It has a close shared ...
:
Palau Palau,, officially the Republic of Palau and historically ''Belau'', ''Palaos'' or ''Pelew'', is an island country and microstate in the western Pacific Ocean, Pacific. The nation has approximately 340 islands and connects the western ch ...
, the
Federated States of Micronesia The Federated States of Micronesia (; abbreviated FSM) is an island country in Oceania. It consists of four Administrative divisions of the Federated States of Micronesia#States, states from west to east, Yap State, Yap, Chuuk State, Chuuk, P ...
, and the
Marshall Islands The Marshall Islands ( mh, Ṃajeḷ), officially the Republic of the Marshall Islands ( mh, Aolepān Aorōkin Ṃajeḷ),'' () is an independent island country and microstate near the Equator in the Pacific Ocean, slightly west of the Internati ...
. * Others:
East Timor East Timor (), also known as Timor-Leste (), officially the Democratic Republic of Timor-Leste, is an island country in Southeast Asia. It comprises the eastern half of the island of Timor, the exclave of Oecusse on the island's north-wester ...
. Among the countries using the U.S. dollar together with other foreign currencies and their local currency are
Cambodia Cambodia (; also Kampuchea ; km, កម្ពុជា, Romanization of Khmer#UNGEGN, UNGEGN: ), officially the Kingdom of Cambodia, is a country located in the southern portion of the Indochinese Peninsula in Southeast Asia, spanning an ar ...
and
Zimbabwe Zimbabwe (), officially the Republic of Zimbabwe, is a landlocked country located in Southeast Africa, between the Zambezi and Limpopo Rivers, bordered by South Africa to the south, Botswana to the south-west, Zambia to the north, and Mozam ...
. Currencies pegged to the U.S. dollar include: * In the Caribbean: the
Bahamian dollar The dollar (currency sign, sign: Dollar sign, $; ISO 4217, code: BSD) has been the currency of The Bahamas since 1966. It is normally abbreviated with the dollar sign ''$'', or alternatively B$ to distinguish it from other dollar-denominated curr ...
,
Barbadian dollar The dollar has been the currency of Barbados since 1935. Globally its currency has the ISO 4217 code ''BBD'', however, unofficially in Barbados the International vehicle registration code code BDS is also commonly used, a currency code that is o ...
,
Belize dollar The Belize dollar is the official currency in Belize (ISO 4217, currency code ''BZD''). It is normally abbreviated with the dollar sign ''$'', or alternatively ''BZ$'' to distinguish it from other dollar-denominated currencies. It is divided int ...
, Bermudan dollar, Cayman Islands dollar,
East Caribbean dollar The Eastern Caribbean dollar (currency symbol, symbol: EC$; ISO 4217, code: XCD) is the currency of all seven full members and one associate member of the Organisation of Eastern Caribbean States (OECS). The successor to the British West Indies d ...
,
Netherlands Antillean guilder The Netherlands Antillean guilder ( nl, gulden) is the currency of Curaçao and Sint Maarten, which until 2010 formed the Netherlands Antilles along with Bonaire, Saba (island), Saba, and Sint Eustatius. It is subdivided into 100 ''cents'' (Dutch ...
and the
Aruban florin The florin (; currency sign, sign: Afl.; ISO 4217, code: AWG) or Aruban guilder is the currency of Aruba. It is subdivided into 100 cents. The florin was introduced in 1986, replacing the Netherlands Antillean guilder at par. The Aruban florin is ...
. * The currencies of five oil-producing Arab countries: the
Saudi riyal The Saudi riyal ( ar, ريال سعودي ') is the currency A currency, "in circulation", from la, Wikt:currens, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or currency in c ...
,
United Arab Emirates dirham The dirham (; ar, درهم إماراتي, currency sign, abbreviation: د.إ in Arabic script, Arabic, Dh (singular) and Dhs (plural) or DH in Latin alphabet, Latin; ISO 4217, ISO code: AED) is the official currency of the United Arab Emirates. ...
, Omani rial,
Qatari riyal The Qatari riyal (currency sign, sign: QR in Latin alphabet, Latin, in Arabic script, Arabic; ISO 4217, ISO code: QAR) is the currency of the State of Qatar. It is divided into 100 dirhams ( ar, درهم). History Until 1966, Qatar used the In ...
and the Bahraini dinar. * Others: the
Hong Kong dollar The Hong Kong dollar (, currency symbol, sign: HK$; ISO 4217, code: HKD) is the official currency of the Hong Kong, Hong Kong Special Administrative Region. It is subdivided into 100 cent (currency), cents or 1000 Mill (currency), mils. The H ...
,
Macanese pataca The Macanese pataca or Macau pataca (; pt, pataca de Macau; currency symbol, sign: $; abbreviation: P; ISO 4217, ISO code: MOP) is the currency of the Macau, Macau Special Administrative Region of the People's Republic of China. It is subdivi ...
,
Jordanian dinar The Jordanian dinar ( ar, دينار أردني; ISO 4217, code: JOD; unofficially abbreviated as JD) has been the currency of Jordan since 1950. The dinar is divided into 10 dirhams, 100 qirsh (also called piastres) or 1000 fils (currency), fulu ...
,
Lebanese pound The pound or lira ( ar, ليرة لبنانية ''līra Libnāniyya''; French language, French: ''livre libanaise''; abbreviation: LL in Latin script, Latin, in Arabic script, Arabic, historically also £L, ISO 4217, ISO code: LBP) is the curre ...
.


Value

The 6th paragraph of Section 8 of Article 1 of the U.S. Constitution provides that the U.S. Congress shall have the power to "coin money" and to "regulate the value" of domestic and foreign coins. Congress exercised those powers when it enacted the
Coinage Act of 1792 The Coinage Act of 1792 (also known as the Mint Act; officially: ''An act establishing a mint, and regulating the Coins of the United States''), passed by the United States Congress on April 2, 1792, created the United States dollar as the countr ...
. That Act provided for the minting of the first U.S. dollar and it declared that the U.S. dollar shall have "the value of a Spanish milled dollar as the same is now current". The table above shows the equivalent amount of goods that, in a particular year, could be purchased with $1. The table shows that from 1774 through 2012 the U.S. dollar has lost about 97.0% of its buying power. The decline in the value of the U.S. dollar corresponds to
price inflation In economics, inflation is an increase in the general price level of goods and services in an economy. When the general price level rises, each unit of currency buys fewer goods and services; consequently, inflation corresponds to a reductio ...
, which is a rise in the general level of prices of goods and services in an economy over a period of time. A
consumer price index A consumer price index (CPI) is a price index, the price of a weighted average market basket of Goods, consumer goods and Service (economics), services purchased by households. Changes in measured CPI track changes in prices over time. Ove ...
(CPI) is a measure estimating the average price of consumer goods and services purchased by households. The
United States Consumer Price Index The United States Consumer Price Index (CPI) is a set of consumer price indices calculated by the U.S. Bureau of Labor Statistics The Bureau of Labor Statistics (BLS) is a unit of the United States Department of Labor. It is the princ ...
, published by the
Bureau of Labor Statistics The Bureau of Labor Statistics (BLS) is a unit of the United States Department of Labor. It is the principal fact-finding agency for the U.S. government in the broad field of labor economics and statistics and serves as a principal agency of ...
, is a measure estimating the average price of consumer goods and services in the United States. It reflects inflation as experienced by consumers in their day-to-day living expenses. A graph showing the U.S. CPI relative to 1982–1984 and the annual year-over-year change in CPI is shown at right. The value of the U.S. dollar declined significantly during wartime, especially during the
American Civil War The American Civil War (April 12, 1861 – May 26, 1865; also known by Names of the American Civil War, other names) was a civil war in the United States. It was fought between the Union (American Civil War), Union ("the North") and t ...
, World War I, and World War II. The
Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
, which was established in 1913, was designed to furnish an "elastic" currency subject to "substantial changes of quantity over short periods", which differed significantly from previous forms of high-powered money such as gold, national banknotes, and silver coins. Over the very long run, the prior gold standard kept prices stable—for instance, the price level and the value of the U.S. dollar in 1914 were not very different from the price level in the 1880s. The Federal Reserve initially succeeded in maintaining the value of the U.S. dollar and price stability, reversing the inflation caused by the First World War and stabilizing the value of the dollar during the 1920s, before presiding over a 30% deflation in U.S. prices in the 1930s. Under the
Bretton Woods system The Bretton Woods system of Monetary system, monetary management established the rules for commercial and financial relations among the United States, Canada, Western European countries, Australia, and Japan after the 1944 Bretton Woods Agree ...
established after World War II, the value of gold was fixed to $35 per ounce, and the value of the U.S. dollar was thus anchored to the value of gold. Rising government spending in the 1960s, however, led to doubts about the ability of the United States to maintain this convertibility, gold stocks dwindled as banks and international investors began to convert dollars to gold, and as a result, the value of the dollar began to decline. Facing an emerging
currency crisis A currency crisis is a type of financial crisis, and is often associated with a real economic crisis. A currency crisis raises the probability of a banking crisis or a Sovereign default, default crisis. During a currency crisis the value of foreig ...
and the imminent danger that the United States would no longer be able to redeem dollars for gold, gold convertibility was finally terminated in 1971 by President Nixon, resulting in the " Nixon shock". The value of the U.S. dollar was therefore no longer anchored to gold, and it fell upon the Federal Reserve to maintain the value of the U.S. currency. The Federal Reserve, however, continued to increase the money supply, resulting in
stagflation In economics, stagflation or recession-inflation is a situation in which the inflation rate is high or increasing, the economic growth rate slows, and unemployment remains steadily high. It presents a dilemma for economic policy, since actions ...
and a rapidly declining value of the U.S. dollar in the 1970s. This was largely due to the prevailing economic view at the time that inflation and real economic growth were linked (the
Phillips curve The Phillips curve is an economic model, named after William Phillips hypothesizing a correlation between reduction in unemployment and increased rates of wage rises within an economy. While Phillips himself did not state a linked relationsh ...
), and so inflation was regarded as relatively benign. Between 1965 and 1981, the U.S. dollar lost two thirds of its value. In 1979,
President Carter James Earl Carter Jr. (born October 1, 1924) is an American politician who served as the 39th president of the United States from 1977 to 1981. A member of the Democratic Party (United States), Democratic Party, he previously served as th ...
appointed
Paul Volcker Paul Adolph Volcker Jr. (September 5, 1927 – December 8, 2019) was an American economist who served as the 12th chair of the Federal Reserve, chairman of the Federal Reserve from 1979 to 1987. During his tenure as chairman, Volcker was widely ...
Chairman of the Federal Reserve The chair of the Board of Governors of the Federal Reserve System is the head of the Federal Reserve, and is the active executive officer of the Federal Reserve Board of Governors, Board of Governors of the Federal Reserve System. The chair shal ...
. The Federal Reserve tightened the money supply and inflation was substantially lower in the 1980s, and hence the value of the U.S. dollar stabilized. Over the thirty-year period from 1981 to 2009, the U.S. dollar lost over half its value. This is because the Federal Reserve has targeted not zero inflation, but a low, stable rate of inflation—between 1987 and 1997, the rate of inflation was approximately 3.5%, and between 1997 and 2007 it was approximately 2%. The so-called "
Great Moderation The Great Moderation is a period in the United States of America starting from the mid-1980s until at least 2007 characterized by the reduction in the Volatility (finance), volatility of business cycle fluctuations in developed nations compared w ...
" of economic conditions since the 1970s is credited to monetary policy targeting price stability. There is an ongoing debate about whether central banks should target zero inflation (which would mean a constant value for the U.S. dollar over time) or low, stable inflation (which would mean a continuously but slowly declining value of the dollar over time, as is the case now). Although some economists are in favor of a zero inflation policy and therefore a constant value for the U.S. dollar, others contend that such a policy limits the ability of the central bank to control
interest rates An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, th ...
and stimulate the economy when needed.


Pegged currencies

*
Aruban florin The florin (; currency sign, sign: Afl.; ISO 4217, code: AWG) or Aruban guilder is the currency of Aruba. It is subdivided into 100 cents. The florin was introduced in 1986, replacing the Netherlands Antillean guilder at par. The Aruban florin is ...
*
Bahamian dollar The dollar (currency sign, sign: Dollar sign, $; ISO 4217, code: BSD) has been the currency of The Bahamas since 1966. It is normally abbreviated with the dollar sign ''$'', or alternatively B$ to distinguish it from other dollar-denominated curr ...
(at par) * Bahraini dinar (higher value) *
Barbadian dollar The dollar has been the currency of Barbados since 1935. Globally its currency has the ISO 4217 code ''BBD'', however, unofficially in Barbados the International vehicle registration code code BDS is also commonly used, a currency code that is o ...
*
Belarusian ruble The ruble ( be, рубель ''rubeĺ’''; Currency symbol, Abbreviation: Rbl (plural: Rbls); ISO 4217, ISO code: BYN) is the currency of Belarus. It is also known as the rubel, or in Commonwealth English as the rouble. The ruble is subdivided ...
(alongside Euro and Russian Ruble in currency basket) *
Belize dollar The Belize dollar is the official currency in Belize (ISO 4217, currency code ''BZD''). It is normally abbreviated with the dollar sign ''$'', or alternatively ''BZ$'' to distinguish it from other dollar-denominated currencies. It is divided int ...
*
Bermudian dollar The Bermudian dollar (currency sign, symbol: dollar sign, $; ISO 4217, code: BMD; also abbreviated BD$; informally called the Bermuda dollar) is the official currency of the British Overseas Territories, British Overseas Territory of Bermuda. ...
(at par) * Cayman Islands dollar (higher value) * Costa Rican colon *
Cuban peso The Cuban peso (in Spanish , ISO 4217 code: CUP) also known as , is the official currency of Cuba. The Cuban peso historically circulated at par with the Spanish dollar, Spanish-American silver dollar from the 16th to 19th centuries, and then at ...
*
East Caribbean Dollar The Eastern Caribbean dollar (currency symbol, symbol: EC$; ISO 4217, code: XCD) is the currency of all seven full members and one associate member of the Organisation of Eastern Caribbean States (OECS). The successor to the British West Indies d ...
* East Timor centavo coins (at par) * Ecuadorian centavo coins (at par) * Salvadoran colon * Eritrean nakfa *
Guatemalan quetzal The quetzal (; ISO 4217, code: GTQ) is the currency of Guatemala, named after the List of national birds, national bird of Guatemala, the resplendent quetzal. In ancient Maya civilization, Mayan culture, the quetzal bird's tail feathers were used ...
* Haitian gourde *
Honduran lempira The lempira (, sign: L, ISO 4217 code: HNL;) is the currency of Honduras. It is subdivided into 100 centavos. Etymology The lempira was named after the 16th-century ''cacique'' Lempira (Lenca ruler), Lempira, a ruler of the indigenous people ...
*
Hong Kong dollar The Hong Kong dollar (, currency symbol, sign: HK$; ISO 4217, code: HKD) is the official currency of the Hong Kong, Hong Kong Special Administrative Region. It is subdivided into 100 cent (currency), cents or 1000 Mill (currency), mils. The H ...
(narrow band) * Iraqi dinar *
Jordanian dinar The Jordanian dinar ( ar, دينار أردني; ISO 4217, code: JOD; unofficially abbreviated as JD) has been the currency of Jordan since 1950. The dinar is divided into 10 dirhams, 100 qirsh (also called piastres) or 1000 fils (currency), fulu ...
(higher value) *
Kuwaiti dinar The Kuwaiti dinar ( ar, دينار كويتي, ISO 4217, code: KWD) is the currency of Kuwait. It is sub-divided into 1,000 Fils (currency), fils. As of 2022, the Kuwaiti dinar is the currency with the highest value per base unit, with KD  ...
(higher value) *
Lebanese pound The pound or lira ( ar, ليرة لبنانية ''līra Libnāniyya''; French language, French: ''livre libanaise''; abbreviation: LL in Latin script, Latin, in Arabic script, Arabic, historically also £L, ISO 4217, ISO code: LBP) is the curre ...
* Antillean guilder * Nicaraguan cordoba *
Nigerian naira The naira (currency sign, sign: ₦; ISO 4217, code: NGN) is the currency of Nigeria. One naira is divided into 100 ''kobo''. The Central Bank of Nigeria (CBN) is the sole issuer of legal tender money throughout the Federal Republic of Nigeria ...
* Omani rial (higher value) *
Panamanian balboa The balboa (currency sign, sign: B/.; ISO 4217: PAB) is, along with the United States dollar, one of the official currency, currencies of Panama. It is named in honor of the Spanish people, Spanish List of explorers, explorer/conquistador Vasco N ...
(at par) *
Qatari riyal The Qatari riyal (currency sign, sign: QR in Latin alphabet, Latin, in Arabic script, Arabic; ISO 4217, ISO code: QAR) is the currency of the State of Qatar. It is divided into 100 dirhams ( ar, درهم). History Until 1966, Qatar used the In ...
*
Saudi riyal The Saudi riyal ( ar, ريال سعودي ') is the currency A currency, "in circulation", from la, Wikt:currens, currens, -entis, literally meaning "running" or "traversing" is a standardization of money in any form, in use or currency in c ...
* Sierra Leonean leone *
Trinidad and Tobago dollar The Trinidad and Tobago dollar (ISO 4217, currency code TTD) is the currency of Trinidad and Tobago. It is normally abbreviated with the dollar sign $, or alternatively TT$ to distinguish it from other dollar-denominated currencies. It is subdiv ...
*
United Arab Emirates dirham The dirham (; ar, درهم إماراتي, currency sign, abbreviation: د.إ in Arabic script, Arabic, Dh (singular) and Dhs (plural) or DH in Latin alphabet, Latin; ISO 4217, ISO code: AED) is the official currency of the United Arab Emirates. ...
* Yemeni rial (lower value) * Zimbabwean bond coins and bond notes (at par)


Exchange rates


Historical exchange rates


Current exchange rates


See also

* Counterfeit United States currency * Dedollarisation * International use of the U.S. dollar *
List of the largest trading partners of the United States The 30 largest trade partners of the United States represent 87.9% of U.S. exports, and 87.4% of U.S. imports . These figures do not include services or foreign direct investment. The largest US partners with their total trade in goods (sum of imp ...
*
Monetary policy of the United States Monetary policy of The United States concerns those policies related to the Minting coins, minting & Federal Reserve Note, printing of money, policies governing the legal exchange of currency, demand deposits, the money supply, etc. In the Unite ...
*
Petrodollar recycling Petrodollar recycling is the international spending or investment of a country's revenues from petroleum exports ("petrodollars"). It generally refers to the phenomenon of major List of countries by oil exports, petroleum-exporting states, mai ...
* Strong dollar policy * U.S. Dollar Index


Notes


References


Further reading

*


External links


U.S. Bureau of Engraving and Printing



American Currency Exhibit at the San Francisco Federal Reserve Bank

Relative values of the U.S. dollar, from 1774 to present



Summary of BEP Production Statistics


Images of U.S. currency and coins


U.S. Currency Education Program page with images of all current banknotes

U.S. Mint: Image Library


{{DEFAULTSORT:United States Dollar Currencies introduced in 1792 Currencies of British Overseas Territories Currencies of East Timor
Dollar Dollar is the name of more than 20 Currency, currencies. They include the Australian dollar, Brunei dollar, Canadian dollar, Hong Kong dollar, Jamaican dollar, Liberian dollar, Namibian dollar, New Taiwan dollar, New Zealand dollar, Singapore d ...
Currencies of El Salvador Currencies of the Kingdom of the Netherlands
Dollar Dollar is the name of more than 20 Currency, currencies. They include the Australian dollar, Brunei dollar, Canadian dollar, Hong Kong dollar, Jamaican dollar, Liberian dollar, Namibian dollar, New Taiwan dollar, New Zealand dollar, Singapore d ...
Currencies of Zimbabwe Historical currencies of the United States 1792 establishments in the United States