What Is Currency Trading Definition Examples Video Lesson Transcript Study Com

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What is a Currency?

Currency can best be defined as tokens used as money in a country. In addition to the metal coins and paper bank notes, modern currency also includes checks drawn on bank accounts, money orders, travelers checks, and will soon include electronic money or digital cash.
Typically currency refers to money that is legally designated as such by the governing body, but in some cultures currency can refer to any object that has a perceived value and can be exchanged for other objects.
Generally speaking, each country has its own currency. For example, Switzerland's official currency is the Swiss franc, and Japan's official currency is the yen. An exception would be the euro, which is used as the currency for several European countries.
Investors often trade currency on the foreign exchange market, which is one of the most heavily traded markets in the world.
Currency, in and of itself, is nothing. It can be a shell, a metal coin, or a piece of paper with a historic image on it, but the value that people place on it has nothing to do with the physical value of the money. Money derives its value by being a medium of exchange, a unit of measurement and a storehouse for wealth. Money allows people to trade goods and a service indirectly, understands the price of goods and gives us a way to save for larger purchases in the future. Money is valuable merely because everyone knows everyone else will accept it as a form of payment.

By Barry Norman, Investors Trading Academy