Since ancient times, world money provided payment for goods and services produced in a foreign country. Thus, they are the basis for the development of international agreements. For a long time, world money was expressed in metal, that is, only metal coins, especially those made of precious species, were considered such.
But in the process of evolution of economic relations, coinage as the basis of the currency has ceased, due to inexpediency and high cost. That is why the release of paper money began to be welcomed, the production of which was less costly, and the value practically did not decrease.
Currently, world money is the currency used in international payments. The most common was the US dollar, then the euro and the Japanese yen. At the same time, experts believe that in connection with the crisis, the US dollar will not be able to maintain a leadership position. Most likely, in a decade, the Chinese yuan will replace him . But for now, these are just forecasts of economists from different countries.
Modern world money takes the following forms:
- The currency most commonly used in credit relationships. Earlier in this form promissory notes acted. However, their drawback was that they could not serve as a means of settlement in transactions with foreign partners. And with the creation of national credit money and the definition of specific international currency units, the operations of representatives of different countries have become much simpler.
- An international monetary unit that is applied collectively. So far, not a single currency has been able to win primacy from the US dollar. Great expectations are placed on the euro, the common currency in European countries. But, as noted above, the American dollar is ubiquitous and has no analogues.
- Relatively recently, a form such as mottos has appeared. They represent non-cash money used in settlements with foreign counterparties. Such documents include letters of credit, payment orders, checks, securities, bills.
In addition, world money performs certain functions.
It is worth noting the fact that, first of all, world money performs economic functions. Relations between counterparties of different countries were largely hampered by the need to convert national currencies, that is, settlement of transactions required additional agreement on a specific currency. With the advent of world money, economic entities were able to offset mutual claims and obligations and pay only the balance of the debt. Currently, such operations are not unusual, and large commercial banks conduct offsetting transactions daily.
But besides the economic one, it is worth mentioning the political function of world money. They are a tool that serves to achieve specific political goals. For example, interstate loans and borrowings in some cases force the borrowing country to be more loyal or act contrary to their own interests. And some large political associations squeeze the participants of the organization into a vice, obliging them to provide financial assistance to a state that is experiencing temporary difficulties.
Due to defaults and crises, some business entities still trust only gold and other precious metals. And this can be understood, because for a long time a single world currency was just a gold coin. Over time, it was ousted from international payments, and replaced by a hard currency (for example, the dollar or the euro). If earlier in the reserve fund of developed countries there was about 80% of gold, now this indicator has significantly decreased and amounts to no more than 17%. This is due to the development of cashless payments, and to the artificial reduction in gold prices by leading states.