Currencies are exchanged through the acquisition and sale of the foreign exchange market. The currency market itself is a system that provides the necessary socio-economic and organizational aspects needed for currency trading. The global currency market is primarily a competitive market, which means that a large number of participants are constantly present on it. Unlike currency exchanges, where traders earn money due to the difference in exchange rates, the market deals with economic relations between importers and exporters of goods. They are also known as the primary actors of the market, and the formation of basic supply and demand is precisely in their jurisdiction.
As for the above traders, they consider the currency as a commodity, and trade currency in order to make a profit. It should be noted that it is such activity that most characterizes the modern foreign exchange market. Now 9 out of 10 transactions are exactly the purchase and sale for the purpose of earning on the difference in exchange rates, while at the same time, trading operations account for a relatively small volume of the market.
According to the classification, the global currency market can be called multi-level. This means that it consists of national, regional and international markets. At the national level, banking systems are a means of carrying out operations. The regional foreign exchange market is the place where the purchase and sale of hard currency and local currencies is conducted. The three main such markets are continental, and represent Europe, Asia and America. Each of them has several financial centers. The volume of transactions daily is hundreds of billions of dollars. Above the regional ones is the international market, which, in essence, is their combination. Money is constantly moving between markets, which is explained by a change in quotations - as a result, equilibrium is always maintained at the international level.
One of the basic concepts used by the world currency market is convertibility. A currency can be freely convertible, partially convertible, or non-convertible. The better this indicator, the more popular is the currency in the markets of various levels. Today, there is not much hard currency - these are the US dollar, euro, Swiss franc, pound sterling, Japanese yen and some other currencies. In particular, the Chinese yuan may soon be in the leading positions , but so far this has not happened due to the specific currency policy of China - its currency is artificially restrained from strengthening.
Hard currency not only circulate freely on markets at all levels, but also act as a reserve in most countries, along with precious metals. If the currency is partially converted, it rarely goes beyond the regional market. An example of such a currency is the Russian ruble. Non-convertible currencies for various reasons can only be used within a particular country. One of the most striking examples to date is North Korean won. The closed economy of the country leads to the fact that the world currency market does not consider won as a means of payment.