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National Currency

General description

A national currency is the money designated as legal tender by the national government or monetary authority and is in most cases the most common currency circulating in that nation. Different nations can adopt the same currency, as it is in the case of the Euro.

The central bank determines the national currency and typically allows commercial banks to issue most of the national currency in circulation (97% in the UK) 1 as bank deposits of their clients when issuing a loan.

Main examples of national currencies are: the US dollar, Pound sterling, Euro, Yen, and Renminbi. These currencies today are typically fiat currencies.

The ‘money monoculture’ created by national currency can result in the homogenisation of local and regional cultures. In the words of Eisenstein 2, because of national currencies, “local distinctiveness, autonomy, and economic opportunity disappear. (…) Instead of vibrant, economically diverse communities with their own local character, we have a monoculture where every place is the same”.

Complementary currencies are sometimes practically defined as any currency that is not a national currency.

References

  1. new economics foundation, (2012), Where does money come from? Website: http://www.neweconomics.org/publications/entry/where-does-money-come-from
  2. Eisenstein, C., (2011) Sacred Economics – Money, Gift & Society in the Age of Transition, Evolver Editions: Berkeley, California. p.292
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