What is a heavy currency?

The hard currency, also called a strong currency, is a currency that people use in more than one area of ​​the world because it is widely accepted in exchange for goods and services. This is because it is perceived worldwide as a reliable storage of value. The hard currency must also be one that comes from a country that has political and economic stability. Short -term stability of value and liquidity in foreign exchange markets are other features typical of hard currency. In many ways, the concept of hard currency is related to the concept of reserve currency. The German Deutschmark was also considered one of the best hard currencies than it was replaced by the euro. In addition to being useful for the international exchange, hard currency can also be used in countries with command economies, such as the People's Republic of China and former East Germany. In these countries, like some others, there are and there were special shops that would not accept the local currency, but only an internationally recognized hard currency. These stores often sold items that wereRare and/or imported, and therefore it is necessary to pay suppliers more stable than the local currency.

In economics, the hard currency is perceived as different from a soft currency that does not hold well or comes from a country suffering from war, harsh dictatorship or other political or economic instability. In some cases, the soft currency can be considered anything other than golden dragons, gold coins or paper based on gold. Although the gold itself varies, at least in terms of currency, these definitions of hard and soft currencies are applicable to a long -term economic tendency known as Gresham's law.

This law, named after an English financier from the 16th century, states that the hill quality quality will tend to be replaced over time. When this happens, high -quality currency like gold will be used mainly as a trade in wealth while the currency with lowerQuality becomes an exchanger. One example is the fact that the US cash register He has left the gold standard decades ago in favor of the Fiat currency, which is paper money now used in the US is not supported by gold in the sense that the government will not now exchange gold for paper, as it would be under the gold standard.