United States dollar

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Contemporary United States Coins and Notes
Unit ($) Design on Obverse Design on Reverse Nicknames
Coins
$0.01 Abraham Lincoln Lincoln Memorial Penny
$0.05 Thomas Jefferson Westward Journey Designs Nickel
$0.10 Franklin D. Roosevelt torch, oak branch, olive branch Dime
$0.25 George Washington Statehood designs Quarter
$0.50 John F. Kennedy Seal of the President of the United States Half Dollar, 50-Cent piece
$1.00 Sacagawea Eagle in flight *
$1.00 Susan B. Anthony Eagle landing on The Moon *
$1.00 (Large Size) Dwight D. Eisenhower Apollo 11 Mission Patch *
*$1 coins have little circulation, and therefore, no commonly-accepted nicknames
Federal Reserve Notes
1 George Washington Great Seal of the United States Dollar bill, Single
2 Thomas Jefferson Declaration of Independence Deuce
5 Abraham Lincoln Lincoln Memorial
10 Alexander Hamilton Treasury building
20 Andrew Jackson White House
50 Ulysses S. Grant U.S. Capitol
100 Benjamin Franklin Independence Hall Benjamin, C-note
Large U.S. denominations (deprecated)
USD redirects here. For other uses, see USD (disambiguation).

The United States dollar, or American dollar, is the official currency of the United States. It is also widely used as a reserve currency outside the United States. Currently, the issuance of currency is controlled by the Federal Reserve Banking system. The most commonly used symbol for the U.S. dollar is the dollar sign ($). The ISO 4217 code for the United States Dollar is USD; the U.S. dollar is also referenced as US$ by the International Monetary Fund. In 1995, over $380 billion (380 G$) in U.S. currency was in circulation, two-thirds of it overseas. As of April 2004 nearly $700 billion [1] was in circulation, with an estimated half to two-thirds of it still being held overseas [2].

The United States is one of many countries that use a currency known as a dollar. Several countries use the U.S. dollar as their official currency, and many others allow it to be used in a de facto legal capacity. See dollar.

The colloquialism buck is often used to refer to a U.S. dollar. This term, dating to the 18th century, may have originated with the colonial fur trade. Grand, sometimes shortened to simply G, is a common term for the amount of 1,000 of several currencies, including dollars. Banknotes' nicknames are usually the same as their values (such as five, twenty, etc.); however, the $1 bill is often called a single, and the $100 bill has gotten the nickname benjamin (after the portrait of Benjamin Franklin that it bears).

Overview

The U.S. dollar is most commonly divided into 100 cents (symbol ¢). In another division, there are 1,000 mills or ten dimes to a dollar; additionally, the term eagle was used in naming gold coins. However, only cents are in everyday use as divisions of the dollar; "dime" is used solely as the name of the coin with that value, while "eagle" and "mill" are largely unknown to the general public, though mills are sometimes used in matters of tax levies. When currently issued in circulating form, denominations equal to or less than a dollar are emitted as U.S. coins while denominations equal to or greater than a dollar are emitted as Federal Reserve notes. (Both one-dollar coins and notes are produced today, although the note form is significantly more common.) In the past, paper money was occasionally issued in denominations less than a dollar (Fractional Currency) and gold coins were issued for circulation up to the value of twenty dollars.

U.S. coins are produced by the United States Mint. U.S. dollar banknotes have been printed by the Bureau of Engraving and Printing for the Federal Reserve since 1914. They began as large-sized notes. In 1928, they switched to small-sized notes, for reasons that are yet to be explained. A logical explanation would be to reduce costs in producing bills, by allowing more bills to be printed on the same amount of paper.

Notes above the $100 denomination ceased being printed in 1946 and were officially withdrawn from circulation in 1969. These notes were used primarily either in inter-bank transactions or by organized crime; it was the latter usage that prompted President Richard Nixon to issue an executive order in 1969 halting their use. With the advent of electronic banking, they became unnecessary. Notes in denominations of $500, $1,000, $5,000, $10,000, and $100,000 were all produced at one time; see large denomination bills in U.S. currency for details. See History of the American dollar for more info about the currency's history.

United States coins

Main article: United States coinage

In normal circulation, there are coins in the denominations 1¢ (penny), 5¢ (nickel), 10¢ (dime), 25¢ (quarter), 50¢ (half dollar; uncommon), and $1 (uncommon).

Dollar coins have never been popular in the United States. Silver dollars were created from 1794 through 1935 with many gaps; then a copper-nickel dollar of the same large size was minted from 1971 through 1978. The Susan B. Anthony dollar coin was introduced in 1979; these proved to be unpopular because they were often mistaken for quarters, thanks to their nearly-equal size, their milled edge, and their similar color. Minting of these dollars for circulation ended in 1980 (collectors' pieces were struck in 1981), but, as with all past U.S. coins, they remain legal tender. As the number of Anthony dollars held by the Federal Reserve and dispensed primarily to make change in postal and transit vending machines had been virtually exhausted, additional Anthony dollars were struck in 1999. In 2000, a new $1 coin featuring Sacagawea was introduced, which corrected some of the mistakes of the Anthony dollar by having a smooth edge and a gold color, without requiring changes to vending machines which accept the Anthony dollar. However, this new coin has failed to achieve the popularity of the still-existing $1 bill and is rarely used in daily transactions. The failure to simultaneously withdraw the dollar bill (the Save the Greenback Act of 1995 banned its phasing out) and weak publicity efforts have been cited by coin proponents as primary reasons for the failure of the dollar coin to gain popular support. Some cynics also point out that the Federal Reserve makes more profit from dollar bills than dollar coins because they wear out in a few years, whereas coins are more permanent. As most vending machines are incapable of making change in banknotes, they commonly only accept $1 bills, though a few will give change in dollar coins.

Reaching into the past, the United States has minted other coin denominations since 1793: half-cent, two-cent, three-cent, twenty-cent, $2.50, $3.00, $4.00, $5.00, $10.00, and $20.00. Technically, all these coins are still legal tender at face value, though they are far more valuable today for their numismatic value, and for gold and silver coins, their precious metal value.

The United States Mint also produces gold and platinum bullion coins, called "American Eagles", all of which are legal tender though their use in everyday transactions is virtually non-existent. The reason for this is that they are not intended for use in transactions and thus the face value of the coins are much lower than the worth of the precious metals in them. The American Silver Eagle bullion coin is only issued in the $1 (1 troy oz) denomination. The American Gold Eagle bulllion coin denominations (with gold content) are: $5 (1/10 troy oz), $10 (1/4 troy oz), $25 (1/2 troy oz), and $50 (1 troy oz). The American Platinum Eagle bullion coin denominations (with platinum content) are: $10 (1/10 troy oz), $25 (1/4 troy oz), $50 (1/2 troy oz), and $100 (1 troy oz). The silver coin is 99.9% silver, the gold coins are 91.67% gold (22 karat), and the platinum coins are 99.95% platinum. These coins are not available from the Mint for individuals, but must be purchased from authorized dealers. The Mint also produces high quality "proof" coins, intended for collectors, in the same denominations and bullion content, which are available for individuals.

The largest denomation of currency currently printed or minted by the United States is the $100 bill and the $100 troy ounce Platinum Eagle.

International use

File:US $100 obverse.jpg
U.S. $100 Federal Reserve Note, featuring a portrait of Benjamin Franklin.

A few nations besides the United States use the U.S. dollar (USD) as their official currency. Ecuador, El Salvador, and East Timor all adopted the currency independently. The former members of the US-administered Trust Territory of the Pacific Islands, including Palau, the Federated States of Micronesia, Northern Mariana Islands and the Marshall Islands, chose not to issue their own currency after becoming independent.

Additionally, the local currencies of Bermuda, the Bahamas, Panama, and a few other states can be freely exchanged at a 1:1 ratio for USD. The currency of Barbados is similarly convertible at a 2:1 ratio. Argentina used a fixed 1:1 exchange rate between the Argentine peso and the U.S. dollar from 1991 until 2002. In Lebanon, one dollar is equal to 1500 Lebanese pound, and is used interchangeably with local currency as a de facto legal tender. The exchange rate between the Hong Kong dollar and the United States dollar has also been linked since 1983 at HK$7.8/USD, and Pataca of Macau, pegged to Hong Kong dollar at MOP1.03/HKD, indirectly linked to the US dollar roughly at MOP8/USD. Several oil-producing Gulf Arab countries, including Saudi Arabia and Kuwait, also peg their currencies to the dollar, since the dollar is the currency used in the international oil trade.

The renminbi used by the People's Republic of China had been informally and controversially pegged to the dollar since the mid-1990s at Y8.28/USD until July 21, 2005. Likewise, Malaysia had pegged its ringgit at RM3.8/USD since 1997. However, on July 21, 2005, both countries removed their respective pegs and adopted managed floats against a basket of currencies.

The dollar is also used as the standard unit of currency in international markets for commodities such as gold and oil. Even foreign companies with little direct presence in the United States, such as the European company Airbus, list and sell their products in dollars, although some argue this is attributed to the aerospace market being dominated by US companies.

At the present time, the U.S. dollar remains the world's foremost reserve currency, primarily held in $100 denominations. The majority of U.S. notes are actually held outside the United States. According to economist Paul Samuelson, the overseas demand for dollars allows the United States to maintain persistent trade deficits without causing the value of the currency to depreciate and the flow of trade to readjust.

Not long after the introduction of the euro (€; ISO 4217 code EUR) as a cash currency in 2002, the dollar began to steadily depreciate in value on the international scene. After the euro started to rise in value in March 2002, the U.S. trade and budget deficits continued to increase. By Christmas 2004 the dollar had fallen to new lows against all major currencies, especially its rival the euro. The euro rose above $1.36 /€ (under 0.74 €/$) for the first time in late December 2004, in sharp contrast to its lows in early 2003 (rate of $0.87/€). Beginning in late May into early June though the Dollar rose sharply against the Euro as European states reported stagnation in the overall EU economy and doubts were raised over the EU Constitution which was voted down in two member states: France and The Netherlands. As unemployment rates rise in the Euro zone and economic growth slows the EU may see a drop in the value of the Euro against the Dollar for at least part of 2005 although the Euro is expected to maintain its strength if in a slightly diminished manner.

Origin of the name dollar

The United States dollar derives from the Spanish 8 reales coin which was composed of just under one ounce of silver. This coin was popular among American colonists, who called it the Spanish dollar, the name having derived from a German coin of similar size and composition known as the thaler. The first dollar coins issued by the United States mint were of the same size and composition as the Spanish dollar and even after the American Revolutionary War the Spanish and U.S. silver dollars circulated side by side in the United States.

Although private banks issued currency backed by Spanish and U.S. silver dollars, the federal government did not do so until the American Civil War.

For further history of the name, see Dollar.

The dollar symbol

Main Article: Dollar sign

There are various stories on origin of the "$" sign to represent "dollar." Because the dollar was originally the Spanish 8 reales coin, it is suggested that the 'S' derives from the number '8' which appeared on the coin. The most widely accepted explanation, according to the U.S. Bureau of Engraving and Printing, is that "$" is a corruption of the letters "PS" (for 'peso' or 'piastre' - especially the former, as each letter could represent each syllable of "Pe-So") written over each other in Spanish. Eventually, the 'P' was reduced to a vertical line - | - since the hump disappeared into the upper curve of the 'S' anyway. Examination of old manuscripts yields support for this theory. The "$" symbol was widely in use before formal adoption of the Spanish dollar as U.S. currency in 1785.

The dollar sign is sometimes written with two vertical strokes. This is probably just a carry-over of the old habit of using three strokes to write the original sign: One stroke for the 'S' (it is physically easier to write the 'S' first, then the 'P'), a second stroke for the vertical line '|,' and then a third stroke for the hump of the 'P.' People in a hurry or who simply do not care about making a perfectly formed 'P' (especially as the 'hump' will disappear into the 'S' anyway), probably just made the third stroke a second vertical line.

There are, however, a number of fanciful explanations for the second vertical line - ranging from superimposition of the letters 'U' and 'S' (the bottom of the 'U' disappearing into the bottom curve of the 'S,' effectively leaving two vertical lines that eventually merge into one as the sign '$'), to the very amusing but original idea that the dollar sign with two vertical lines represents the two pillars of the original Temple of Solomon at Jerusalem. Neither of these stories holds up, however, first because this version of the symbol pre-dates the founding of the United States (whence came the notion of 'U' superimposed over 'S'); and, second, because there is simply no evidence for the theory in the history of the Spanish coin. Rather, this theory seems to trace to the traditions of Freemasonry; and, indeed, some Masonic symbols do appear on U.S. currency - but they did not in 1785.

A few people write the sign with one vertical stroke for small sums of money and two vertical strokes for large sums of money. ($5 with one stroke and $1,000,000 with two strokes) However, this is only a matter of style, and it certainly has little to do with the original variation.

For further information about the symbol, see Dollar. See also Pieces of Eight.

Current USD exchange rates

AUD | CAD | EUR | GBP | INR | NZD | BRL | Lots of exchange rates

External links


Template:US currency and coinage Template:AmericanCurrencies

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