any conflict if a country using two currency at the same time???

Question

if a country using two currency at the same time...could be any conflict happen???what are they???or the idea of using two currency is a step to improve a country???Thank You!!!!

Answer 1

There is a small country, the Republic of Moldova, where there are two currencies but this is very specific. There you have one currency on most of the territory of the country but there is also a region - Transnistria - that wants to be independent and that uses another currency. Another example could be Kosovo where they use Euro even though the status of that region is uncertain (it's not really part of Serbia anymore and it's not an independent state either), and they are not part of the Euro zone. Many examples like this exist around the world!

Answer 2

The United States had multiple currencies at many points in its history. It is important to remember that money is anything people will accept in trade other than barter. Giant stone wheels are money on one island that also uses international currency for trade.

Originally, each state and sometimes town produced its own currency. As well, each bank produced a currency and the Spanish Real was the national standard currency. It was an interim stop gap measure by Jefferson that got us the dollar. The idea of using a "dollar," or anglocized thaler as the unit was not intended to be a permanent thing. However, it was offensive to the sons of the Revolution to continue to use the Spanish "Royal," as the accepted unit of currency.

Shortly following the Civil War, the number of currencies in use hit their highest point. We used Greenbacks which were disputable money, US Notes which were backed in gold, National Currency, we used interest bearing Notes (about the only time hand to hand currency bore interest), private bank notes, gold and silver specie and the Pound Sterling was of course accepted anywhere in the world.

We developed a single currency following the Federal Reserve Act though it was not until recently that we had a national currency. Even today, if you look at a one dollar bill, our currency is not entirely national. One dollar bills are drawn on the credit of a specific issuing Federal Reserve Bank. Only larger bills are now drawn against the national system. People have for decades treated Federal Reserve Notes as national currency, but until recently they were claims against a particular bank and not the entire system.

People tend to use whatever works. In Hungary during the cold war, cigarettes were the standard currency but the official money was of necessity used as well. Cigarettes were simply the national 'hard' currency.

Conflicts occur when people won't honor all forms of currency equally and then that rate of exchange changes. For example, during the Panic of 1837 paper money was being traded at 90 cents per dollar of face value in gold or silver. So you could pay $1 in gold or $1.11 in paper money. This wasn't so much a conflict as a potential source of conflict.

When you see multiple currencies you are seeing two things--a lack of confidence and a decentralized system of money creation. In Scotland two currencies are still in use. Scottish banks are still allowed to print their own money and it trades alongside the British pound in Scotland.

Two currencies can improve an economy because one is likely to be a reserve currency such as the dollar and the other is a local currency. If you cannot get enough dollars into the system for general usage, then printing your own money is a valuable substitute. Reserve currencies are currencies accepted in any nation of the world. As such, "they are as good as gold," and are money anywhere. For a variety of positive reasons, smaller countries print their own money but this often means that such a country needs two currencies, one for use internally and one for use externally.

Answer 3

In periods of high inflation (like Germany after WW I), a new currency might be issued that replaces a debased currency with a ridiculously low exchange rate to try and stabilize the currency.