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TABLE OF CONTENTS
A. DEFINITION .......................................................................2
B. FUNCTION ..........................................................................9
C. FACTORS THAT EFFECT THE CURRENCY .................13
D. EXAMPLE OF THE EXCHANGE .....................................15
E. EXAMPLE OF THE CURRENCIES IN THE WORLD......
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A. DEFINITION
What is ‘CURRENCY'
Currency is a generally accepted form of money, including coins and paper
notes, which is issued by a government and circulated within an economy. Used
as a medium of exchange for goods and services, currency is the basis for trade.
A currency (from Middle English: curraunt, "in circulation", from Latin:
currens, -entis), in the most specific use of the word, refers to money in any
form when in actual use or circulation as a medium of exchange, especially
circulating banknotes and coins.[1][2] A more general definition is that a currency
is a system of money (monetary units) in common use, especially in a nation.[3]
Under this definition, US dollars, British pounds, Australian dollars, and
European euros are examples of currency. These various currencies are
recognized stores of value and are traded between nations in foreign exchange
markets, which determine the relative values of the different currencies.[4]
Currencies in this sense are defined by governments, and each type has limited
boundaries of acceptance.

Other definitions of the term "currency" are discussed in their respective

synonymous articles banknote, coin, and money. The latter definition,
pertaining to the currency systems of nations, is the topic of this article.
Currencies can be classified into two monetary systems: fiat money and
commodity money, depending on what guarantees the value (the economy at
large vs. the government's physical metal reserves). Some currencies are legal
tender in certain political jurisdictions, which means they cannot be refused as
payment for debt. Others are simply traded for their economic value. Digital
currency has arisen with the popularity of computers and the Internet.

Conclution of group:
Currency is an object generally accepted by the public to measure,
exchange, and make payments on the purchase of goods and services,
and at the same time as the landfill
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HISTORY
Early currency

Cowry shells being used as money by an Arab trader.

Originally money was a form of receipt, representing grain stored in temple
granaries in Sumer in ancient Mesopotamia and later in Ancient Egypt.
In this first stage of currency, metals were used as symbols to represent value
stored in the form of commodities. This formed the basis of trade in the Fertile
Crescent for over 1500 years. However, the collapse of the Near Eastern trading
system pointed to a flaw: in an era where there was no place that was safe to
store value, the value of a circulating medium could only be as sound as the
forces that defended that store. Trade could only reach as far as the credibility
of that military. By the late Bronze Age, however, a series of treaties had
established safe passage for merchants around the Eastern Mediterranean,
spreading from Minoan Crete and Mycenae in the northwest to Elam and
Bahrain in the southeast. It is not known what was used as a currency for these
exchanges, but it is thought that ox-hide shaped ingots of copper, produced in
Cyprus, may have functioned as a currency.
It is thought that the increase in piracy and raiding associated with the Bronze
Age collapse, possibly produced by the Peoples of the Sea, brought the trading
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system of oxhide ingots to an end. It was only with the recovery of Phoenician
trade in the 10th and 9th centuries BC that saw a return to prosperity, and the
appearance of real coinage, possibly first in Anatolia with Croesus of Lydia and
subsequently with the Greeks and Persians. In Africa, many forms of value store
have been used, including beads, ingots, ivory, various forms of weapons,
livestock, the manilla currency, and ochre and other earth oxides. The manilla
rings of West Africa were one of the currencies used from the 15th century
onwards to sell slaves. African currency is still notable for its variety, and in
many places various forms of barter still apply.
Coinage
Main article: Coin
These factors led to the metal itself being the store of value: first silver, then
both silver and gold, and at one point also bronze. Now we have copper coins
and other non-precious metals as coins. Metals were mined, weighed, and
stamped into coins. This was to assure the individual taking the coin that he was
getting a certain known weight of precious metal. Coins could be counterfeited,
but they also created a new unit of account, which helped lead to banking.
Archimedes' principle provided the next link: coins could now be easily tested
for their fine weight of metal, and thus the value of a coin could be determined,
even if it had been shaved, debased or otherwise tampered with (see
Numismatics).
Most major economies using coinage had several tiers of coins, using a mix of
copper, silver and gold. Gold coins were used for large purchases, payment of
the military and backing of state activities; they were more often used as
measures of account than physical coins. Silver coins were used for midsized
transactions, and as a unit of account for taxes, dues, contracts and fealty, while
coins of copper, silver, or some mixture thereof (see debasement), were used for
everyday transactions. This system had been used in ancient India since the time
of the Mahajanapadas. The exact ratio in value of the three metals varied greatly
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in different eras and places; for example, the opening of silver mines in the Harz
mountains of central Europe made silver relatively less valuable, as did the
flood of New World silver after the Spanish conquests. However, the rarity of
gold consistently made it more valuable than silver, and likewise silver was
consistently worth more than copper.
Paper money
Main article: Banknote
In premodern China, the need for credit and for a medium of exchange that was
less physically cumbersome than large numbers of copper coins led to the
introduction of paper money, i.e. banknotes. Their introduction was a gradual
process which lasted from the late Tang dynasty (618–907) into the Song
dynasty (960–1279). It began as a means for merchants to exchange heavy
coinage for receipts of deposit issued as promissory notes by wholesalers' shops.
These notes were valid for temporary use in a small regional territory. In the
10th century, the Song dynasty government began to circulate these notes
amongst the traders in its monopolized salt industry. The Song government
granted several shops the right to issue banknotes, and in the early 12th century
the government finally took over these shops to produce state-issued currency.
Yet the banknotes issued were still only locally and temporarily valid: it was not
until the mid 13th century that a standard and uniform government issue of
paper money became an acceptable nationwide currency. The already
widespread methods of woodblock printing and then Pi Sheng's movable type
printing by the 11th century were the impetus for the mass production of paper
money in premodern China.
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Song dynasty Jiaozi, the world's earliest paper money.

At around the same time in the medieval Islamic world, a vigorous monetary
economy was created during the 7th–12th centuries on the basis of the
expanding levels of circulation of a stable high-value currency (the dinar).
Innovations introduced by Muslim economists, traders and merchants include
the earliest uses of credit,[5] cheques, promissory notes,[6] savings accounts,
transactional accounts, loaning, trusts, exchange rates, the transfer of credit and
debt,[7] and banking institutions for loans and deposits.[7]
In Europe, paper money was first introduced on a regular basis in Sweden in
1661 (although Washington Irving records an earlier emergency use of it, by the
Spanish in a siege during the Conquest of Granada). As Sweden was rich in
copper, its low value necessitated extraordinarily big coins, often weighing
several kilograms.
The advantages of paper currency were numerous: it reduced the need to
transport gold and silver, which was risky; it facilitated loans of gold or silver at
interest, since the underlying specie (gold or silver) never left the possession of
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the lender until someone else redeemed the note; and it allowed a division of
currency into credit and specie backed forms. It enabled the sale of stock in
joint-stock companies, and the redemption of those shares in paper.
But there were also disadvantages. First, since a note has no intrinsic value,
there was nothing to stop issuing authorities from printing more notes than they
had specie to back them with. Second, because it increased the money supply, it
increased inflationary pressures, a fact observed by David Hume in the 18th
century. Thus paper money would often lead to an inflationary bubble, which
could collapse if people began demanding hard money, causing the demand for
paper notes to fall to zero. The printing of paper money was also associated
with wars, and financing of wars, and therefore regarded as part of maintaining
a standing army. For these reasons, paper currency was held in suspicion and
hostility in Europe and America. It was also addictive, since the speculative
profits of trade and capital creation were quite large. Major nations established
mints to print money and mint coins, and branches of their treasury to collect
taxes and hold gold and silver stock.
At that time, both silver and gold were considered legal tender, and accepted by
governments for taxes. However, the instability in the ratio between the two
grew over the course of the 19th century, with the increases both in supply of
these metals, particularly silver, and in trade. The parallel use of both metals is
called bimetallism, and the attempt to create a bimetallic standard where both
gold and silver backed currency remained in circulation occupied the efforts of
inflationists. Governments at this point could use currency as an instrument of
policy, printing paper currency such as the United States Greenback, to pay for
military expenditures. They could also set the terms at which they would
redeem notes for specie, by limiting the amount of purchase, or the minimum
amount that could be redeemed.
By 1900, most of the industrializing nations were on some form of gold
standard, with paper notes and silver coins constituting the circulating medium.
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Private banks and governments across the world followed Gresham's Law:
keeping the gold and silver they received, but paying out in notes. This did not
happen all around the world at the same time, but occurred sporadically,
generally in times of war or financial crisis, beginning in the early part of the
20th century and continuing across the world until the late 20th century, when
the regime of floating fiat currencies came into force. One of the last countries
to break away from the gold standard was the United States in 1971, an action
known as the Nixon shock. No country has an enforceable gold standard or
silver standard currency system.
Banknote era
Main articles: Banknote and Fiat currency
A banknote (more commonly known as a bill in the United States and Canada)
is a type of currency, and commonly used as legal tender in many jurisdictions.
With coins, banknotes make up the cash form of all money. Banknotes are
mostly paper, but Australia's Commonwealth Scientific and Industrial Research
Organisation developed the world's first polymer currency in the 1980s that
went into circulation on the nation's bicentenary in 1988. Now used in some 22
countries (over 40 if counting commemorative issues), polymer currency
dramatically improves the life span of banknotes and prevents counterfeiting.
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B. FUNCTION
FUNCTIONAL CURRENCY
 From Wikipedia, the free encyclopedia
Functional currency refers to the main currency used by a business or unit of a
business. It is the monetary unit of account of the principal economic
environment in which an economic entity operates.
International Accounting Standards (IAS)[1] and U.S. Generally Accepted
[2]
Accounting Principles (GAAP) provide rules for translation of foreign
currency transactions and financial statements. SFAS 52 introduced the concept
of functional currency, defined as "the currency of the primary economic
environment in which the entity operates; normally, that is, the currency of the
environment in which an entity primarily generates and expends cash."
Businesses may enter into transactions (sales, payments, etc.) in multiple
currencies. Each qualified business unit (QBU) of the business translates these
items to its functional currency at an appropriate exchange rate. It then prepares
periodic reports of its position (balance sheet) and activity (income and cash
flow statements) in that functional currency. When various QBUs are combined,
these reports are translated and consolidated to become financial statements.
Translation of statements may result in translation differences, which are
accounted for as a cumulative translation adjustment.
Transactions are often translated at the spot rate, i.e., the rate of exchange
between the transaction currency and the functional currency on the date of the
transaction. Example: Jim is traveling on business and pays a hotel bill for SFR
200. Jim's home currency is the GBP. On the date Jim pays the bill, the
exchange rate is SFR2 = GBP
1. Jim records an expense of GBP 100. Alternatively, businesses may record
transactions in another currency using some sort of standard rate for some
period, such as the average rate for the month.
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Businesses using the accrual method of accounting may recognize revenue or

expense in one period and receive or pay it in another. In the intervening period
the exchange rate may have changed. When an accrued item is settled, the
difference due to exchange rate movement in the amount accrued and the
amount settled is treated as foreign exchange gain or loss. This gain or loss is
recognized in the same manner as the underlying transactions, such as an
ordinary travel expense.

 Primary and Secondary Functions of Currency!

1. Primary Functions (Main or Basic Functions)
2. Secondary Functions (Subsidiary or Derivative Functions)
ADVERTISEMENTS:
1. Primary Functions:
Primary Functions include the most important functions of currency, which it
must perform in every country,
ADVERTISEMENTS:
These are:
(i) Medium of Exchange:
currency, as a medium of exchange, means that it can be used to make
payments for all transactions of goods and services. It is the most essential
function of currency. Currency has the quality of general acceptability So, all
exchanges take place in terms of money.
1. This function has removed the major difficulty of lack of double coincidence
of wants and inconveniences associated with the barter system.
2. Use of Currency allows purchase and sale to be conducted independently of
one another.
3. This function of Currency facilitates trade and helps in conducting
transactions in an economy.
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4. Currency has no power to satisfy human wants, but it commands power to

purchase those things, which have utility to satisfy human wants.
For, “How does Currency separate the acts of sale and purchase”, refer HOTS.
(ii) Measure of Value (Unit of Value):
Currency as measure of value means that Currency works as a common
denomination, in which values of all goods and services are expressed.
1. By reducing the value of all goods and services to a single unit (i.e. price), it
becomes very easy to find out the exchange ratios between them and comparing
their prices.
2. This function facilitates maintenance of business accounts, which would be
otherwise impossible.
3. Currency helps in calculating relative prices of goods and services. Due to
this reason, it is regarded as a Unit of Account’. For instance, ‘Rupee’ is the unit
of account in India, ‘Pound’ in England and so on.
2. Secondary Functions:
These refer to those functions of Currency which are supplementary to the
primary functions. These functions are derived from primary functions and,
therefore, they are also known as ‘Derivative Functions’.
The major secondary functions are:
(i) Standard of Deferred Payments:
Currency as a standard of deferred payments means that Currency acts as a
‘standard’ for payments, which are to be made in future. Every day, millions of
transactions take place in which payments are not made immediately. Currency
encourages such transactions and helps in capital formation and economic
development of the economy.
This function of Currency is significant because:
1. Currency as a standard of deferred payments has simplified the borrowing
and lending operations.
2. It has led to the creation of financial institutions.
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(ii) Store of Value (Asset Function of Money):

Currency as a store of value means that money can be used to transfer
purchasing power from present to future. Currency is a way to store wealth.
Although wealth can be stored in other forms also, but money is the most
economical and convenient way. It provides security to individuals to meet
contingencies, unpredictable emergencies and to pay future debts. Under barter
system, it was difficult to use goods as a store of wealth due to perishable nature
of some goods and high cost of storage.

Currency as store of value has the following advantages:

1. Currency is available in fractional denomination, ranging from Rs 1 to Rs
1,000.
2. Currency is easily portable. So, it is easy and economical to store money as
its storage does not require much space.
3. Currency has the merit of general acceptability so; it can be easily exchanged
for goods at all times.
4. Savings in terms of Currency are much more secured than in terms of goods.
Currency has overcome the drawbacks of Barter System:
Barter system makes the exchange process very difficult and highly inefficient.
Money has overcome the drawbacks of barter system in the following manner:
1. Medium of Exchange:
As a medium of exchange, Currency has removed the major difficulty of lack of
double coincidence of wants in barter system. It separates the acts of sale and
purchase of goods and services and helps both the parties in obtaining
maximum satisfaction. A buyer can buy goods through Currency and a seller
can sell goods for Currency.
2. Measure of value:
Under Barter system, different goods were of different values and there was no
common denomination to express their exchange ratios. But, Currency is the
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measuring rod which expresses the value of other commodities. It becomes

easier to compare the relative values of any two commodities.
3. Store of Value
Under Barter system, it is very difficult to store goods for future use. Most of
the goods are perishable and their storage requires huge space and
transportation cost. But, Currency can be easily stored for future use. It is the
most convenient and economical means of storing earnings and wealth. It has
the merit of general acceptability and its value remains stable as compared to
other goods.
4. Standard of deferred payments:
Barter system lacks suitable standard of deferred payments which creates
difficulty in credit transactions. Borrower may not be able to arrange goods of
exactly the same quality at the time of repayment. On the other hand, due to
general acceptability of Currency, future payments are expressed in terms of
Currency. Currency has simplified the borrowing and lending operations and
encouraged capital formation.

C. FACTORS THAT EFFECT THE CURRENCY

 Inflation Impact on Value of Currency
Inflation has a positive impact and negative impact depending on the severity or
inflation that occurs. If inflation is mild, it has a positive effect in the sense that
it can boost the economy better, which is to increase national income and get
people excited to work, save, and invest. Conversely, the period of inflation is
severe when there is uncontrolled inflation (hyperinflation) the state of the
economy becomes chaotic and the economy is felt lethargic. People become
uninspired work, save or invest and produce because prices are rising rapidly.
Fixed income recipients such as state employees or private employees as well as
workers will also be overwhelmed to bear and keep up with the price so that
their lives become degenerate and fall from time to time.
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For people who have a fixed income, inflation is very detrimental. Let us take
for example a retired civil servant in 1990. In 1990, his pension was enough to
meet his life needs, but in 2003 or 13 years later, his purchasing power may be
only half. That is, pension money is no longer enough to meet the needs of his
life. Conversely, people who rely on profit-based income, such as employers,
are not harmed by inflation. Similarly, employees who work in companies with
salaries follow the rate of inflation.
Inflation also causes people are reluctant to save because the value of the
currency is declining. Indeed savings generate interest, but if the rate of
inflation is above interest, the value of money still decreases. When people are
reluctant to save, the business world and investment will be difficult to develop
because to grow the business world requires funds from banks obtained from
savings society.
For people who borrow money from banks (debtors), inflation is profitable
because at the time of debt repayment to creditors, the value of money is lower
than at the time of borrowing. Conversely, creditors or lenders will lose money
because the value of the payback is lower when compared to when borrowing.
For producers, inflation can be profitable if the income earned is higher than the
increase in production costs. When this happens, producers are encouraged to
multiply their production (usually in large enterprises). However, if inflation
causes a rise in the cost of prodduction until it ultimately harms the producer
then the producers are reluctant to continue production. Manufacturers can stop
their production temporarily. In fact, not being able to keep up with the inflation
rate of the producer's efforts may go bankrupt (usually in small businesses).

In general, inflation can lead to reduced investment in a country, encouraging

interest rate increases, encouraging speculative investment, the failure of
development implementation, economic instability, the balance of payments
deficit and the decline in the level of life and welfare of the people.
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D. EXAMPLE OF THE EXCHANGE

The exchange rate (otherwise known as the exchange rate) is an agreement
known as the exchange rate of a currency against current or future payments,
between two currencies of each country or territory.

In this case the unit of currency "or" currency sarian ") which can be purchased
from 1" currency unit "unit (also called" currency base "). For example, in the
EUR / USD currency exchange rate is 1.4320 (1.4320 USD per EUR) which
means currency in USD using currency pair is EUR.
 Exchange Rate vs Selling Rate (Exchange Rates Currency Exchange)
 Buying Rate -> From foreign money to rupiah
 Exchange Rate -> From rupiah to foreign currency
Tabel Rate
Rate Bank BNI

Rate Selling Buy

USD 13,395.00 13,645.00

SGD 9,852.00 10,102.00

AUD 10,141.00 10,366.00

EUR 15,779.00 16,104.00

HKD 1,682.00 1,782.00

GBP 17,655.00 18,065.00

JPY 117.85 121.60

CHF 13,470.00 13,765.00

CAD 10,483.00 10,733.00

SAR 3,438.00 3,738.00

For more details direct our aja to the example case, let me be more clear, Case
Example:
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1. A tourist from America came to Indonesia to bring money US $ 10,000

for his purposes while in Indonesia, the American tourist exchange
money into the currency of Rupiah
2. American tourists are intending to return to his country, the remaining
money he has is Rp 15.000.000, American tourists exchange the rupiah
currency to the dollar american dollars
To find the answer no 1 & 2 we must know first the buying rate and selling rate
applicable now, can be seen on internet banking sites or in newspapers,
The formula for calculating buying and selling rates
Buy rate = Value of foreign currency x Rupiah value

Selling rate = Rupiah value

Value of foreign currency

1. For answer no 1 we use Buying Rate, because from foreign currency to

rupiah. Buy rate = 13,395 x 10.000 =
Rp 133.950.000, Then American Tourists after exchanging money to
Rupiah he has Rp 133.950.000

2. For answer no 2 we use Selling Rate, because from the currency of Rupiah to
foreign currency, Selling Rate 1US $ = Rp 11.435, then: selling rate =

Selling rate = 15.000.000 = US$ 1099,303

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E. EXAMPLE OF THE CURRENCIES IN THE WORLD

1. Currency from the japanese sate(Yen)

2. Currency from the singapore state(Dollar)

3. Currency from the German state(Euro)

4. Currency from the chinesse state(Yuan)

5. Currency from the Netherlands(Euro)

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6. Currency from the Spanish state(Euro)

7. Currency from the North Korea(Won)

8. Currency from the Malaysia state(Ringgit)

9. Currency from the Philippine state((Peso)

10.Currency from the Vietnam state(Dong)

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11.Currency from the England /UK state(Poundsterling)

12.Currency from the French state(Euro)

13.Currency from the Italian state(Euro/Lira)

14.Currency from the Denmark state(Krone)

15.Currency from the Swiss state(Franc)

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16.Currency from the Australia state(Dollar)

17.Currency from the United States(Dollar)

18.Currency from the Argentina state(Peso)

19.Currency from the Brazil state(Real)

20.Currency from the Canada state(Dollar)

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BIBLIOGRAPHY
https://www.investopedia.com/terms/c/currency.asp
https://en.wikipedia.org/wiki/Currency
https://en.wikipedia.org/wiki/Currency
https://en.wikipedia.org/wiki/Functional_currency
http://www.yourarticlelibrary.com/economics/money/primary-and-secondary-
functions-of-money/30307
https://gyuz.wordpress.com/2014/03/12/kurs-beli-vs-kurs-jual-info-tukar-
menukar-mata-uang/