What is Dollar?

The dollar is a term from the English word dollar, derived from the Low German giver. This is the name given to the monetary unit of several countries, including the United States and Canada. The dollar, therefore, is an official currency of different nations. Currently, the money with the largest circulation worldwide is the US dollar.

It is common for the value of currencies to compare to the value of the US dollar. This exchange rate considers a relevant indicator of each economy.

Characteristics of Dollar

The dollar is the name of the original currency of the United States of America, which has grown into a unique of the most used coins in the world.

This currency is in demand both for reasons of profitability and risk, as well as for its quality as a medium of exchange, constituting a relatively stable asset in its price, allowing it to be hedged against economic fluctuations and the loss of value of the local currency.

One of the characteristics that the North American currency possesses is its liquidity, due to the confidence that people have in it due to the excellent stability that the economy of the United States of America has shown for a long time. This makes it easy to buy or sell US dollars at the current market price.

Origin of the Dollar Symbol

Over time, the American currency cease to anchor to the Spanish money and became independent, adopting the $ as its symbol. There are two theories about this symbol:

The most accepted since it has the approval of the United States Bureau of Engraving and Printing. It defends that it is an evolution of the Spanish abbreviation Ps, which comes from pesos, piastres or pieces of eight (Spanish silver reals).

The other theory interprets the two Pillars of Hercules between Gibraltar and Tangier. The bar, the column, and the S, the band surrounds it with the legend «Plus Ultra».

The dollar is the official money of the United States, a place where it is issued- and other countries such as Ecuador, El Salvador or Zimbabwe. In addition, the US dollar is the currency most used by tourists.

The first silver dollars began to be minted in 1794, after the approval of “The Coinage Act”, a decree that created the first North American mint and established the dollar as the country’s reference unit.

As far as the national banking system concerned, the Federal Reserve Act of 1913 create a central bank to organize it to keep pace with changes in its financial needs. The Central Reserve Board created a new currency called the Federal Reserve Note. The first federal bill was the ten-dollar bill, built-in 1914. Ultimately, the Federal Reserve Board decides to lower the cost of manufacturing the money by reducing the actual size of the minutes by 30%.

Note designs would not changes again until 1996. If when improvements were made over ten years to prevent counterfeiting.

Historical Over View of the United States

Historical Over View of the United States
The Government of the United States. By decree, create the dollar as the unit of circulation as of April 2, 1792. The first coins mint in this denomination came out two years later, that is, in 1794, made in the House of Philadelphia “Philadelphia Mint”. Dollar coins of the size of the Spanish colonial columnar coins. It is called because the figure of two columns flanking the globe) were issued in pure silver. That size maintains in the United States from 1794 to 1935 (Silver Dollar).

Between 1971-78, the Eisenhower type mint but in a copper-nickel alloy. From 1979 to 1981, trim, size coins mint.

The dollar is the first unit of money divided into decimal units: one dollar equals one hundred cents. Today most countries use a similar decimal system.

Countries Through Which the US Dollar Circulates

Although the dollar uses in many countries, as far as the US dollar concert and also. If there are only eight that have it as their official currency. The United States, Ecuador, El Salvador, Marshall Islands, Micronesia, Palau, East Timor and Zimbabwe.

US dollar bills and coins in use

In total, there are five fractions of a dollar that, over time, acquire their names:

  • A penny: penny.
  • Five cents: nickel.
  • Ten cents: tell me.
  • Twenty-five cents: quarter.
  • And also, Fifty cents: half a dollar.

Foreign Exchange Reserves of the US dollar

The total money supply (M3) of the US Dollar stood at $23,301.05 trillion at the finish of 2020. According to the International Monetary Fund (Data for the US only). Reserves of 628.37 billion maintain to cover the currency. This corresponds to a relation of 1:37.1 or the same: Not even 1 in 38 back by an equivalent value.

Some 494.52 billion dollars (78.7%) of the monetary reserves are gold. The rest consists of foreign exchange, special drawing rights in the International Monetary Fund and other reserve positions.

Average Dollar Exchange Rate

The European Central Bank determines and publishes the uniform reference rates (average rate per year) for each calendar year. These annual average rates provide a consistent basis for converting the US dollar into euros for many indicators.

And also, the reference rate for the year 2022, is not sit. From the beginning of the year, it would be around 1.1283 USD.

Cautions and Warnings

The most significant risk of investing in dollars consists of price fluctuations due to temporary scarcity. Is conditions within the local market or instability in the North American or world economy.


The dollar, represent by the symbol “$”, is the official currency of a group of countries, including the United States. where this currency arises and has the most effective use.

It currently uses accept in different parts, countries, dependencies and regions of the world. And also such as El Salvador, Australia, Zimbabwe, Trinidad and Tobago, Barbados, Bahamas, Puerto Rico, Ecuador and El Salvador. If the last three cannot issue the currency because they adopt the US as their official currency.

On the other hand, in Panama, this currency is legal tender even though the official currency is the Balboa. The dollar symbol “$” comes from the first Spanish coins. And also, it uses at the time of the independence of Unit States.

Also Read: What is Energy? – Units, Types, Natural Sources and More

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