Doller, euro, ruble, yuan, yen, pound, franc. The world of money is sprinkled with names. When traveling, you change rubles to liras, then to dirhams, then to bаты. Why can't there be one currency for everyone? It's convenient. But behind every piece of paper is sovereignty, history, economic policy, and a bit of magic. Let's figure out where different money came from, why it's needed, and why the dollar is still the main one, but not eternal.

Why can't there be one currency for everyone

The idea of a single world currency is as old as the world. Keynes proposed it in the 1940s. But there are three big problems. The first is sovereignty. Each country wants to manage its economy. To issue as much money as needed, to raise the rate, to devalue in a crisis. If there is a single currency, then all these levers go to an supranational body. Countries are not ready.

The second is different levels of economies. Germany and Greece have the same currency - the euro. But Germany is richer and more efficient. It turns out that Germans subsidize Greeks. In a single world currency, poor countries would drag rich ones down, and the rich would not want to share.

The third is crises. If the currency is common, then in a crisis in one country it will immediately spread to all. You can't devalue, you can't print money alone. You can only tighten your belt and wait for help from neighbors. The Eurozone experienced this in 2010-2015. Painfully.

Therefore, 180 countries - 180 currencies. Plus local ones: dollar in Zimbabwe, euro in Montenegro, Russian ruble in Abkhazia. It turns out a mess, but it's alive.

How currencies appear

Each currency has its own history of birth. Usually - together with the state. Proclaimed independence - you need your own money. Print it. But it can be otherwise. The euro appeared not with a new state, but with a treaty between old ones. 1999 - cashless euro, 2002 - coins and banknotes. Immediately 12 countries refused to use their marks, francs, liras. Painfully, but survived.

The US dollar appeared in 1792. Before that, Spanish coins were in circulation. The ruble has a history since the 13th century, but the modern one - after the denomination in 1998. The yuan - since 1948, after the communist revolution. The pound sterling - one of the oldest, since 775.

There are ghost currencies. For example, the Zimbabwe dollar. Due to hyperinflation, they printed a note of 100 trillion dollars. Now it's not in circulation, the country uses the US dollar and yuan. There are currencies tied to another currency (for example, the Danish krone is rigidly tied to the euro). There are currencies that hang in the air - they are issued, but almost not used, all calculations are in dollars.

Dollar: why it's the main one

The US dollar is the world's reserve currency. About 60 percent of global reserves are held in dollars. 80 percent of international contracts (oil, gas, gold) are denominated in dollars. Why? History.

After World War II, the United States was the only undamaged economy. Gold reserves - 2/3 of the world's. At the Bretton Woods Conference in 1944, it was agreed: the dollar is exchanged for gold (35 dollars per ounce), and all other currencies - for the dollar. So the dollar became "world gold". In 1971, Nixon canceled the conversion of the dollar to gold. But the dollar had already been so deeply rooted that it continued to be used out of habit and due to trust.

Plus, the United States is the largest economy, a stable political system (relatively), a huge capital market. It's convenient to trade in dollars, it's easy to get, it's liquid. Even enemies of the United States hold reserves in dollars because there is no alternative.

But the share of the dollar is falling. In the 1970s, it was 85 percent of reserves, now 60. China, Russia, BRICS countries are actively looking for alternatives.

Euro: main competitor

The euro is the second most important reserve currency. About 20 percent of global reserves. The eurozone consists of 20 countries, 350 million people. The economy is roughly equal to the American one.

The euro appeared as a political project: to unite Europe with a common currency so that wars are forgotten forever. Economically, it was risky. The German mark was too strong, the Italian lira - too weak. By uniting, we got problems. Germany became the locomotive, Greece - a burden.

The crisis of 2009-2015 almost destroyed the eurozone. Greece, Ireland, Portugal, Spain were on the brink of default. They were saved by loans, but strict austerity measures had to be introduced. People went to the streets.

Nevertheless, the euro survived. Now it is firmly in second place. The euro is used even outside the EU: Montenegro, Kosovo, Andorra, San Marino, Vatican. Euro banknotes can be found in Africa (former French colonies tied the CFA franc to the euro). But the euro will not be able to completely replace the dollar: Europe does not have such military power and such a debt market.

Ruble: history of ups and downs

The Russian ruble is the 18th largest global reserve currency (less than 1 percent). But for Russians, it is the main one. Its history is like a swing. 1992 - hyperinflation, the ruble depreciated 2500 times. 1998 - default, the ruble fell 4 times in a month. 2014 - collapse due to oil and sanctions, the exchange rate fell by half. 2022 - a new collapse (more than 100 rubles per dollar), then strengthening due to capital control.

The ruble is a volatile currency. It is strongly dependent on the price of oil and gas, sanctions, and geopolitics. Plus - closed: due to sanctions, the ruble is difficult to exchange for other currencies, dollar transfers through SWIFT are blocked.

Nevertheless, the ruble is alive. Inside the country, it serves a huge economy. There are plans to make the ruble a reserve currency for the Eurasian Union, but it is weak. Negotiations are ongoing with China and India on settlements in rubles and yuan instead of the dollar. If it works out, the share of the ruble will grow. But far from world dominance as during the Soviet Union.

Yuan: rising star

The Chinese yuan (or renminbi) is the currency of the second largest economy in the world. Its share in global reserves is about 3 percent and is growing slowly. Why not more? China has not fully converted the yuan. The state controls the exchange rate, limits the outflow of capital, does not allow the yuan to float freely. This hinders its use in international settlements.

But China is actively promoting the yuan. It pays for imports in yuan, issues loans to African and Asian countries in yuan, launched its own payment system CIPS (an alternative to SWIFT). In 2016, the IMF included the yuan in the SDR basket - symbolic recognition.

Many experts predict that in 10-20 years the yuan will become the third reserve currency after the dollar and the euro. But it is far from the first place: the United States will not give up leadership without a fight, and the Chinese economy depends on exports, and a strong yuan is not beneficial to it.

Nevertheless, for Russian business, the yuan has already become an important currency. In 2023-2026, settlements in yuan between Russia and China have increased by tens of times.

Other significant currencies

The Japanese yen is the third largest reserve currency (about 5 percent). Japan is the world's largest creditor, the yen is considered a "safe haven" in crises. The pound sterling - an old good currency, the fourth largest reserve (about 4.5 percent). London is a financial center, the pound is convenient for operations. The Swiss franc is a currency for the rich, considered the most stable. Switzerland is a neutral country, its banks are trusted more than many states.

The Canadian and Australian dollars are commodity currencies. They rise when oil, gas, and ore prices rise. They are narrowly specialized, but convenient for hedging.

The Indian rupee - a growing giant. India is the fifth largest economy in the world, but the rupee is still closed, little used outside the country. However, the potential is huge.

Cryptocurrencies - bitcoin, etherium - are not national currencies (except in El Salvador, where bitcoin is a legal means of payment). But they affect the world of money, create an alternative to states.

How countries protect their currencies

Central banks do three main things. The first - manage the rate. If the rate is high, the currency appreciates (it is profitable to keep money in this country). If it is low - it depreciates (it stimulates the economy, but causes capital outflow). The second - currency interventions. If the currency is falling, the central bank sells dollars from reserves and buys its own currency, raising its exchange rate. If it rises too quickly - on the contrary, it buys dollars and sells its own, reducing growth.

The third - currency restrictions. Prohibit the export of your own currency abroad, require the sale of foreign exchange earnings, limit the purchase of cash dollars. This is not a market method, but it saves in a crisis.

Example - Russia after 2022: exporters were required to sell foreign exchange, the withdrawal of cash was limited, transfers abroad were prohibited without special permission. The ruble strengthened. Then restrictions were lifted - the ruble fell.

Each country has its own toolset. The United States - the printing press and the status of a reserve currency. China - currency control and state banks. Europe - a common rate, but not a common fiscal policy, which weakens the euro.

What's in the future: will national currencies disappear

In the next 30 years - no. National currencies are too convenient for states to give them up. But there are trends. The first - central bank digital currencies (CBDC). China has launched the digital yuan, Sweden - the digital crown, Russia is testing the digital ruble. This will not replace cash, but may simplify international settlements and reduce the share of the dollar.

The second trend - regional currencies. For example, BRICS countries are discussing the creation of a single accounting unit tied to a basket of currencies. Not in cash, but for mutual settlements. This will reduce dependence on the dollar.

The third trend - dedollarization. China, Russia, Iran, North Korea, Venezuela are actively looking for an alternative to the dollar. They trade in yuan, rubles, even in crypto. So far, the share of settlements in alternative currencies is small, but it is growing.

The conclusion: the world of money will become more diverse. The dollar will remain the leader, but will no longer be a monopoly. New currency blocs will appear, possibly digital hybrids. But paper banknotes with the portraits of great people will not disappear. Because the banknote is not just a means of payment. It is a piece of history that can be put in a wallet.

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