Alternative Exchange Rate Regimes
Floating vs fixed exchange rate regimes. Previous Modern Money primer blog posts were quite general and apply to all countries that use a domestic currency. It does not matter whether these currencies are pegged to a foreign currency or to a precious metal, or whether they are freely floating—the principles are the same. In this blog post we will examine the implications of exchange regimes for our analysis.
Let us deal with the case of governments that do not promise to convert their currencies on demand into precious metals or anything else. When a $5 note is presented to the US Treasury, it can be used to pay taxes or it can be exchanged for five $1 notes (or for some combination of notes and coins to total $5)—but the US government will not convert it to anything else.
Further, the US government does not promise to maintain the exchange rate of US Dollars at any particular level. We can designate the US Dollar as an example of a sovereign currency that is nonconvertible, and we can say that the US operates with a floating exchange rate . Examples of such currencies include the US Dollar, the Australian Dollar, the Canadian Dollar, the UK Pound, the Japanese Yen, the Turkish Lira, the Mexican Peso, the Argentinean Peso, and so on.
In the following sections we will distinguish between these sovereign nonconvertible floating currencies and currencies that are convertible at fixed exchange rates .
The gold standard and fixed exchange rates. A century ago, many nations operated with a gold standard in which the country not only promised to redeem its currency for gold, but also promised to make this redemption at a fixed exchange rate .
An example of a fixed exchange rate is a promise to convert thirty-five US Dollars to one ounce of gold. For many years, this was indeed the official US exchange rate. Other nations also adopted fixed exchange rates, pegging the value of their currency either to gold or, after WWII, to the US Dollar.
Convert Us Dollars To British Pounds - News
It is unique as it enables customers to transact in Euros and US Dollars and then upon returning home convert back to British Pounds, as well as offering cardholders exclusive discounts at high street retailers.” Mark Rice, Director of CashCase adds
For example, the official exchange rate for the UK Pound was $2.80 US. In other words, the government of the UK would provide $2.80 (US currency) for each UK Pound presented for conversion. With an international fixed exchange rate system,
These conversion rates are based on the average exchange rate for the five business days ending two days before the date of the half-yearly results announcement. The interim dividend in US dollars and UK pounds sterling will be paid on Tuesday 4
Until now, 12 foreign currencies were subject to the mandatory conversion requirement, including the US dollar , the euro , the British pound , the yen , the Australian dollar , the Russian rouble and a number of Western European currencies.
For example, if the British pound declined in terms of dollars due to the UK's large trade account deficit, then UK central bank had to intervene in the foreign exchange market to buy enough pounds and supply enough dollars to increase the dollar price
CashCase Launches CashCase Visa Prepaid Card
CashCase has launched the CashCase Visa Prepaid Card, which it says is the first card combining multiple currencies, mobile YAP technology and retail discounts for use at home and abroad. The prepaid card allows travellers to move money between British Pounds, Euros, and US Dollars, while providing cardholders with a safe and convenient alternative to carrying foreign currency or using their debit or credit card whilst abroad.
The card features integrated YAP mobile payments functionality, a first in the UK, which enables customers to use their mobile phone to transfer money between cards and obtain instant balance updates. The card also sends instant wireless alerts, enabling cardholders as to opt to receive a notification whenever the card is used. CashCase is accepted anywhere that Visa is accepted, including 1.5m ATMs, and merchants in 160 countries.
“CashCase is the next generation of prepaid cards,” says CashCase CEO, Gavan Stewart. “It is unique, as it enables customers to transact in Euros and US Dollars, and then upon returning home, convert back to British Pounds, as well as offering cardholders exclusive discounts at high street retailers.”
The CashCase Visa Prepaid Card is now available nationwide direct to consumers via the CashCase website. Select retail merchants and travel agencies will carry the card before the end of the year.
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