Major Currencies a sof now:

1. US dollar The US dollar is the most dominant currency unit today, despite its decline and shakiness in
the recent past. In fact, all currencies are measured using the US dollar as the standard. In quantified terms, about 90 per cent of transactions worldwide involve the US dollar. At present, the US dollar remains the world's foremost reserve currency. The US dollar has been adopted and in some cases used as the official currency in many different territories and countries. This process of using one country currency in a different economy is called 'dollarization'. Dollarization occurred in the British Virgin Islands, East Timor, Ecuador, El Salvador, Marshall Islands, Federated States of Micronesia, Palau, Panama, Pitcairn Islands, and Turks and Caicos Islands.

2. Euro The euro is the official currency of 16 of the 27 member states of the European Union. It
accounts for almost 37 per cent of the daily transactions in the Forex market, according to a report. The states, known collectively as the Eurozone, are Austria, Belgium, Cyprus, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. The currency is also used in five European countries whereas over 175 million people across the globe use currencies which are pegged to the euro, including more than 150 million people in Africa. Based on 2008 figures, the Eurozone is the world's second largest economy.

3. Japanese Yen The Japanese Yen takes the third spot among the most heavily traded currencies. About 20
per cent of the daily transactions in the forex market involve the Japanese Yen. The word yen stands for 'round object' in Japanese. The yen was officially adopted by Japan's Meiji government in an Act signed on May 10, 1871. The new currency was introduced in July of that year. Image: Japanese Yen.

4. British Pound The British pound, on most occasions, is measured up against the US dollar. It accounts for
17 per cent of the daily Forex transactions. The official name of the currency is pound sterling. It is used mainly in formal contexts and also when necessary to distinguish the United Kingdom currency from other currencies bearing the same name.

5.

Swiss Franc

The Swiss Franc makes in to the round of top 5 most heavily traded currencies in the forex
market. About 6 per cent of the daily transactions in the forex market involve the Swiss franc. The franc is the currency and legal tender of Switzerland and Liechtenstein as also in the Italian exclave Campione d'Italia. The Swiss franc is the only version of the franc still issued in Europe. In the first half of the 19th century, the Swiss Franc was unregulated and considered a highly complicated currency. Before regulations were imposed in 1850 by the Swiss Federal Constitution, the country had 75 entities and 25 cantons, all producing their own coins.

Disadvantages of euro:

Disadvantages and Risks of the Euro

While there are many advantages to the euro, there are also some disadvantages. The cost of transitioning 12 countries' currencies over to a single currency could in itself be considered a disadvantage. Billions were spent not only producing the new currency, but in changing over accounting systems, software, printed materials, signs, vending machines, parking meters, phone booths, and every other type of machine that accepts currency. In addition, there were hours of training necessary for employees, managers, and even consumers. Every government from national to local had impact costs of the transition. This enormous task required many hours of organization, planning, and implementation, which fell on the shoulders of government agencies. The chance of economic shock is another risk that comes along with the introduction of a single currency. On a macroeconomic level, fluctuations have in the past been controllable by each country.

With their own national currencies, countries could adjust interest rates to encourage investments and large consumer purchases. The euro makes interest-rate adjustments by individual countries impossible, so this form of recovery is lost. Interest rates for all of Euroland are controlled by the European Central Bank. They could also devalue their currency in an economic downturn by adjusting their exchange rate. This devaluation would encourage foreign purchases of their goods, which would then help bring the economy back to where it needed to be. Since there is no longer an individual national currency, this method of economic recovery is also lost. There is no exchange-rate fluctuation for individual euro countries. A third way they could adjust to economic shocks was through adjustments in government spending, such as unemployment and social welfare programs. In times of economic difficulty, when lay-offs increase and more citizens need unemployment benefits and other welfare funding, the government's spending increases to make

these payments. This puts money back into the economy and encourages spending, which helps bring the country out of its recession. Because of the Stability and Growth Pact, governments are restricted to keeping their budget deficits within the requirements of the pact. This limits their freedom in spending during economically difficult times, and limits their effectiveness in pulling the country out of a recession. In addition to the chance of economic shock within Euroland countries, there is also the chance of political shock. The lack of a single voice to speak for all euro countries could cause problems and tension among participants. There will always be the potential risk that a member country could collapse financially and adversely affect the entire system.

The Euro: Advantages and Disadvantages Of A Single Currency

Every national currency around the globe is subject to identical market laws and its value changes according to the same factors that influence all other currencies. Within the Eurozone, all countries share the same currency - the euro, and are less affected by changes in the euro exchange rate. There are many advantages of the euro adoption by the countries in the Eurozone, despite that disadvantages also exist, and the most well known are the following: obliteration of the existing exchange rate fluctuations between a number of currencies and reduction of transaction costs (no other currency is necessary when conducting business or travelling in the Eurozone). The single European currency also stimulates trade activities and free movement of capital, goods and people but these effects should be subject to a profound academic research. Previously, the national economies of the European Union member states sometimes suffered from fluctuations of the local currencies within a common market. The euro exchange rate does not offer shelter from currency fluctuations in general but provides predictability and unifies the means of exchange in all countries in the Eurozone. Following the adoption of the

euro, 12 countries in the EU witnessed their national currency disappear with more new member states entering the Eurozone gradually and other waiting at the door. Thus, all current members of the Eurozone take advantage of the single currency but they share the same disadvantages as well. When the U.S. Federal Reserve releases data showing increasing unemployment rate, falling number of new mortgages and growing number of businesses going bankrupt the most immediate consequence will be a falling exchange rate of the U.S. dollar. The same applies to the single European currency, but in addition to the data released by the European Central Bank, Forex traders around the globe take decisions whether to buy or not to buy euro depending on data about the national economies of the countries participating in the Eurozone. Hence, negative signals reported by the French or German economy could result in depreciation of the euro exchange rate as a whole despite that the economies of all other Eurozone member states are running smoothly. From the average customers point of view, the single euro exchange rate is a good thing, though. There is no need to exchange your money into a new currency every time you cross a border within the Eurozone. The euro facilitates also the currency transfers within and outside the EU and reduces the costs of such transfers. As a rule, the risks of a currency collapse cannot be eliminated but the safety provided by the euro is good enough to reduce such risks to a minimum and to maintain largely predictable euro exchange rate.

Advantages of the Euro

The euro is fundamentally a tool to enhance political solidarity. This political motivation began when the idea of the European Union and a single currency was first conceived. While it also has the economic effect of unifying the economies of participating countries, it ultimately does much more for the European Union. Economically, the euro's advantages include:

Elimination of exchange-rate fluctuations - Any time either a consumer or a business made a commitment to buy something in a different country in the future (at future prices), they stood the chance of paying much more (or less) than they had planned. The euro eliminates the fluctuations of currency values across certain borders. Price transparency - Being able to easily tell if a price in one country is better than the price in another is also a big benefit, both for consumers and businesses. With price equalization across borders, businesses have to be more competitive. Pricing still varies, but consumers can more easily spot a good deal -- or a bad one. Transaction costs - This is particularly helpful for tourists and others who cross several borders during the course of a trip. Before, they had to exchange their money as they entered each new country. The costs of all of these exchanges added up significantly. With the euro, no exchanges are necessary within the Euroland countries.

Increased trade across borders - The price transparency, elimination of exchangerate fluctuations, and the elimination of exchange-transaction costs all contribute to an increase in trade across borders of all the Euroland countries. Increased cross-border employment - Not only can business be conducted across borders more easily, but people are more easily employable across borders. With a single currency, it is less cumbersome for people to cross into the next country to work, because their salary is paid in the same currency they use in their own country. Simplified billing - Billing for services, products, or other types of payments are simplified with the euro. Expanding markets for business - Business can expand more easily into neighboring countries. Rather than having to set up separate accounting systems, banks, etc. for transactions in countries other than their native one, the euro makes it simple to operate from a single central accounting office and use a single bank. Financial market stability - On a larger scale, the financial and stock exchanges can list every financial instrument in euros rather than in each nation's denomination. This has further ramifications in that it promotes trade with less restriction internationally, as well as strengthens the European financial markets. Banks can offer financial products (loans, CDs, etc.) to countries throughout Euroland. Macroeconomic stability - Because of the European Central Bank (ECB), introduction of the euro also helps to lower (and control) inflation among the EU countries. Lower interest rate - Because of the decreased exchange-rate risk, the euro encourages lower interest rates. In the past, additional interest was charged to cover the risk of the exchange-rate fluctuation. This risk is gone with the introduction of the euro. Structural reform for European economies - The participation requirements of the euro pushed many EU member states who wanted to participate to get their economies in shape and improve their economic growth. With the requirements of the Stability and Growth Pact, they will also have to maintain that control in the future, or face fines.

UK Stuff:

So its nearly there. As the pound lurches, veers and staggers, this weeks falls have brought it to within an ace of parity to the euro, so that in tourist exchange rates one pound is already sometimes worth about 99 cents. Only a year ago there were 1.4 euros to the pound. And as the pound has plummeted in recent months, so there have been the first flickerings of life around an idea dormant for the last six or seven years: that Britain, too weak to maintain its own currency, should sign up to the euro instead. When you think about it the idea of abandoning your currency when it has lost a lot of its value is a pretty stupid one: rather like thinking that if you have let your house run down in value until it is the same as a smaller one next door, it is a good time to swap. We all know that in that situation you have to learn to look after your house better.

But that hasnt stopped some members of the British Government telling Mr Barroso, the President of the European Commission, that people who matter in Britain are thinking about it and that if we had the euro we would have been better off. No member of Labours Cabinet will admit to having this conversation, although whoever it was needs to do some urgent studying of what has happened to Britains economy. Since the interest rates in the eurozone have been lower than ours for many years, it is fair to assume that, had we been in the euro all this time, Gordon Browns boom would have been even more unsustainable. And since those euro interest rates are now higher th an those set by the Bank of England, it is also fair to assume that Browns bust would now be even more dramatic and painful. So for Britain, being in the euro would have made matters even worse, and our jobless totals would now be climbing even faster. In the light of that truth it is incredible that the policy of Labour ministers, as Lord Mandelson has clearly put it, is that our aim, our goal, should be to join the single currency. Something of a cheek isnt it, to make this countrys economy so badly prepared for recession that our currency goes weak at the knees, and then say that if its that weak we had better get rid of it?

Not trading places: Britain would be worse off if we had the euro, says Mr Hague Of course, Labour have promised to hold a referendum if ever they want to go ahead and scrap the pound. But then they also promised everyone a vote on signing up to the European Constitution, and do you remember having one? The truth is we need rid of our Government rather than our currency. The reasons Britain didnt join the euro when it was launched a decade ago are as valid today as they were then; if anything, they have become stronger over time. TODAY'S POLL

Top of Form

Should Britain join the euro now the pound is so low? Yes No
Bottom of Form

All polls The economic reasons are simply stated: British families have many more of their mortgages in floating interest rates than people on the continent; we have a much bigger financial services sector, and more of our trade and investments are denominated in U.S. dollars. All of these factors mean that the right level of interest rates set for people in Greece, Germany or Italy is not necessarily the right one for us. Giving up our currency would mean we would lose a vital tool for trying to run the British economy in the interests of the people of Britain - and that means an unacceptable loss of the independence of this country. So a Conservative Government under David Cameron would have no ministers telling Brussels we would be better off without the pound, and no goal of joining the euro one day. We would never join the euro. The jobs and businesses of this country are too important ever to sign away our right to do our utmost to defend them.

Read more: http://www.dailymail.co.uk/debate/newsdebate/article-1103618/EXCLUSIVEWhy-Britain-join-euro-Tories-WILLIAM-HAGUE.html#ixzz1jiRXBISE

The chief secretary to the Treasury, who once helped run the campaign for the UK to adopt the single currency, said he felt "relieved" it had failed. Being out of the euro gave the country extra "flexibilities" when recovering from the economic crisis, he added. Labour ruled out a referendum on joining the euro in 2003. The then Chancellor, Gordon Brown, stated that just one of his five key economic tests had been met, and that a public vote would only be held when it was felt joining the single currency would be in the national interest. 'Long way off' Euro membership has since died down as a political issue, although it is broadly supported as a long-term policy by the Lib Dem leadership.

The coalition agreement reached between the Lib Dems and the Conservatives in May states that the UK will not join or "prepare to join" during this parliament. Mr Alexander, who was head of communications for the Britain in Europe movement from 1999 to 2004, told a fringe meeting at the Lib Dem conference in Liverpool: "In the current economic circumstances I'm relieved that we are not in the euro... "I still think there's a case for that [membership] in the long term, but that's a long way off." He added: "I think that the flexibilities that we have as an economy are helping our economy to recover." Mr Alexander, who is overseeing the government's spending cuts programme ahead of October's spending review, also said: "The fact that the pound has fallen has a strengthening effect on external trade and that's one of the drivers for the economy that we need. "I think that means the right decision on the euro was made in the end."

When the euro was born, there were some reasonably good economic reasons why the UK shouldn't be part of it from day one. Gordon Brown came up with his famous five tests, with the predictable (and desired) result that the UK to this day has retained the pound as its currency, even as the euro increases in scope and popularity. (There are now 15 full members of the eurozone, as well as nine more states and territories using the euro as their sole currency, and many others, like Poland, the Czech Republic, and the Baltics, obliged to join in the future.) Today, the UK would pass the five tests with flying colors. Yet even as the euro becomes increasingly useful and powerful, the chances of the UK ever joining seem to get ever slimmer. So Willem Buiter pops the question on his blog: When will the UK wake up and join the Euro Area? My feeling is that the time has passed. Tony Blair could have pushed it through at the beginning of his term in office, when he was flush with political capital, but he expended all of that capital, and then some, on the Iraq war instead. UK politicians like the fact that the euro is a non-issue right now, and have no incentive to open that particular political Pandora's box. And so the UK will remain a monetary outlier, like Switzerland or Norway, and will remain at the mercy of international financial events. Here's Buiter:

To have a large, internationally active banking sector and financial system, your currency has to be a serious global reserve currency if you are to be able to provide the lender of last resort and market maker of last resort services required to minimize the risk of a bank run or market liquidity crunch bringing down large chunks of your banking system. You can decide to take the risk of running a large globally active financial sector with a local currency like sterling or the Icelandic krona, but you will be taking an unnecessary and costly risk. Sooner or later that risk will be reflected in your cost of capital and make you uncompetitive. So, if the UK wants to remain the seat of the world's financial capital, there is only one choice: adopt the euro now, and wonder why you did not do so in 1999. The Bank of England has managed to weather the current financial crisis so far: It's bruised and battered after the farcical bail-out of Northern Rock, but still more or less in one piece. But UK central bankers would be on much more solid ground if they had a much more solid currency. It won't happen while this crisis is ongoing, but it would be great if it were implemented before the next one hits. And, yes, a pony would be nice, too.

EURO and GERMANY: Berlin More than 20 years after the end of the Cold War, a sense of dj vu is raising anew issues once thought settled. In Moscow, demonstrators are once again filling the streets, calling for an end to authoritarian rule this time aimed at Vladimir Putin instead of the Communist Party. In Europe, resolution of the sovereign debt crisis on Berlins terms has retrieved the German question from the ash can of history.

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What happens next in Russias version of the Facebook-driven Arab Spring will take some time to play out. German dominance of Europe, however, is already enough of a fact to prompt British Prime Minister David Cameron to opt out of any role in the future of a German-run European Union that would constrain British sovereignty. RELATED: The eurozone crisis explained in 5 simple graphs Former British Prime Minister Margaret Thatcher long ago saw the challenge Mr. Cameron would be facing. In a candid roundtable discussion about German unification and the end of the cold war with Francois Mitterrand, George H.W. Bush, and Mikhail Gorbachev published in the journal NPQ in 1995, Ms. Thatcher minced no words. I was opposed to German unification from early on for the obvious reasons. To unify Germany would make her the dominant nation in the European community. They are powerful, and they are efficient, she said at the time. Addressing Mr. Bush and Mr. Gorbachev, she continued: President Mitterrand and I know. We have sat there at the table [with Germany] very often indeed. Germany will use her power. She will use the fact that she is the largest contributor to Europe to say, Look, I put more money in than anyone else, and I must have my way on things which I want. I have heard it several times. And I have heard the smaller countries agree with Germany because they hoped to get certain subsidies. The German parliament would not ratify the Maastricht Treaty unless the central bank for a single currency was based there. What did the European Union say? Yes, you shall have it. Thatcher said then what is surely on Camerons mind today: All this is flatly contrary to all my ideals. Some people say you have to anchor Germany to Europe to stop these features from coming out again. Well, you have not anchored Germany to Europe, but Europe to a newly dominant Germany. That is why I call it a German Europe.

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In the 1995 discussion, neither Bush nor Gorbachev shared Thatchers alarm. I felt German unification would be in the fundamental interest of the West, Bush said. I felt the time had come to trust the Germans more, given what they had done since the end of World War II. Despite the Soviet Unions early opposition to German unity, Moscow ultimately agreed. As Gorbachev put it: President Bush was right about Germany. The Germans had accepted democratic values. They had behaved responsibly. They had recognized their guilt. They had apologized for their past, and that was very important. So, as difficult as it was to accept, it was inevitable that the Soviet leadership took decisions consistent with this reality. The ultimate retort to Thatchers historical anxiety has come from Poland, the country that suffered most at the hands of Germany. For Polands current foreign minister, Radoslaw Sikorski, German strength is a welcome anchor for Europe as it faces down the global bond market and the specter of slowing growth. OPINION: Europe's debt crisis: Five ways its been put to good use The biggest threat to the security and prosperity of Poland, Sikorski said in Berlin recently,is not terrorism, not the Taliban, not German tanks, nor Russian missiles, but the collapse of the eurozone. ... I will probably be the first Polish foreign minister in history to say so, but here it is: I fear German power less than I am beginning to fear German inactivity. You have become Europes indispensable nation. You must not fail to lead. Thatcher and Sikorski are both right; their views are the flip side of the same euro coin. A Europe in which Germany is the indispensable nation is, in effect, a German Europe.