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Currency facts for kids

Kids Encyclopedia Facts
A print from 1845 shows cowry shells being used as money by an Arab trader
Cowry shells being used as money by an Arab trader

A currency is a unit of exchange, facilitating the transfer of goods and services. It is a form of money, where money is defined as a medium of exchange rather than e.g. a store of value. A currency zone is a country or region in which a specific currency is the dominant medium of exchange. To facilitate trade between currency zones, there are exchange rates i.e. prices at which currencies (and the goods and services of individual currency zones) can be exchanged against each other. Modern currencies can be classified as either floating currencies or fixed currencies based on their exchange rate regime.


Jiao zi
Song dynasty Jiaozi, the world's earliest paper money

Early Currency

Currency is the creation of a circulating medium of exchange based on a store of value. Currency evolved from two basic innovations: the use of counters to assure that shipments arrived with the same goods that were shipped, and the use of silver ingots to represent stored value in the form of grain. Both of these developments had occurred by 2000 BC. This first stage of currency, where metals were used to represent stored value, formed the basis of trade in for over 1500 years.


These factors led to the shift of the store of value being the metal itself: at first silver, then both silver and gold. 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.

In most major economies using coinage, copper, silver and gold formed three tiers of coins. Gold coins were used for large purchases, payment of the military and backing of state activities. Silver coins were used for large, but common, transactions, and as a unit of account for taxes, dues, contracts and fealty, while copper coins represented the coinage of common transaction.

United States one dollar bill, reverse
United States one dollar bill
400 Euros in 50 Euro notes
400 Euros in 50 Euro notes
British pound notes on table
Thai baht
Thai baht
Indonesian Rupiah (IDR) banknotes2009
Indonesian Rupiah (IDR) banknotes 2009
1000 yen Natsume Soseki
1000 yen
Euler-10 Swiss Franc banknote (front)
Swiss Franc banknote
Australia 10dollar note 1968
Australia 10 dollar note 1968
Fiji 10 dollar note, reverse side (8031928059)
Fiji 10 dollar note, reverse side
IRA-1b-Imperial Bank of Persia-One Toman (1906)
mperial Bank of Persia-One Toman (1906)
Brazil reál címletsor
Brazil Real various notes
Kenyan 20 Shilling Note
Kenyan 20 Shilling Note
25-dracmas 1903-front

Some well-known currencies are:

Currency names of the world, in order of the first letter, by currency name:

Images for kids

See also

Kids robot.svg In Spanish: Moneda (divisa) para niños

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