Introduction


Of Legal Tenders and Foreign Exchange

It cannot be denied that money has played a major role in our lives. In fact, it had been used in as many ways possible - both good and bad. No matter how it affected our lives, the money we have today has been altered many times and its value increased and decreased.

Take the pound sterling for example. It is the monetary unit of Great Britain and is one of the major currency of the foreign exchange. Looking into its gold content, it actually contains about 7.32 g of fine gold. But its is known today as the pound sterling, it used to be the basic monetary unit in 8th century Britain. It didn't contain grains of gold then, rather silver. It was only in the 17th century where its content was replaced by gold and thus its value increased.

Thus, ₤100 has a different value when converted into Philippine peso. The former is called money in Britain but is foreign exchange in the Philippines.

The differences in monetary units of all countries in the world brought about the concept of foreign exchange. As trade, commerce, tourism and other business transactions became prevalent, it became necessary to create the system in order that payments and transactions involving monetary units made it all possible. The term foreign exchange means the conversion or global conveyance of monetary units from one country to another.

The leading currency nowadays is the Euro which is used by twelve countries. This enabled transactions easier and payment for goods possible without rushing and having their own country's currency exchanged. The Euro was given birth in 1999 when it was made the official legal tender of the countries which comprise the European Union (among which are Austria, Belgium, France, Luxembourg, Greece, Spain. Italy, the Netherlands, etc. and French territories such as Guyana, Monaco, and etc.). At that time, 11 out of the 15 countries agreed to make it their official legal tender.

The value of the Euro was based according to the value of the monies of each of the countries involved. Since then, this monetary unit has been used by many other countries as well. The notes and coins are issued by the national banks of each member country but its currency is managed by the European Central Bank (ECB).

Thus, people intending to trade with countries using the same note and money would now be able to save more time and effort rather when currencies were different. The effect of having a single monetary unit of these member countries of the EU has played a role in terms of boosting its employment and economy. But still, organizations cannot compel all countries to have a common monetary unit for each country as they have a will and mind of their own and would like to preserve their currency as part of their culture and heritage.

Nevertheless, the foreign exchange has been a great help to all peoples of the world as well as made it possible for many to work and travel abroad without worrying too much about money.

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