WCURRENCY

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Overview

The United States Dollar (USD) is the official currency of the United States and the most widely used currency in international trade and finance. Approximately 88% of all foreign exchange transactions involve the US dollar, and it serves as the world's primary reserve currency, held by central banks worldwide as a store of value and medium for international settlements.

History

The dollar traces its roots to the Spanish silver dollar, which circulated widely in colonial America. The Coinage Act of 1792 formally established it as the national currency. For most of the 19th and early 20th centuries it operated under the gold standard. In 1971, President Nixon ended gold convertibility (the "Nixon Shock"), moving the world to fiat currencies.

The Bretton Woods Agreement (1944) had made the USD the anchor of the international monetary system. Even after Bretton Woods collapsed, the dollar retained its dominant global role.

Federal Reserve

The Federal Reserve ("the Fed"), established in 1913, is the central bank of the United States. It sets monetary policy through the federal funds rate with a dual mandate: maximise employment and maintain stable prices (≈2% inflation target). The FOMC meets eight times per year — when the Fed raises rates, the dollar typically strengthens; when rates fall, the dollar often weakens.

Key Facts

• ~58% of global foreign exchange reserves are held in USD — far ahead of the euro (≈20%).
• ~45% of all USD banknotes are $100 bills, many held outside the US.
• The $ sign is believed to derive from the abbreviation "ps" for the Spanish peso.
• Ecuador, El Salvador, Panama, and Zimbabwe use USD as official/de facto currency.
• The Bureau of Engraving and Printing produces ≈38 million banknotes daily.
• EUR/USD is the world's most traded forex pair (≈23% of daily global volume).

See also: EUR – Euro · GBP – British Pound Sterling · Guide