The Federal Reserve Bank (commonly referred to as “The Fed”) is the US central bank . Dollar (USD) is the most traded currency in the forex market and can be paired with all other major currencies. Common names for the USD include the green, buck, greenback, dead presidents, dough, smacker, bones, scrillas, and paper.
Importance of the US Dollar
The US Dollar is the most used currency in the world and in the Forex market. As the dominant currency, it is held by every central bank in the world. Also, the Dollar is used as the default currency in the commodity market and therefore has a direct impact on commodity prices.
Introduction of the US Dollar
The Dollar was officially adopted as money of the United States in 1785. The Coinage Act of 1792 created the first U.S. Mint and created the federal monetary system, as well as set names for coins specified by their value in gold, silver, and copper. In 1863, a national banking system was created and legislation for national banks were created. These banks were authorized to issue national currency secured by purchasing of US bonds. In 1914, the first $10 Federal Reserve notes were supplied. In 1914, the first $10 Federal Reserve notes were supplied.
Silver and Gold Standard in the US
For many years, the United States try to make a bimetallic standard, starting by creating a silver standard based on the Spanish Milled Dollar in 1785. However, silver coins soon got out of circulation becoming suspended completly by 1806. In this period of time, most countries had already started using the gold standard, meaning that any money paper could be redeemed by the government for its value in gold. Since the United States held most of the world’s gold, many countries pegged the value of their money to the Dollar. Central banks hold fixed exchange rates between their currencies and the Dollar, turning the US Dollar into the de facto currency of the world. In 1973, the US disconnected the value of the Dollar from gold entirely.