International monetary relations are built on the circulation of a variety of currencies. Each currency is different and classified according to a number of criteria. Thus, in relation to the issuing state, the following types of currencies can be distinguished:
national currency
foreign currency
collective.
A foreign currency is one that is the official currency of another country or group of countries. For Russia, the euro, the US dollar, and the Japanese yen are all foreign currencies. For the Eurozone, the euro is a collective currency.
Currencies can also be classified based on their convertibility. Thus, all currencies in the world are divided into:
non-convertible
partially convertible
freely convertible
The division is based on the ability to conduct a full cycle of currency transactions with a given currency. Currently, the global financial system contains only seventeen freely convertible currencies.
There are also other types of currencies:
strong
weak
or
hard
soft
In this case, the currency's classification is determined by its stability relative to its denomination and the exchange rates of other countries' currencies. The British pound sterling is considered the strongest or hardest currency in the world.
All currencies are also classified by their duration:
temporary
permanent
Temporary currencies are introduced by countries for a limited period to normalize a crisis that has arisen in the economy.
Currencies also differ in their degree of use. In this regard, the following types of currencies can be distinguished:
reserve, used to store and accumulate reserves for international transactions
leading global currency.
The latter category includes only seven currencies that are most popular for international settlements: the US dollar, euro, Swiss franc, pound sterling, Canadian dollar, Japanese yen, and Australian dollar.
