| Currency is divided into the following components:
* The currency system of the State and also the monetary units of this system;
* Foreign currency;
* The balance amount
Foreign currency:
а) Cash, i.e. currency notes, which are in circulation and are a legitimate mode of payment in foreign states and also currency notes, withdrawn or to be withdrawn from circulation but can be exchanged for currency notes (banknotes, coins, treasury notes);
b) Non-cash, i.e. means in accounts, expressed in currency notes of the foreign state
The legal mode of payment - currency notes, which in accordance with the legislation of the given state, are considered mandatory to accept for repayment of the debt within the territory of a given state.
The restriction on the use of currency notes as a legitimate mode of payment can be established depending on the sum or from the type of payment.
Two main requirements are set to the foreign currency: the authenticity and fitness for its use as currency.
Classification of currencies:
Many currency classifications exist in science, in particular: With respect to the state/issuer:
* National;
* Foreign;
* Collective (For example - Euro)
With respect to the exchange possibility into other currency:
* Easily convertible;
* Partially convertible;
* Unconvertible
With respect to the parity of exchange rates:
* Strong/Solid (i.e. Stable against its face value and to the exchange rates of other currencies);
* Weak/Soft
With respect to the validity period:
* Constant;
* Temporary
The real unit i.e., fulfilling the function of money directly or conditionally, for example, ECU (European Currency Unit) is assigned depending upon the actual existence.
The convertibility of currency:
The judicial criteria for the convertibility of currencies:
- The presence of the market rate of exchange, the existence of a currency stock exchange (foreign exchange markets), a flexible exchange rate, reflecting real parity between supply and demand;
* The absence of standard established restrictions on currency operations;
* The right of the resident and nonresident to freely own and dispose of the currency, including make any operations.
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