United States dollar
The United States dollar (symbol: $; currency code: USD; also abbreviated US$ to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official currency of the United States and several other countries. The Coinage Act of 1792 introduced the U.S. dollar at par with the Spanish silver dollar, divided it into 100 cents, and authorized the minting of coins denominated in dollars and cents. U.S. banknotes are issued in the form of Federal Reserve Notes, popularly called greenbacks due to their predominantly green color.
"USD" redirects here. For other uses, see USD (disambiguation).ISO 4217
USD (numeric: 840)
0.01
$, US$, U$
- Ace, bean, bill, bone, buck, deuce, dough, dub, ducat, doubloon, fin, frog, greenback, large, simoleons, skins, smackeroo, smackers, spondulix, Tom, yard, and eagle
- Plural:
- dead presidents, green, bones, clams
- Based on denomination:
- Washingtons, Jeffersons, Lincolns, Hamiltons, Jacksons, Grants, Benjamins, C-note, grand, sawbuck, single, Bluefaces, Blue Strips
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April 2, 1792[1]
Continental currency
Various foreign currencies, including:
Pound sterling
Spanish dollar
see § Formal (11), § Informal (7)
3.5% or 2.5%
The monetary policy of the United States is conducted by the Federal Reserve System, which acts as the nation's central bank.
The U.S. dollar was originally defined under a bimetallic standard of 371.25 grains (24.057 g) (0.7735 troy ounces) fine silver or, from 1837, 23.22 grains (1.505 g) fine gold, or $20.67 per troy ounce. The Gold Standard Act of 1900 linked the dollar solely to gold. From 1934, its equivalence to gold was revised to $35 per troy ounce. Since 1971, all links to gold have been repealed.[2]
The U.S. dollar became an important international reserve currency after the First World War, and displaced the pound sterling as the world's primary reserve currency by the Bretton Woods Agreement towards the end of the Second World War. The dollar is the most widely used currency in international transactions,[3] and a free-floating currency. It is also the official currency in several countries and the de facto currency in many others,[4][5] with Federal Reserve Notes (and, in a few cases, U.S. coins) used in circulation.
As of February 10, 2021, currency in circulation amounted to US$2.10 trillion, $2.05 trillion of which is in Federal Reserve Notes (the remaining $50 billion is in the form of coins and older-style United States Notes).[6]
As of September 20, 2023, the Federal Reserve estimated that the total amount of currency in circulation was approximately US$2.33 trillion.[7]
Overview[edit]
In the Constitution[edit]
Article I, Section 8 of the U.S. Constitution provides that Congress has the power "[t]o coin money."[8] Laws implementing this power are currently codified in Title 31 of the U.S. Code, under Section 5112, which prescribes the forms in which the United States dollars should be issued.[9] These coins are both designated in the section as "legal tender" in payment of debts.[9] The Sacagawea dollar is one example of the copper alloy dollar, in contrast to the American Silver Eagle which is pure silver. Section 5112 also provides for the minting and issuance of other coins, which have values ranging from one cent (U.S. Penny) to 100 dollars.[9] These other coins are more fully described in Coins of the United States dollar.
Article I, Section 9 of the Constitution provides that "a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time",[10] which is further specified by Section 331 of Title 31 of the U.S. Code.[11] The sums of money reported in the "Statements" are currently expressed in U.S. dollars, thus the U.S. dollar may be described as the unit of account of the United States.[12] "Dollar" is one of the first words of Section 9, in which the term refers to the Spanish milled dollar, or the coin worth eight Spanish reales.
Coinage Act[edit]
In 1792, the U.S. Congress passed the Coinage Act, of which Section 9 authorized the production of various coins, including:[13]: 248
The Federal Reserve Act created the Federal Reserve System in 1913 as the central bank of the United States. Its primary task is
to conduct the nation's monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates in the U.S. economy. It is also tasked to promote the stability of the financial system and regulate financial institutions, and to act as lender of last resort.[65][66]
The Monetary policy of the United States is conducted by the Federal Open Market Committee, which is composed of the Federal Reserve Board of Governors and 5 out of the 12 Federal Reserve Bank presidents, and is implemented by all twelve regional Federal Reserve Banks.
Monetary policy refers to actions made by central banks that determine the size and growth rate of the money supply available in the economy, and which would result in desired objectives like low inflation, low unemployment, and stable financial systems. The economy's aggregate money supply is the total of
The FOMC influences the level of money available to the economy by the following means:
Monetary policy directly affects interest rates; it indirectly affects stock prices, wealth, and currency exchange rates. Through these channels, monetary policy influences spending, investment, production, employment, and inflation in the United States. Effective monetary policy complements fiscal policy to support economic growth.
The adjusted monetary base has increased from approximately $400 billion in 1994, to $800 billion in 2005, and to over $3 trillion in 2013.[67]
When the Federal Reserve makes a purchase, it credits the seller's reserve account (with the Federal Reserve). This money is not transferred from any existing funds—it is at this point that the Federal Reserve has created new high-powered money. Commercial banks then decide how much money to keep in deposit with the Federal Reserve and how much to hold as physical currency. In the latter case, the Federal Reserve places an order for printed money from the U.S. Treasury Department.[68] The Treasury Department, in turn, sends these requests to the Bureau of Engraving and Printing (to print new dollar bills) and the Bureau of the Mint (to stamp the coins).
The Federal Reserve's monetary policy objectives to keep prices stable and unemployment low is often called the dual mandate. This replaces past practices under a gold standard where the main concern is the gold equivalent of the local currency, or under a gold exchange standard where the concern is fixing the exchange rate versus another gold-convertible currency (previously practiced worldwide under the Bretton Woods Agreement of 1944 via fixed exchange rates to the U.S. dollar).