In monetary economics, circulation is the continuing use of individual units of a currency for transactions. Thus currency in circulation is the total value of currency (coins and paper currency) that has ever been issued minus the amount that has been removed from the economy by the central bank. More broadly, money in circulation is the total money supply of a country, which can be defined in various ways always including currency and also including some types of bank deposits.
Standard money is the basic currency circulating within a monetary system. It has legal recognition for prices and settlement. According to Karl Marx circulation is a process which is established by capital and formed from wealth.
The amount of money in circulation varies according to a number of factors. For example, there is more demand at Christmas time when commercial activity is high. Notes and coins stored in warehouses are ordered by banks and sent to them so they may increase supply.
Gold coins are the traditional kind of coin placed into circulation. Some coins enter circulation before a die defect in their design is discovered and they are removed. If a coin is in circulation for a short period of time it is more likely to be of interest to coin collectors.
Total currency in circulation
In 1990, total currency in circulation in the world passed one trillion United States dollars. After 12 years, in 2002 this figure was two trillion USD, and in 2008 it had increased to four trillion USD.
The Bank for International Settlements provides detailed statistics of the worth of banknotes and coins for 18 major currencies used by the member states of the Committee on Payments and Market Infrastructures (CPMI). The table below shows the statistics as of 31 December 2016 in billions of US dollars using the exchange rate at the end of the year. The total value is $4,687 billion.
|Per capita||Country||Billions of dollars|
|$7,341.34||Hong Kong SAR||$54.16|
China is not part of the calculation and may be over a trillion dollars today. That leaves over 160 countries not calculated. The calculation also does not include Cryptocurrencies such as Bitcoin and Ripple, whose total value in circulation exceeds three hundred billion dollars.
- Business strike - coins intended for circulation (as opposed to commemorative and bullion coins)
- Counterfeit money
- List of circulating currencies
- Peng, Xingyun (2015). Financial Theory: Perspectives from China. World Scientific. p. 12. ISBN 9781938134333. Retrieved 14 January 2017.
- Marx, Karl (2007). Capital: A Critique of Political Economy - The Process of Capitalist Production. Cosimo, Inc. p. 386. ISBN 9781605200064. Retrieved 14 January 2017.
- Welch, Patrick J.; Gerry F. Welch (2016). Economics: Theory and Practice. John Wiley & Sons. p. 190. ISBN 1118949730. Retrieved 14 January 2017.
- Solomon, Lewis D. (1996). Rethinking Our Centralized Monetary System: The Case for a System of Local Currencies. Greenwood Publishing Group. p. 101. ISBN 9780275953768. Retrieved 14 January 2017.
- Mike Hewitt (25 June 2009). Fiat Currency in Circulation, How Much Money is There?. The Market Oracle.