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 USD. After 12 years, in 2002 this figure was two trillion USD, and in 2008 it had increased to four trillion USD, broken down by country as follows:
- Eurozone – 1035.2 billion USD, 24.30% of world total
- United States – 850.7 billion USD, 19.97%
- Japan – 762.4 billion USD, 17.90%
- China – 492.3 billion USD, 11.56%
- India – 140.3 billion USD, 3.29%
- Russia – 110.8 billion USD, 2.60%
- UK – 87.5 billion USD, 2.05%
- Canada – 43.8 billion USD, 1.03%
- Switzerland – 40.3 billion USD, 0.95%
- Poland – 37.7 billion USD, 0.89%
- Brazil – 37.3 billion USD, 0.88%
- Mexico – 34.3 billion USD, 0.81%
- Australia – 32.4 billion USD, 0.76%
- Pakistan – 17.63 billion USD, 0.42
- Other countries – 537.4 billion USD, 12.89%
After its useful life has expired banknotes are taken out of circulation and either recycled or destroyed by shredding. In Australia, for example, millions of dollars worth of banknotes are taken out of circulation and destroyed every hour.
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