what does usd stand for 
the usd is the currency abbreviation for the u s dollar the official currency of the united states of america and the world s primary reserve currency over the past several decades it is managed by the federal reserve america s central bank in foreign exchange forex markets the usd is the most common pairing in exchange with other currencies for instance eur usd usd jpy and gbp usd the u s dollar is also the official currency for a small number of other nations such as the marshall islands panama and ecuador and is unofficially accepted in local exchange in several other countries around the world understanding the usdthe usd is the currency of the united states and is denoted by the symbol one dollar can be divided into one hundred cents dollar banknotes are currently issued in denominations of 1 2 5 10 20 50 and 100 each feature the portrait of a president on the front with the exception of the 100 bill which depicts benjamin franklin and the 20 bill may soon feature abolitionist harriet tubman on its front 1notably 500 and 1 000 banknotes used to circulate in limited amounts but ceased in 1969 2 coins are minted in denominations of 0 01 cent 0 05 nickel 0 10 dime 0 25 quarter 0 50 half dollar and 1 00 banknotes and coins are produced by the treasury department and shipped directly to federal reserve banks and branches for distribution and circulation 3the usd is the most traded currency in the international foreign exchange market which facilitates global currency exchange and is the largest financial market in the world with a daily average volume for may 2022 of nearly 1 2 trillion 4 as such the usd is considered a benchmark currency and is readily accepted in transactions worldwide the usd accounts for approximately 88 of all foreign exchange transactions according to the bank for international settlements bis 2019 triennial report 5a brief history of the usdthe usd has been the official currency of the united states since the passage of the national currency act of 1785 before that the united states used a patchwork system of unreliable continental currency british pounds and various foreign currencies at first the dollar was denominated only in coins with paper currency introduced in 1861 and its value was keyed to the relative prices of gold silver and copper various acts of congress modified the usd s design value and underlying commodities until the currency s oversight was formalized with the federal reserve act of 1913 after this reform the dollar was technically a federal reserve note redeemable on demand for an equivalent value of precious metals at any of the federal reserve banks or the u s mint u s dollars ceased to be redeemable with the de facto abandonment of the gold standard in 1933 when president franklin d roosevelt prohibited the private ownership of gold in 1944 the bretton woods agreement effectively forced all of the major currencies of the world to convert from a precious metal based value system to one of the fixed exchange rates with governments allowed to sell gold to the united states for 35 an ounce payable only in u s dollars the gold standard was formally abandoned in 1971 when the bretton woods exchange rates were abandoned today the usd is a free floating currency on global forex markets in the post bretton woods world the u s dollar acts as the reserve currency of most countries instead of stockpiling gold and silver the central banks of the world keep a steady reserve of dollars as a hedge against inflation dollar bills sometimes go by the slang greenbacks in reference to the green colored ink that is characteristic of their reverse side measuring the usd valuethe value of the usd is broadly measured by the u s dollar index usdx which is comprised of a basket of currencies affiliated with the major trading partners of the united states these include the euro 57 6 of the index the japanese yen 13 6 the british pound 11 9 the canadian dollar 9 1 the swedish krona 4 2 and the swiss franc 3 6 the index goes up when the dollar gains strength against other currencies and falls when it weakens 6within the united states the amount of dollars in existence is measured by one of the several money supply money stock metrics put out by the fed the monetary base or m0 is the aggregate total amount of dollars in circulation in the form of cash banknote and coin as the monetary base increases the fractional reserve banking system expands the money supply via the money multiplier effect advantages of the usdseveral factors work to make the usd attractive as a reserve currency and in exchange but the dollar s long standing price stability might be the most important unlike some other major currencies the usd to date has never been devalued to handle the country s debt or seen bouts of hyperinflation moreover no u s dollar has ever been dishonored or refused as legal tender which vastly increases confidence in the soundness of the currency as a result the usd is used to denominate financial debt and commodity transactions all over the world because of its strength and stability many foreign governments and central banks hold onto u s dollar reserves to help keep their own economy and local currency stable this may be in the form of actual usd currency holdings or more commonly as u s treasury bonds example of usd petrodollarsa good example of the usd in terms of international trade and as a reserve currency is in the global market for crude oil much of the world s oil and gas is produced overseas in the middle east russia norway south america and elsewhere the global oil market however is priced in dollars per barrel usd paid for oil to non u s exporters are known as petrodollars which becomes a primary source of revenue for these nations because those nations do not use usd as their primary currency they develop reserves of dollars that must be recycled or spent in order to convert them into local currency forex markets are a primary channel for this as well as the purchase of u s treasuries to hold in reserves usd faqsaccording to the federal reserve as of july 2022 there is just over 2 trillion worth of usd currency in circulation 7 this number swells to more than 21 6 trillion if you look at the m2 measure of the money supply which includes non cash items like money market instruments deposits and other credit money as of july 2022 the eur usd exchange rate is 1 02 which means that one euro eur is equal to usd 1 02 alternatively you can say that one dollar is equal to 0 99 8 the eur usd currency pair is often the most actively traded in forex markets usdcoin usdc is a stablecoin that is pegged to the value of 1 usd the price as of july 30 2022 is 0 95 9 a stablecoin is a class of cryptocurrency that derives its value from some external reference usdcoin is not issued or managed by the u s government or federal reserve as is not considered legal tender in exchange 