What is 'Currency In Circulation'

Currency in circulation is currency that is physically used to conduct transactions between consumers and businesses rather than stored in a bank, financial institution or central bank. Currency in circulation is part of the overall money supply, with a larger portion of the overall supply being stored in checking and savings accounts.

BREAKING DOWN 'Currency In Circulation'

Currency in circulation can be thought of as "currency in hand", meaning that it is used to buy goods and services. Central banks pay attention to the amount of physical currency in circulation because it is present in the most liquid asset class. The more money that comes out of circulation and into longer-term investments, the less money is available to fund shorter-term consumption - a major component of GDP.

RELATED TERMS
  1. Circulating Capital

    The portion of an organization's investment that is continually ...
  2. Active Money

    The total value of coins and paper currency in circulation amongst ...
  3. Electronic Money

    Electronic money is money which exists only in banking computer ...
  4. Monetary Base

    The total amount of a currency that is either circulated in the ...
  5. Bank Lending Survey

    A questionnaire circulated by a country's central banking authority ...
  6. Currency

    Currency is a generally accepted form of money, including coins ...
Related Articles
  1. Insights

    How Central Banks Control The Supply Of Money

    A look at the ways central banks pump or drain money from the economy to keep it healthy.
  2. Investing

    Understanding Money Supply

    Money supply – also called money stock -- refers to the total amount of currency and other liquid financial products in an economy at a particular time.
  3. Insights

    How Currency Works

    Currency offers key advantages over economies based on direct trade. It provides sellers with a broader market for their goods and services. It is also a durable asset for people to accumulate ...
  4. Insights

    The Currency Board: Understanding The Government's Bank

    Currency board, central bank - what's the difference? Find out more about this little-known monetary authority.
  5. Investing

    Why Countries Keep Reserve Currency

    Central banks and financial institutions hold large amounts of foreign money as their reserve currency.
  6. Insights

    What Are Central Banks?

    They print money, they control inflation, and much, much more. All you need to know about central banks is here.
  7. Insights

    How Does China Manage Its Money Supply?

    Here's how the Central Bank of China manages its currency rates and the money supply.
  8. Insights

    What Is Money?

    It's a part of everyone's life, and we all want it, but do you know how it gains value and how it is created?
  9. Trading

    The Forex Market: Who Trades Currency And Why

    The forex market has a lot of unique attributes that may come as a surprise for new traders.
  10. Taxes

    The Link Between The Fed, Money, Debt And Taxes

    Assets on the Fed's balance sheet, money supply level, national debt level and economic production should be maintained in equilibrium.
RELATED FAQS
  1. How does the law of supply and demand affect monetary policy in the United States?

    Learn about how the law of supply and demand affects monetary policy in the United States. Changing interest rates leads ... Read Answer >>
  2. What is the correlation between money supply and GDP?

    Read about the two-way correlation between the total amount of money circulating in the economy and gross domestic product, ... Read Answer >>
  3. What are key economic factors that can cause currency depreciation in a country?

    Read about the causes of currency devaluation, and find out how to differentiate between relative and absolute currency devaluation. Read Answer >>
  4. Is there a world currency? If so, what is it?

    There is no such thing as a world currency. However, since World War II, the dominant or reserve currency of the world has ... Read Answer >>
  5. How can central banks use open market operations to manipulate short-term interest ...

    Discover how central banks use open market operations to manipulate short-term rates. Short-term rates are key inputs into ... Read Answer >>
  6. How do central banks inject money into the economy?

    Central banks use several different methods to increase (or decrease) the amount of money in the banking system. These actions ... Read Answer >>
Hot Definitions
  1. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
  2. Cover Letter

    A written document submitted with a job application explaining the applicant's credentials and interest in the open position. ...
  3. 403(b) Plan

    A retirement plan for certain employees of public schools, tax-exempt organizations and certain ministers. Generally, retirement ...
  4. Master Of Business Administration - MBA

    A graduate degree achieved at a university or college that provides theoretical and practical training to help graduates ...
  5. Liquidity Event

    An event that allows initial investors in a company to cash out some or all of their ownership shares and is considered an ...
  6. Job Market

    A market in which employers search for employees and employees search for jobs. The job market is not a physical place as ...
Trading Center