Private Currency

AAA

DEFINITION of 'Private Currency'

Units of value issued by private companies or organizations. A private currency is typically issued by a private firm or group, to act as an alternative to a national or fiat currency which would be the standard unit of value in a country. Although issuing private currency is restricted by law in many countries, there are still estimated to be thousands of private currencies circulating across the world.

BREAKING DOWN 'Private Currency'

Private currencies are often issued and backed by physical commodities, such as gold or silver. By backing a private currency with a commodity, issuers are able to increase the security of the asset, while limiting the effects of inflation on the currency's value, since commodities tend to move closely in line with inflation. Private currencies have been used in the United States since the mid-1800s and still continue to be used today, in some localities. For example, the "Ithaca HOUR" is a printed currency which has been exchanged in Ithaca, NY since 1991.

RELATED TERMS
  1. Bitcoin

    A digital or virtual currency that uses peer-to-peer technology ...
  2. Fiat Money

    Currency that a government has declared to be legal tender, but ...
  3. Stroud Pound

    A local, private currency launched in the British town of Stroud, ...
  4. Currency

    A generally accepted form of money, including coins and paper ...
  5. Money Supply

    The entire stock of currency and other liquid instruments in ...
  6. Decentralized Market

    A market structure that consists of a network of various technical ...
Related Articles
  1. Technical Indicators

    The Basics Of Money Flow

    Learn how this indicator uses both price and volume to record a more complete picture of price action.
  2. Forex Education

    How Gold Affects Currencies

    There is a strong correlation between gold's value and the strength of currencies trading on foreign exchanges.
  3. Forex Education

    Top 7 Questions About Currency Trading Answered

    Whether you're puzzled by pips or curious about carry trades, your queries are answered here.
  4. Forex Education

    Gold: The Other Currency

    Throughout history, gold has held its value against paper currencies. Learn how it can help offset market risks.
  5. Options & Futures

    Getting Started In Forex

    Before entering this market, you should define what you need from your broker and from your strategy.
  6. Forex Education

    The International Money Market

    Banks, corporations, traders and speculators all use the IMM to borrow, lend, trade, profit, finance, speculate and hedge risks.
  7. Mutual Funds & ETFs

    4 Mutual Funds to Consider If Interest Rates Rise

    Learn what mutual funds will perform best if interest rates rise. Interest rates can rise due to inflation or to an improving economy.
  8. Personal Finance

    Does It Make Sense to Go to College in Europe?

    If you're deciding whether to get a degree abroad, first do your research and talk to alumni who have completed the same program.
  9. Savings

    Traveling Abroad? Get the Best Exchange Rates

    When you exchange currencies, here’s how to make sure you are getting top value on the trade.
  10. Forex Education

    China's Devaluation of the Yuan

    Just over one week ago the People’s Bank of China (PBOC) surprised markets with three consecutive devaluations of the yuan, knocking over 3% off its value.
RELATED FAQS
  1. How is a block chain network useful for trading goods and assets in virtual currencies?

    Perhaps the most famous quote associated with blockchain technology came from an anonymous virtual currency user, who described ... Read Full Answer >>
  2. What types of companies benefit from reporting results utilizing constant currencies ...

    Any company that does a substantial amount of business in foreign countries, and is therefore subject to foreign currency ... Read Full Answer >>
  3. What are key benefits to a country that has engaged in a policy of currency depreciation?

    In the modern world, most currencies represent fiat money not backed by any commodity or precious metal and whose value is ... Read Full Answer >>
  4. How does a block chain prevent double-spending of Bitcoins?

    Double-spending – the incidence of one individual successfully spending a Bitcoin balance more than once – is a major concern ... Read Full Answer >>
  5. What is the difference between barter and currency systems?

    The primary difference between barter and currency systems is that a currency system uses an agreed-upon form of paper or ... Read Full Answer >>
  6. What is a forward contract against an export?

    A forward contract against an export is an agreement between the importer and exporter to exchange a specified amount of ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  2. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  3. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
  4. Dead Cat Bounce

    A temporary recovery from a prolonged decline or bear market, followed by the continuation of the downtrend. A dead cat bounce ...
  5. Bear Market

    A market condition in which the prices of securities are falling, and widespread pessimism causes the negative sentiment ...
  6. Alligator Spread

    An unprofitable spread that occurs as a result of large commissions charged on the transaction, regardless of favorable market ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!