All monetary systems facilitate the production and exchange of money. To achieve this purpose, the U.S. monetary system has evolved to continue to meet the three essential functions of money: it is a medium of exchange, a standard of value, and a store of value. This evolution may be observed through the changes in the form that money has taken over time as it has transitioned from a full-bodied currency system to a fiat currency. Globalization, significant events, and crises have resulted in the design and implementation of legislation that has forced changes to U.S. monetary policy, both locally and globally.
At A Glance
- The modern U.S. monetary supply system facilitates both the production and exchange of money.
- A series of crises and globalization created the current U.S. monetary system.
- There are a variety of securities that can be traded, such as money markets, commercial paper, and bankers' acceptance securities, each with its own trade market.
- The movement of money in an economy affects the velocity of money, and velocity of money can be calculated to help explain economic behavior.
- The velocity of money can be controlled by moving money in and out of an economy and can cause inflation or increase interest rates.
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Regulations and statutes such as the Glass-Steagall Act, the Gramm-Leach-Bliley Act, and the Dodd-Frank Wall Street Reform and Consumer Protection Act are driven by U.S. monetary policies.
- Each monetary regulation, such as the Gramm-Leach-Bliley Act and the Dodd-Frank Act, has an effect on the global economy.
