(hard currency)
Hard currency in the era of the gold standard refers to gold, in modern times refers to the international credit better, the value of the currency is stable, the exchange rate is strong state of the currency. Due to the degree of inflation in different countries, the balance of payments and the degree of foreign exchange control is different, when a country's inflation is low, the balance of payments surplus, the value of the country's currency is relatively stable, the exchange rate is strong state. In the international financial market, it is customary to call it hard currency.
Relative to hard currency is soft currency. It refers to the value of the currency is not stable, the exchange rate is weak state of the currency. Due to excessive currency issuance, the gold content or purchasing power of the currency continues to decline, and the ratio of other countries' currencies will also continue to decline. In addition, a large deficit in the balance of payments will also cause the exchange rate between a country's currency and the currencies of other countries to decline. In the international financial market, usually the value of the currency continues to decline, the exchange rate is weak state of the currency called soft currency.
In fact, hard currency and soft currency is only relative, it will change with the country's economic situation and financial situation. For example, the U.S. dollar, in the 1950s is a hard currency, the late 1960s and 1970s, due to the U.S. high inflation rate, as well as a large number of balance-of-payments deficits, making the dollar exchange rate is a downward trend, the dollar from hard currency to soft currency. 80's, the United States to implement the policy of high interest rates and tightening of the monetary policy, the dollar exchange rate continues to float, and has become a hard currency in the international financial market.
In addition, hard currency and soft currency has another layer of meaning. After the second world war, the international financial market, certain does not implement foreign exchange control, can be free and unlimited exchange of gold and other national currencies of the currency, is called hard currency. Soft currency, on the other hand, refers to the implementation of exchange controls, not freely convertible into gold and other national currencies.
For example, the Chinese yuan is called "hard currency" in North Korea.
For example, the Chinese yuan is called "hard currency" in North Korea.