currency competition



  • The introduction of more than one asset-backed currency in a market that competes for exchange value within that market. For example, in the United States, a state may introduce an alternative currency, such as a gold coin, to be used for exchange within its borders that will compete with the U.S. dollar which is the federal government's legal tender.  Currency competition also occurs in global markets when one government issued currency competes with another as a standard of exchange.