The dollar is the legal tender in the United States –the country where it is minted- but also of other countries such as Ecuador, El Salvador or Zimbabwe. Moreover, the US dollar is the most common currency used by tourists.
The first silver dollars were issued in 1794 after the adoption of the “Coinage Act”, the decree that established the first American national mint and set the dollar as reference unit for the whole country.
As regards the national banking system, the Federal Reserve Act of 1913 established a central bank to help follow the rhythm of changes in the country’s financial need. The Federal Reserve Board created a new currency called Federal Reserve Notes. The first federal note was for ten dollars, created in 1914. Later, the Federal Reserve Board decided to lower the money manufacturing costs by reducing the official size of notes by 30%.
The design of notes would not change again until 1996, when a new series of improvements were introduced over a period of ten years to prevent counterfeiting.
Countries using US Dollar
Although dollars are used commonly in many countries, the US dollar is really legal tender in only eight countries. These countries are: The United States of America, Ecuador, El Salvador, the Marshall Islands, Micronesia, Palau, East Timor and Zimbabwe. .
Current US dollar Coins and Banknotes
There are currently five different denominations of the US Dollar, which have been nicknamed:
- One cent: a penny.
- Five cents: a nickel.
- Ten cents: a dime.
- Twenty five cents: quarter.
- Fifty cents: half dollar.
Regarding banknotes,there are seven denominations: 1, 2, 5, 10, 20, 50 and 100 dollars.
Interesting facts of the US dollar
- Since 1956 all banknotes bear the printed motto: In God We Trust
- Banknotes of 50 and 100 dollars can stay in circulation for up to eight years, 20 dollar notes circulate for an average 2 years, whereas the durability of a single dollar bank note is just 18 months.
- The new 100 dollar notes bear an image of the Independence Hall in which the clock indicates the time: 4:10 pm.
- Dollar notes are not made of paper but instead they are made of a cotton-linen blend for longer duration.
- The only time when banknotes showed the image of a woman was in 1886, when Martha Washington’s effigy was placed on the obverse of silver certificates for one dollar, together with the image of her husband, the first President of the United States, George Washington.
- “Dollarization” is the process of incorporation of one currency into the economic market of a different country.