The dollar is the official currency of the United States -where it is issued- but also of other countries such as Ecuador, El Salvador or Zimbabwe. In addition, the U.S. dollar is the currency most used by tourists.
The first silver dollars began to be minted in 1794, after the approval of “The Coinage Act”, a decree that created the first U.S. mint and established the dollar as the country’s unit of reference.
As far as the national banking system is concerned, the Federal Reserve Act of 1913 created a central bank and organized it to keep pace with the changing financial needs of the country. The Federal Reserve Board created a new currency called Federal Reserve Notes. The first federal bill was the ten dollar bill, created in 1914. Eventually, the Federal Reserve Board decided to lower the costs of manufacturing the currency by reducing the actual size of the bills by 30%.
Banknote designs would not be changed again until 1996, when a series of improvements were made over a ten-year period to prevent counterfeiting.
Countries in which the US dollar circulates
Although the dollar is used in many countries, as far as the U.S. dollar is concerned there are only eight that have it as their official currency. These countries are: United States, Ecuador, El Salvador, Marshall Islands, Micronesia, Palau, East Timor and Zimbabwe.
US dollar banknotes and coins in use
In total, there are five fractions of the dollar, which, over time, have acquired their own name:
– One cent: penny.
– Five cents: nickel.
– Ten cents: dime.
– Veinticinco centavos: quarter.
– Fifty centavos: half dollar.
As for the bills, there are a total of seven: 1, 2, 5, 10, 20, 20, 50 and 100 dollars.
Since 1956, the expression “In God We Trust” has been printed on all bills.
The 50 and 100 dollar bills can be in circulation for up to eight years and the 20 dollar bills for an average of two years, while the useful life of a dollar is only eighteen months.
The new $100 bills feature a tower of Independence Hall with the clock showing 4:10 am.
The bills are not made of paper but, for durability, are made from cotton composites and linen.
The only time a woman’s image has appeared on a banknote was in 1886, when a portrait of Martha Washington was placed on the obverse of the silver dollar certificate next to the image of her husband, the first U.S. president, George Washington.
We call “dollarization” the process of incorporating the U.S. dollar into an economic market other than the U.S. dollar.