What is the oldest currency in the world
Oldest coins still in circulation
Here is a list of the eight oldest currencies still in circulation. There are four main currencies in this list, which we detail below. Click on any of the major currencies to learn more about them or keep scrolling to learn more about the history of the currency first.
*according to Britannica
When was money invented?
It is widely believed that the Mesopotamian shekel was the first known form of physical currency. Since then, societies have used many different representations for currency, including leather, fur, pearls, copper, and precious metals like gold and silver.
The first paper banknotes were used in China during the Tang and Song dynasties from the 7e century. These early fiat currencies allowed merchants and wholesalers to make large transactions without having to consider the heavy weight of metal coins. However, fiat currencies as we know them today were not printed until 1120 by the Chinese government.
What are fiat currencies?
Fiat currencies describe any national currency not backed by a physical commodity, but rather by a government’s promise to recognize their established value. The value of fiat currencies is established by public confidence in the government issuing the currency and the economic decisions made by its central bank.
Fiat currencies are the basis of all economies in the world. Their invention allowed societies to go beyond barter systems to more complex trading systems. Today they function as a tool for the exchange of goods and services and are issued and regulated by national governments.
Fiat currencies work well in our monetary systems because they are lightweight and have little intrinsic value beyond what a government has assigned to them. But currencies have not always functioned in this form.
The easier transportation of paper banknotes allowed for an increase in international trade, and the resulting currency wars are among the earliest examples of currency exchange. Foreign exchange, or forex, is a global network where traders exchange currencies. Traders speculate on the impact of global and domestic economic news on exchange rates, but they also influence those rates themselves through the massive amounts of currencies traded.
The foreign exchange market is the most traded market in the world. Forex markets averaged more than $6.6 trillion in trades every day in 2019. Meanwhile, stocks averaged $553 billion a day for the same year.
Learn more about currency exchange
Gold and silver standards
At the end of the 19e century, many countries began to adopt the gold standard. The monetary system backed each currency note with a fixed amount of gold bullion. An international gold standard was established in 1871 after many influential countries had already established their own gold standards. Previously, a silver standard was used in some countries like the United States due to its wider availability.
Eventually, however, economic growth outpaced gold supply. This – along with an increase in nations’ debt during World War I – brought about the end of the gold standard. In its place, countries began accumulating reserve foreign currencies to support their own: primarily the US dollar and British pound. These two currencies are among the oldest and strongest currencies in the world of today.
The four oldest major currencies
Although number eight overall, the Japanese yen is the fourth oldest major currency. The yen was introduced in 1871 and since its inception has seen several devaluations to the point that current banknotes have values of ¥1,000, ¥5,000, and ¥10,000.
Due to the extremely low value of a single yen, currency pairs with the yen as the quote currency often have pip values to ten decimal places. Meanwhile, other currency pairs usually have pip values to the thousandth decimal place.
Despite this low value, the yen is extremely popular in the foreign exchange markets. It is the third most traded currency overall. The Bank of Japan maintains an extremely low, and sometimes negative, interest rate, which makes the yen popular in carry trade strategies.
To learn more about the yen and its unique place in the forex market, read our full article guide to the japanese yen
The US dollar was created in June 1776, days before the country officially declared its independence on July 4, 1776. Although third among the majors, it is technically the fourth oldest currency behind the Serbian dinar.
The US dollar is now the most traded currency across the world and accounts for the largest percentage of foreign currency reserves of any currency across the world. EUR/USD is the most traded currency pair in the foreign exchange markets.
The dollar is influenced by typical economic factors:
- U.S. central bank policy announcements
- The Federal Reserve
- US economic data
- Geopolitical events
Any significant change in the US economy often affects other national currencies due to the dollar’s outsized influence in the global economic market.
Learn more about the US dollar in our in-depth article usd guide
The Russian ruble was created in the 13e century and features a double-headed eagle, an orb and a sceptre. The currency has been revalued many times over its long history. At one point it was even taken out of circulation.
The value of the Russian ruble is most affected by the Central Bank of the Russian Federation, inflation, geopolitics and oil prices. The ruble is considered a base currency due to the impact of the price of crude oil on the value of the currency. Russia is the largest producer of natural gas and the second largest producer of crude oil.
Russia is also home to the fifth-most billionaires of any country, according to a 2021 Forbes report. Despite all that financial power, geopolitical issues involving Russia, such as the country’s 2022 invasion of Ukraine , have complicated the stability and availability of the ruble for trade in the foreign exchange markets.
The British pound sterling is the oldest currency still in circulation today, dating back to 800 when it took the form of silver coins. The nickname “pound” comes from the measurement system first used to evaluate coins. At the time, 240 sterling coins weighed one pound. Today, a pound is divided into 100 pence, and the currency is represented by paper notes and £1 and £2 coins.
The British pound is the fourth most traded currency in the foreign exchange market. It features heavily in major, minor and exotic currency pairs. Like most major modern currencies, the pound is heavily influenced by the Bank of England’s monetary policy, inflation, UK economic growth and trader sentiment.
The most popular currency pair with the pound, GBP/USDoften moves in the same way as EUR/USD. However, GBP/USD is negatively correlated, meaning it moves opposite, with EUR/GBP.
Learn more about the world’s oldest currency in our extensive guide to the british pound sterling.
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