The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official currency of the United States and several other countries. The Coinage Act of 1792 introduced the U.S. dollar at par with the Spanish silver dollar, divided it into 100 cents, and authorized the minting of coins denominated in dollars and cents. U.S. banknotes are issued in the form of Federal Reserve Notes, popularly called greenbacks due to their predominantly green color.
Article I, Section 8 of the U.S. Constitution provides that Congress has the power "[t]o coin money."[7] Laws implementing this power are currently codified in Title 31 of the U.S. Code, under Section 5112, which prescribes the forms in which the United States dollars should be issued.[8] These coins are both designated in the section as "legal tender" in payment of debts.[8] The Sacagawea dollar is one example of the copper alloy dollar, in contrast to the American Silver Eagle which is pure silver. Section 5112 also provides for the minting and issuance of other coins, which have values ranging from one cent (U.S. Penny) to 100 dollars.[8] These other coins are more fully described in Coins of the United States dollar.
dollars
Article I, Section 9 of the Constitution provides that "a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time,"[9] which is further specified by Section 331 of Title 31 of the U.S. Code.[10] The sums of money reported in the "Statements" are currently expressed in U.S. dollars, thus the U.S. dollar may be described as the unit of account of the United States.[11] "Dollar" is one of the first words of Section 9, in which the term refers to the Spanish milled dollar, or the coin worth eight Spanish reales.
Unlike the Spanish milled dollar, the Continental Congress and the Coinage Act prescribed a decimal system of units to go with the unit dollar, as follows:[13][14] the mill, or one-thousandth of a dollar; the cent, or one-hundredth of a dollar; the dime, or one-tenth of a dollar; and the eagle, or ten dollars. The current relevance of these units:
Though the Dutch pioneered in modern-day New York in the 17th century the use and the counting of money in silver dollars in the form of German-Dutch reichsthalers and native Dutch leeuwendaalders ('lion dollars'), it was the ubiquitous Spanish American eight-real coin which became exclusively known as the dollar since the 18th century.[21]
The colloquialism buck(s) (much like the British quid for the pound sterling) is often used to refer to dollars of various nations, including the U.S. dollar. This term, dating to the 18th century, may have originated with the colonial leather trade, or it may also have originated from a poker term.[22]
Greenback is another nickname, originally applied specifically to the 19th-century Demand Note dollars, which were printed black and green on the backside, created by Abraham Lincoln to finance the North for the Civil War.[23] It is still used to refer to the U.S. dollar (but not to the dollars of other countries). The term greenback is also used by the financial press in other countries, such asAustralia,[24] New Zealand,[25] South Africa,[26] and India.[27]
The symbol $, usually written before the numerical amount, is used for the U.S. dollar (as well as for many other currencies). The sign was the result of a late 18th-century evolution of the scribal abbreviation ps for the peso, the common name for the Spanish dollars that were in wide circulation in the New World from the 16th to the 19th centuries. The p and the s eventually came to be written over each other giving rise to $.[28][29][30][31]
The U.S. dollar was introduced at par with the Spanish-American silver dollar (or Spanish peso, Spanish milled dollar, eight-real coin, piece-of-eight). The latter was produced from the rich silver mine output of Spanish America; minted in Mexico City, Potosí (Bolivia), Lima (Peru) and elsewhere; and was in wide circulation throughout the Americas, Asia and Europe from the 16th to 19th centuries. The minting of machine-milled Spanish dollars since 1732 boosted its worldwide reputation as a trade coin and positioned it to be model for the new currency of the United States.
Even after the United States Mint commenced issuing coins in 1792, locally minted dollars and cents were less abundant in circulation than Spanish American pesos and reales; hence Spanish, Mexican and American dollars all remained legal tender in the United States until the Coinage Act of 1857. In particular, Colonists' familiarity with the Spanish two-real quarter peso was the reason for issuing a quasi-decimal 25-cent quarter dollar coin rather than a 20-cent coin.
After the American Revolution, the thirteen colonies became independent. Freed from British monetary regulations, they each issued sd paper money to pay for military expenses. The Continental Congress also began issuing "Continental Currency" denominated in Spanish dollars. For its value relative to states' currencies, see Early American currency.
Continental currency depreciated badly during the war, giving rise to the famous phrase "not worth a continental".[40] A primary problem was that monetary policy was not coordinated between Congress and the states, which continued to issue bills of credit. Additionally, neither Congress nor the governments of the several states had the will or the means to retire the bills from circulation through taxation or the sale of bonds.[41] The currency was ultimately replaced by the silver dollar at the rate of 1 silver dollar to 1000 continental dollars. This resulted in the clause "No state shall... make anything but gold and silver coin a tender in payment of debts" being written in to the United States Constitution article 1, section 10.
After 1968 a series of revisions to the gold peg was implemented, culminating in the Nixon Shock of August 15, 1971, which suddenly ended the convertibility of dollars to gold. The U.S. dollar has since floated freely on the foreign exchange markets.
The one-dollar coin has never been in popular circulation from 1794 to present, despite several attempts to increase their usage since the 1970s, the most important reason of which is the continued production and popularity of the one-dollar bill.[42] Half dollar coins were commonly used currency since inception in 1794, but has fallen out of use from the mid-1960s when all silver half dollars began to be hoarded.
The U.S. dollar is joined by the world's other major currencies - the euro, pound sterling, Japanese yen and Chinese renminbi - in the currency basket of the special drawing rights of the International Monetary Fund. Central banks worldwide have huge reserves of U.S. dollars in their holdings and are significant buyers of U.S. treasury bills and notes.[67]
Foreign companies, entities, and private individuals hold U.S. dollars in foreign deposit accounts called eurodollars (not to be confused with the euro), which are outside the jurisdiction of the Federal Reserve System. Private individuals also hold dollars outside the banking system mostly in the form of US$100 bills, of which 80% of its supply is held overseas.
The United States Government is capable of borrowing trillions of dollars from the global capital markets in U.S. dollars issued by the Federal Reserve, which is itself under U.S. government purview, at minimal interest rates, and with virtually zero default risk. In contrast, foreign governments and corporations incapable of raising money in their own local currencies are forced to issue debt denominated in U.S. dollars, along with its consequent higher interest rates and risks of default.[71]The United States's ability to borrow in its own currency without facing a significant balance of payments crisis has been frequently described as its exorbitant privilege.[72]
Under the Bretton Woods system established after World War II, the value of gold was fixed to $35 per ounce, and the value of the U.S. dollar was thus anchored to the value of gold. Rising government spending in the 1960s, however, led to doubts about the ability of the United States to maintain this convertibility, gold stocks dwindled as banks and international investors began to convert dollars to gold, and as a result, the value of the dollar began to decline. Facing an emerging currency crisis and the imminent danger that the United States would no longer be able to redeem dollars for gold, gold convertibility was finally terminated in 1971 by President Nixon, resulting in the "Nixon shock".[82]
You must express the amounts you report on your U.S. tax return in U.S. dollars. Therefore, you must translate foreign currency into U.S. dollars if you receive income or pay expenses in a foreign currency. In general, use the exchange rate prevailing (i.e., the spot rate) when you receive, pay or accrue the item.
Note: The exchange rates referenced on this page do not apply when making payments of U.S. taxes to the IRS. If the IRS receives U.S. tax payments in a foreign currency, the exchange rate used by the IRS to convert the foreign currency into U.S. dollars is based on the date the foreign currency is converted to U.S. dollars by the bank processing the payment, not the date the foreign currency payment is received by the IRS.
To convert from foreign currency to U.S. dollars, divide the foreign currency amount by the applicable yearly average exchange rate in the table below. To convert from U.S. dollars to foreign currency, multiply the U.S. dollar amount by the applicable yearly average exchange rate in the table below. 2ff7e9595c
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