Top Ten Traded Currencies of the World

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Top Ten Traded Currencies of the World

Considering time differences around the world, chances are that you can trade currencies 24 hours a work-day in the American, European, or Asian markets. There are more than 190 countries in the world with currencies that can be traded, of course, subject to government restrictions.

The following list contains information about the share of these currencies in daily trading activities in foreign exchange markets as well as some interesting facts about the central banks that issue them. Note that volume percentages for all currencies should add up to 200 percent, because each transaction involves two currencies.

If you add the shares of the top ten currencies, you see that their cumulative share is about 181 percent. Therefore, the rest of the currencies in the world have a share of 19 percent in daily currency trading.

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Top Ten Traded Currencies of the World
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Top Ten Traded Currencies of the World
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The U.S. Dollar
Nearly 85 percent of the transactions in foreign exchange markets involve the dollar. Until the establishment of the Federal Reserve System in 1913, various currencies were issued in the U.S.

In the late 18th century and during the American Revolution, the Continental Congress printed its first paper money, known as continentals. But inflation was rapidly increasing and continentals were becoming worthless pretty quickly.

The First Bank of the United States established in 1791 was the first attempt to central banking, which was not well-received by a mostly agrarian electorate. When the bank’s 20-year charter expired in 1811, votes in Congress were not enough to renew it.

The Second Bank of the United States of 1816 had a similar story. The Free Banking Era (1836–1865) had state-chartered banks and unchartered “free banks,” issuing their own notes, redeemable in gold or specie. Following the financial panics of the late 19th and early 20th century, the American public was ready for a central bank. In 1913, President Woodrow Wilson signed the Federal Reserve Act into law.

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The Euro

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The Euro

Even though it was introduced in 1999, the euro became the second highest-traded currency in the world with a 39 percent share in daily transactions. Introducing a new common currency and a central bank that oversees this currency was not an easy task.

Imagine the German mark, the French franc, the Italian lira, and so on and how much organization would be required to get rid of them and replace them with the euro. Since the early 1960s, the central banks of the European Economic Community (EEC) had been trying to coordinate their monetary policies and promote price stability.

The Maastricht Treaty of 1992 put a long-contemplated idea on paper: a common currency. In 1998, the European Central Bank was established. The euro was introduced in 1999.

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Top Ten Traded Currencies of the World
3The Japanese Yen

The Japanese Yen
With a share of over 19 percent of the daily currency transactions, the Yen takes the #3 spot. The history of the yen goes back to 1871 when it was adopted officially as the Japanese currency by Japan's Meiji government. In 1882, the Bank of Japan was established under the Bank of Japan Act as the country’s central bank.

At the end of World War II, the Bank was reorganized in 1942 according to the new Bank of Japan Act. The Act of 1942 states the objectives of the Bank as regulating the currency as well as controlling and facilitating credit and finance to enhance the country’s general economic performance.

The Act of 1942 was amended several times after World War II and was completely revised in 1997 to reflect the modern principles of central banking: independence from fiscal authority and transparency.

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Top Ten Traded Currencies of the World
4 The British Pound

The British Pound
The British pound has a share of almost 13 percent in daily currency trades. The official name of the currency is pound sterling. As one of the oldest central banks in the world, the Bank of England was founded in 1694 to act as the government’s banker and debt-manager.

It began issuing notes the same year, where notes had a few lines of engraved text, promising to pay a specified sum at the Bank's premises with spaces for a handwritten date, number, signature, and the name of the payee. In 1734, the Bank moved to Threadneedle Street in London and is still located there today.

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