Why are some countries' currencies “weaker”?
1:30 is not stronger than 1:79. These are just numbers. Trading 1:120 in 2008 and 1:79 now vs. trading 1:31 in 2008 vs 1:30 now is much better criteria to look at to evaluate the strength of the currency, and if you look at that you can see that the Japanese Yen is significantly stronger than the Bhat. While Yen gained 25% to its worth, Bhat gained nothing over the same period of time. You can also see that the Yen was very consistent, while Bhat was volatile over that period. "The answer from littleadv perfectly explains that the mere exchange ratio doesn't say anything. Still it might be worth adding why some currencies are ""weak"" and some ""strong"". Here's the reason: To buy goods of a certain country, you have to exchange your money for currency of that country, especially when you want to buy treasuries of stocks from that country. So, if you feel that, for example, Japanese stocks are going to pick up soon, you will exchange dollars for yen so you can buy Japanese stocks. By the laws of supply and demand, this drives up the price. In contrast, if investors lose faith in a country and withdraw their funds, they will seek their luck elsewhere and thus they increase the supply of that currency. This happened most dramatically in recent time with the Icelandic Krona." "You may as well ask why a piece of wood is 25 centimeters long but only 10 inches. Most units of measure are very arbitrary. Somebody decides that this amount of heat or distance or money is a convenient unit, and so that's what they use. Suppose that tomorrow the government issued a whole new currency that had 10 times the value of the old currency. So if you used to make 10,000 foobars a year, now you make 1,000 new foobars. And likewise the price of everything you buy is divided by 10. If a certain model car used to cost 2,000 foobars, now it costs 200 new foobars. Are you better or worse off? Clearly if ALL prices change by the same percentage, then it makes absolutely no difference. (Aside from the hassle of making the switch and getting used to the new numbers.) A currency where 1 unit of money buys more is not necessarily a ""stronger currency"". Any more than inches are ""better"" than centimeters because you get more wood for an inch than you get for a centimeter. A currency is said to be ""strong"" when it's value is stable or increasing relative to other currencies. If yesterday I could trade 10 foobars for 1 plugh, but today I only need 9 foobars to buy 1 plugh, then foobars are stronger than plughs. Even though I still need more foobars than plughs to buy the same item."
The Euro is a common currency between various countries in Europe.  This means that individual countries give up their traditional sovereign control of their own currency, and cede that control to the EU. Such a system has many advantages, but it also means that individual countries cannot deal with their unique situations as easily.  For instance, if the US were a part of the EU, then the Fed couldn't issue $600B the way they are to bolster the economy. The danger to the Euro is that countries will withdraw their participation in order to micromanage their economies more effectively.  If a major country withdraws its participation, it could start a domino effect where many countries withdraw so that they too can manage their economies more effectively.  As more countries withdraw, a shared currency becomes less and less appealing. I think you are asking a few questions here. Why is gold chosen as money? In a free market there are five characteristics of a good money: Gold and silver meet all five characteristics.  Diamonds are not easily divisible which is why they are not normally used as money.  Copper, Iron, and lead are not scarce enough - you would need a lot of these metals to make weekly or daily purchases.  Paper is also way too plentiful to be used as money. By the way, historically silver has been used for money more than gold. How does international trade work with gold as money (is this what you are asking with your hypothetical example of 10 countries each with y amount of gold?) Typically a government will issue a currency that is backed by gold.  This means you can redeem your currency for actual gold.  Then when an American spends 5 US dollars (USD) to purchase a Chinese good the Chinese man now owns 5 USDs.  The Chinese man can either redeem the 5 USD for gold or spend the 5 USD in the US.  If a government issues more currency then they have gold for then the gold will start to flow from that country to other countries as the citizens of the other countries redeem the over-issued currency for gold.  This outflow of gold restricts governments from over-issuing paper currency. Who creates the procedures and who supervises them in modern worldwide economy? The Federal Reserve, IMF, and Bank of International Settlements all are involved in the current system where the US dollar (see Bretton Woods agreement) is the reserve currency used by central banks throughout the world.  Some think this system is coming to an end.  I tend to agree. My experience is from travelling in Central Europe and Germany, so I've dealt with much smaller amounts of money, but the general principles are the same. Many Visa-brand ATM cards allow you to withdraw money from European ATMs for a 1% fee (plus any fees the bank may charge, my bank charged zero fee) in local currency.  Even if the bank charges a 2-3% fee, the combined max 4% fee is going to be a lot smaller than most currency exchange places will offer.  There are a lot of exchange offices that are built to scam tourists out of their money.  We had no choice but to use one that ended up taking around 10% of the exchanged money (luckily we were only exchanging a small amount of currency).  Call your bank and ask what their fees are, and if they are large, find a bank with small or zero fees and move your accounts there.  Be sure to notify your bank that you are going to be travelling for an extended time in a foreign country.  Literally any ATM (Geldautomat) accepted our card (thank you VISA).  We literally walked off the plane with some USD and no foreign currency, and were able to stop at an ATM right outside our hotel (the taxi had a card reader, as most in Munich did). If you have a source of income secured within the country (which I am hoping you do if you will be living there) you could live off of your income, and use your USD to pay off things like credit card bills.  Get a Travel Rewards Credit Card (or similar card that offers no foreign transaction fees or free currency transfers).  Use this card for anything and everything you can, and pay it with a transfer from your US bank account.  Under this method you'll probably have to convert some currency, but you can do so from an ATM easily enough. Absolutely.  It does highly depend on your country, as US brokerages are stricter with or even closed to residents of countries that produce drugs, launder money, finance terror, have traditional difficulty with the US, etc. It also depends on your country's laws.  Some countries have currency controls, restrictions on buying foreign/US securities, etc. That said, some brokerages have offices world-wide, so there might be one near you.  If your legal situation as described above is fortunate, some brokers will simply allow you to setup online using a procedure not too different from US residents: provide identification, sign tons of documents.  You'll have to have a method to deliver your documentation in the ways you'd expect: mail, fax, email. E*Trade is the best starter broker, right now, imo.  Just see how far you can go in the sign-up process. "You're acting like my comments are inconsistent. They're not.  I think bitcoin's price is primarily due to Chinese money being moved outside of China. I don't think you can point to a price chart and say ""Look, that's the Chinese money right there, and look, that part isn't Chinese money"". That's what I said already." Some countries are considering stocking up on gold to shore up their notes.  (Or so I heard)  If this happens, gold will obviously become more rare.  The price will then be valued not only by the buying and selling of it but also by the forced rarity of it. It would make their garbage look better as compared to other sovereigns, they will re-bundle the toxic assets it into some crap alphabets and try to make them look as good as Treasuries and sell them. Hence the synchronous downgrades of China, Hongkong, Britain [Monetary Policy Inflexibility](https://en.wikipedia.org/wiki/Economic_and_Monetary_Union_of_the_European_Union#Monetary_policy_inflexibility) &gt;Since membership of the eurozone establishes a single monetary policy for the respective states...  without the possibility to print money as an easy way out.  Italy's options are privatization, austerity, and shifting the burden on to the taxpayer.