Money. What first comes to mind when you hear this word? Banknotes, coins, bank accounts? But money is a much more complex phenomenon than it seems at first glance. It is not only a means of payment. But also a symbol of economic power, a tool of influence and a measure of value. There are 180 official currencies in the world. Each of which has its own history, advantages and disadvantages. But how much money is there in the world: from cash to cryptocurrencies? This question is worth considering in more detail.
Physical money: cash you can touch
How much cash is there in the world?
Cash is the most obvious form of money that we hold in our hands, put in our wallets. Or see at checkouts every day. It feels real, tangible, unlike the digital records in bank accounts. According to 2023 estimates, the total amount of cash in circulation is about $40 trillion. That’s an impressive number, but it’s just the tip of the iceberg. Most of the world’s money exists in the form of digital records that we can’t see or touch. Cash remains a symbol of stability and accessibility. Especially in countries where the internet and banking services have not yet become ubiquitous.
How is cash distributed between currencies?
Cash is distributed unevenly between different currencies. And this distribution reflects the economic power of countries. The US dollar occupies a leading position. About 60% of all cash in the world is denominated in dollars. This is due to the fact that the dollar is the world’s reserve currency. It is used for international settlements, trade and investments. The euro, yuan, yen and pound sterling are also among the most popular currencies. But their share is much smaller. The euro accounts for about 20% of world cash, and the yuan – only 2-3%.
But there are also lesser-known currencies that are used only within a single country or region. Ugandan shilling, the Lao kip, or the Paraguayan guarani. These currencies have limited circulation and are used mainly for domestic payments. Did you know that in some countries, such as Zimbabwe (a country in Southern Africa ). Cash has practically lost its value due to hyperinflation, and people are forced to use foreign currencies. Such as the US dollar or the South African rand?
Interesting fact about cash
Did you know that most cash exists in the form of high-denomination banknotes that are rarely used in everyday life? For example, a 10,000 Swiss franc note or a 10,000 Singapore dollar note. Such banknotes are intended for large financial transactions. But due to their value, they rarely find their way into the hands of ordinary citizens.
In Switzerland, for example, the 1,000-franc note is the largest denomination. But most people have never held one. It is used mainly for large transactions between banks or for storing money. In Singapore, the $10,000 note was even withdrawn from circulation due to money laundering risks.
Another interesting fact: in many countries there are collector or anniversary banknotes that are issued in limited editions and have high artistic value. In Canada there is a banknote with a holographic image that changes at different angles. And in Australia they issued a banknote with a transparent window that protects it from counterfeiting.
Digital money: the invisible economy
Most money is numbers on screens
The modern world is increasingly relying on physical money. About 90% of all money in the world exists as digital records in bank accounts. This means that when you transfer money from card to card. You are not moving physical bills. But only changing numbers in a database. Digital money has become the basis of the modern economy, and its share continues to grow.
This shift to digital money has been made possible by advances in technology. Banking systems, mobile apps, and online platforms allow us to make transactions instantly. Even if we are on the other side of the world. But have you ever wondered if those “numbers” on the screen are more than just an abstraction? They have real value that impacts our lives, the economies of countries, and global markets.
How do banks create money ?
One of the most interesting aspects of the modern economy is how banks create money. When you take out a loan, the bank doesn’t actually give you any money. It just adds numbers to your account. This process is called “credit issuance,” and it’s the primary source of growth in the world’s money supply.
Here’s how it works: When you deposit money, the bank keeps only a small portion of that money (called a “reserve”) and uses the rest to lend to other customers. This way, the same amount of money can “work” for several people at the same time. This is called the “bank multiplier,” and it’s thanks to this mechanism that the amount of money in the world is constantly growing.
But this process also has its risks. For example, if too many people want to withdraw their deposits at the same time. The bank may be unable to meet its obligations. That is why central banks exist to regulate this process and ensure the stability of the financial system.
Electronic payments and cashless transactions
Countries like Sweden or China are actively moving towards cashless payments. In Sweden, for example, only 1-2% of the population uses cash. Shops, cafes and even churches accept payments via cards or mobile apps. In China, the popularity of services like WeChat Pay and Alipay has reached such a level that even street vendors use QR codes for payments.
Technologies like Apple Pay or Google Pay make payments fast and convenient. You can pay for your purchases with a single tap on your smartphone or watch. But they are also changing the way we think about money. Did you know that every payment you make with your card leaves a digital trail that can be traced?
This opens up new possibilities for analyzing consumer behavior, but it also raises privacy concerns. For example, banks and financial institutions can use this data to personalize offers or assess creditworthiness. But who else has access to this data? And how can it be used?
Investments and financial markets: money that “works”
What are financial markets?
Financial markets are where money “works.” They are a vast system that connects millions of people, companies, and institutions around the world. Stocks, bonds, derivatives, and funds are all forms of “working” money that circulate in these markets.
For example, when you buy shares of a company. You become a partial owner of it. You’re not just investing money, you’re participating in its development and receiving a portion of the profits in the form of dividends. Bonds, on the other hand, are debt obligations. When you buy a bond, you’re essentially lending money to a government or company. Which agrees to pay it back with interest.
The total value of financial markets is hundreds of trillions of dollars. For example, the stock market alone is valued at over $100 trillion. And if you add to this the markets for bonds, derivatives, and other instruments, the amount becomes even larger. This shows that financial markets are a major source of capital for the economy.
How do investments affect the economy?
Investors put money into businesses, which in turn create new products, services, and jobs. In this way, money becomes the engine of economic growth. For example, when a startup receives investment, it can expand production, hire more employees, or develop a new product that will change the market.
But investing is not just about making money. It is also about risk. Did you know that the volume of financial markets is tens of times greater than the volume of physical money? This means that most of the money in the world exists in the form of “financial assets” that can lose their value due to economic crises, political instability, or other factors.
During the 2008 financial crisis, many investors lost billions of dollars due to the collapse of the real estate market and banking assets. But, on the other hand, it is precisely investments that help the economy recover from such crises. When investors believe in the future, they put money into new projects, which stimulates economic growth.
Cryptocurrencies: money of the future or a fashion trend?
What are cryptocurrencies?
Cryptocurrencies like Bitcoin, Ethereum, or Cardano are a new type of money that exists only in digital form. They do not have a physical form like banknotes or coins. But have a real value that is determined by supply and demand in the market.
Cryptocurrencies are based on blockchain technology, which provides decentralization and transparency. The blockchain is essentially a huge database that stores information about all transactions. This database is not controlled by any institution or state, which makes cryptocurrencies independent of traditional financial systems.
Bitcoin, the first and most famous cryptocurrency, was created in 2009 by an anonymous developer (or group of developers) under the pseudonym Satoshi Nakamoto. Its main idea was to create a currency that was independent of banks or governments.
Total cryptocurrency market capitalization
The cryptocurrency market is a dynamic and volatile world. At its peak in 2021, the total cryptocurrency market capitalization reached over $3 trillion. This was the period when Bitcoin reached an all-time high of around $69,000 per coin.
However, the market capitalization is currently around $1-1.5 trillion. This is due to price fluctuations, regulatory restrictions, and economic uncertainty. In 2022, the market experienced a major crash due to the bankruptcy of major crypto exchanges such as FTX, which caused a loss of investor confidence.
Can cryptocurrencies be considered “money”?
This issue remains a subject of debate. Some countries, such as El Salvador, have recognized Bitcoin as an official currency. In 2021, El Salvador became the first country to allow the use of Bitcoin to pay for goods and services on par with the national currency.
However, most countries are still skeptical about cryptocurrencies. China has completely banned the use of cryptocurrencies, while the European Union and the United States are introducing strict regulations to control this market.
The main arguments against recognizing cryptocurrencies as “money”:
Energy consumption: Mining cryptocurrencies, especially Bitcoin, requires huge amounts of electricity, which raises concerns about environmental impacts.
Volatility: Cryptocurrency prices can change by tens of percent in a matter of days, making them an unreliable means of storing value.
Lack of centralized control: This can be an advantage. But also a disadvantage, as it makes it more difficult to combat crime such as money laundering or terrorist financing.
National debt and money printing
What is public debt?
National debt is the amount of money a country’s government has borrowed from domestic or foreign creditors to finance its spending. These spending may include infrastructure construction, social programs, defense, or even paying off previous debts.
The total amount of public debt in the world is over $300 trillion. This is an impressive figure that reflects the scale of the financial obligations of countries. For example, the United States has the largest public debt in the world – over $30 trillion. Japan, China and the countries of the European Union also have significant debt obligations.
But why do governments borrow at all? Sometimes it’s the only way to secure funding for important projects, especially when tax revenues are low. However, a large debt can become a serious problem. If the country’s economy is not growing fast enough to pay it off.
How do central banks “print” money?
When the economy needs a boost, central banks can issue new money. This process is called “money issuance” or “money printing.” During the COVID-19 pandemic, many countries resorted to massive money issuance to support the economy.
Here’s how it works: The central bank buys government bonds or other assets on the open market, thereby increasing the amount of money in circulation. This money then goes to banks, which can make loans to businesses and individuals. This stimulates economic activity because people and companies have access to additional funds.
However, “printing” money has its risks. If the issue is too large, it can lead to inflation — rising prices for goods and services. After massive money issuance during the pandemic, many countries faced significant inflation. Which reduced the purchasing power of the population.
Interesting facts about money
The largest banknotes in the world
Money can be not only a means of payment. But also a collectible or historical artifact. The 100 trillion Zimbabwean dollar bill became a symbol of the hyperinflation that hit Zimbabwe in the late 2000s. In 2008, inflation in the country reached incredible levels – millions of percent per year. This led to prices rising by the hour, and people carrying money in their bags to buy even basic goods.
This bill is no longer in use. But it has become a popular souvenir among collectors. It can be bought at auctions for a few dollars, an ironic contrast to its face value.
But Zimbabwe is not the only example. In the 1940s, Hungary issued a note with a denomination of 1 sextillion pengo (that’s a number with 21 zeros!) due to hyperinflation after World War II. This is the largest denomination of a banknote in history.
Countries that are abandoning cash
The world is gradually moving towards cashless payments, and some countries are already taking big steps in this direction.
Norway: In this country, most banks no longer accept cash, and many stores refuse to accept it. Even charities are switching to digital donations.
Sweden: This country is one of the leaders in going cashless. Most shops, cafes and even churches only accept payments via cards or mobile apps. According to the National Bank of Sweden, only 1-2% of transactions in the country are made using cash. Even street beggars use QR codes to collect donations!
China: Cashless payments have become the norm in China, thanks to the popularity of WeChat Pay and Alipay . These platforms allow you to pay for everything from coffee to apartment rent with a single tap of your smartphone. Even in rural areas, people are actively using digital payments.
India: After demonetization in 2016, when the government removed large currency notes from circulation, the country has been rapidly moving towards digital payments. The state-owned UPI platform allows for instant transfers between banks, making financial transactions much easier for millions of people.
Money is just a tool
Money is not an end in itself, but a means to an end. It reflects our work, dreams, and ambitions. But true wealth is something that cannot be bought.
Types of money in the world
| Type of money | Examples | Volume (trillions of dollars) | Features |
|---|---|---|---|
| Cash | US dollar, euro, yuan | ~40 | Physical medium, limited volume. |
| Digital money | Bank accounts, electronic payments | ~90 (share of total money supply) | The foundation of the modern economy is the speed of transactions. |
| Financial markets | Stocks, bonds, derivatives | ~100 (stock market) | Money “works,” but there are risks. |
| Cryptocurrencies | Bitcoin, Ethereum, Cardano | ~1.5 (market capitalization) | Decentralized, volatile, promising. |
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