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There are many ways to measure an exchange rate. The most common way is to measure a bilateral exchange rate. A bilateral exchange rate refers to the value of one currency relative to another. Bilateral exchange rates are typically quoted against the US dollar (USD), as it is the most traded currency globally.

There are four main types of exchange rate regimes: freely floating, fixed, pegged (also known as adjustable peg, crawling peg, basket peg, or target zone or bands ), and managed float.

There are 4 major types of Money : Commodity Money. Fiat Money. Fiduciary Money. Commercial Bank Money.

One can classify currencies into three monetary systems: fiat money, commodity money, and representative money, depending on what guarantees a currency's value (the economy at large vs. the government's physical metal reserves).

Currencies are quoted in relation to another currency. For example, when we refer to the exchange rate of the euro (the currency of the European Union) to the U.S. dollar we quote the relationship, or exchange rate, as EUR/USD.

Exchange rate quotations can be quoted in two ways ? Direct quotation and Indirect quotation. Direct quotation is when the one unit of foreign currency is expressed in terms of domestic currency. Similarly, the indirect quotation is when one unit of domestic currency us expressed in terms of foreign currency.

Classification of Money There are four categories of money. They are fiat money, commodity money, fiduciary money, and commercial bank money.

The term currency refers to the tangible form of money that is paper bills and coins. It's used as a medium of exchange that's accepted at face value for products and services as well as for savings and the payment of debt.

Nondepository institutions include insurance companies, pension funds, securities firms, government-sponsored enterprises, and finance companies. There are also smaller nondepository institutions, such as pawnshops and venture capital firms, but they are much smaller sources of funds for the economy.

State and Federal Charters The Office of the Comptroller of the Currency (OCC) charters national banks; the state banking departments charter state banks. In addition, the Office of Thrift Supervision (OTS) chartered federal savings banks and savings associations.