Currency, Foreign Exchange & DeFi Vocabulary

Vocabulary flashcards covering key terms from the lecture on currency types, foreign exchange markets, and decentralized finance.

Currency

A form of money that exists and is accepted within a specific geographic or economic area.

Global Reserve Currency

A currency—such as the U.S. dollar—that other countries hold in large quantities for international trade and reserves.

Major floating Currency

A widely used currency (e.g., dollar, euro, yen) that dominates global transactions and financial markets.

Emerging-floating Currency

The currency of a developing economy that is less widely held and can be more volatile than major currencies.

Currency Peg

A policy that fixes one currency’s value to another, reducing volatility but limiting domestic policy autonomy.

Currency Confidence

The level of trust market participants have in a currency’s stability, influencing its value and acceptance.

Fiat Currency

Government-issued money whose value relies on legal decree rather than physical backing (e.g., gold).

Cryptocurrency

A digital asset created and secured through blockchain mining instead of central-bank issuance.

Blockchain

A distributed ledger technology that records and secures transactions for cryptocurrencies and other digital assets.

Decentralized Finance (DeFi)

Blockchain-based financial services (e.g., on Ethereum) that operate without traditional intermediaries like banks.

Traditional Payment System

Centralized services—such as PayPal, Venmo, banks, and Visa—that facilitate electronic money transfers.

Foreign Exchange Market (FX)

The global marketplace for exchanging one currency for another.

FX Trading

Buying and selling currencies to profit from fluctuations in exchange rates.

Institutional Investor

A large organization (e.g., pension fund) that participates in the FX market for investment or hedging.

Corporation (FX Context)

A company that uses the FX market to manage payments and receipts from international trade or investment.

Retail Investor

An individual who buys or sells currencies on the FX market for personal investment purposes.

Equity Investor (International)

An investor who uses FX to settle purchases or sales of foreign stocks.

Fixed-Income Investor (International)

An investor who combines views on international bond markets with expectations about underlying currency movements.