The hardest currency, its main characteristics
We often hear the phrase, “Keep your money in hard currency; this will help protect your savings from exchange rate risks.”.
And this is not without reason: over 20 years, the Ukrainian hryvnia's exchange rate has fallen eightfold against major world currencies, and a similar picture is observed for other weak currencies.
Even high interest rates on deposits cannot compensate for exchange rate losses; the only solution is to use hard currency to store savings.
But which currency is the most stable? It turns out it's not the euro, but the most popular US dollar.
The hardest currency in the world
In the constantly changing financial world, currency stability is of great importance. The Swiss franc .
This is no coincidence, as Switzerland is known for its stable economic situation, reliable banking system and strict monetary policy.
A historical overview and the current state of this currency show that the Swiss franc has long been a stable currency. During both world wars, when most currencies were devalued, the Swiss franc remained steadfast.
Today, despite the challenging global economic situation, the Swiss franc continues to maintain its position as one of the most reliable currencies. Its value has strengthened significantly since 2021.
The main reasons for the stability and reliability of the Swiss franc are related to Switzerland's economic policy and its image as the "World's Safe".
Firstly , Switzerland has a strict monetary policy that is aimed at preventing inflation.
Secondly , Switzerland is known for its reliable banking system, which attracts investors from all over the world.
Finally, Switzerland's economy is one of the most stable in the world, which contributes to the strengthening of the Swiss franc.
Thus, the world's strongest currency—the Swiss franc—is the result of Switzerland's strict monetary policy, robust banking system, and stable economy. This makes it attractive to investors and maintains its stability even in volatile times.
The pros and cons of the hardest currency
Using the hardest currency has its advantages and disadvantages. Among the advantages are:
- Stability and low inflation make it attractive for long-term savings.
- The ability to be used as a global reserve, which ensures confidence in the currency.
However, there are some drawbacks. Specifically, the interest rate is not high; not long ago, the Swiss franc had a negative interest rate, meaning you had to pay the bank for holding money in this currency. This has now changed, and the interest rate on the franc is +1.75% per annum.
Another important aspect is Switzerland's anti-money laundering policy, which requires it to regularly issue new banknotes and withdraw old ones from circulation. Exchange times are limited, and to exchange expired banknotes without loss, you'll have to travel to Switzerland.
Alternative hard currencies
In addition to the above-mentioned currency, there are also alternative options, from which the US dollar should be immediately excluded, since it is quite risky to use this currency for long-term investments today.
- Singapore dollar
- AEO Dirham
- Norwegian krone
Besides traditional currencies, I'd highlight Tether Gold whose price is tied to the price of gold. And according to its developers, Tether Gold is backed by physical gold.
The easiest way to purchase Tether Gold or XAUT is through cryptocurrency brokers .
