USD or the United States dollar derives from the Spanish 8 reales coin which was composed of just under one ounce of silver. This coin was popular among American colonists, who called it the Spanish dollar, the name having derived from a German coin of similar size and composition known as the thaler. The first dollar coins issued by the United States Mint were of the same size and composition as the Spanish dollar and even after the American Revolutionary War the Spanish and U.S. silver dollars circulated side by side in the United States.
The USD uses the decimal system, consisting of 100 cents. In another division, there are 1,000 mills or ten dimes to a dollar; additionally, the term eagle was used in naming gold coins. However, only cents are in everyday use as divisions of the dollar; "dime" is used solely as the name of the coin with the value of 10?, while "eagle" and "mill" are largely unknown to the general public, though mills are sometimes used in matters of tax levies and gasoline prices. When currently issued in circulating form, denominations equal to or less than a dollar are emitted as U.S. coins while denominations equal to or greater than a dollar are emitted as Federal Reserve notes. (Both one-dollar coins and notes are produced today, although the note form is significantly more common.) In the past, paper money was occasionally issued in denominations less than a dollar (Fractional Currency) and gold coins were issued for circulation up to the value of twenty dollars.
USD coins are produced by the United States Mint. U.S. dollar banknotes are printed by the Bureau of Engraving and Printing, and, since 1914, have been issued by the Federal Reserve. The "large-sized notes" issued before 1928 measured 7.42 inches by 3.125 inches; small-sized notes, introduced that year, measure 6.14 inches by 2.61 inches.
Notes above the $100 denomination ceased being printed in 1946 and were officially withdrawn from circulation in 1969. These notes were used primarily either in inter-bank transactions or by organized crime; it was the latter usage that prompted President Richard Nixon to issue an executive order in 1969 halting their use. With the advent of electronic banking, they became less necessary. Notes in denominations of $500, $1,000, $5,000, $10,000, and $100,000 were all produced at one time; see large denomination bills in U.S. currency for details.
Dollars are also used as the standard unit of currency in international markets for commodities such as gold and oil. Even foreign companies with little direct presence in the United States, such as the European company Airbus, list and sell their products in dollars, although some argue this is attributed to the aerospace market being dominated by US companies.
At the present time, the U.S. dollar remains the world's foremost reserve currency, primarily held in $100 denominations. The majority of U.S. notes are actually held outside the United States. Economist Paul Samuelson and others maintain that the overseas demand for dollars allows the United States to maintain persistent trade deficits without causing the value of the currency to depreciate and the flow of trade to readjust.
Not long after the introduction of the euro (?; ISO 4217 code EUR) as a cash currency in 2002, USD began to steadily depreciate in value on the international scene. After the euro started to rise in value in March 2002, the U.S. trade and budget deficits continued to increase. By Christmas 2004 the dollar had fallen to new lows against all major currencies, especially its rival the euro. The euro rose above $1.36 /? (under 0.74 ?/$) for the first time in late December 2004, in sharp contrast to its lows in early 2003 (rate of $0.87/?). Beginning in late May into early June though the Dollar rose sharply against the Euro as European states reported stagnation in the overall European Union economy and doubts were raised over the EU Constitution which was voted down in two member states, France and The Netherlands. As unemployment rates rise in the Euro zone and economic growth slows the EU may see a drop in the value of the Euro against USD.