Artificial Currency Unit

Summary of Artificial Currency Unit

An international standard of value created by a multilateral agreement. An artificial currency unit (ACU) is not a currency in the conventional sense in that it cannot be used to settle private transactions. An ACU is given a value in terms of a basket of various national currencies in fixed or variable proportion. Unlike national currencies, which are created to settle domestic accounts, ACUs are designed purely for the settlement of international transactions be-tween official bodies. Although created by official international bodies as reserve assets, ACUs, defined as a mixture of the currencies of major trading nations, tend to be more stable than any single currency. For this reason, some major banks offer accounts and borrowing facilities denominated in terms of the largest ACU, SPECIAL DRAWING RIGHTS (read this and related legal terms for further details), and European currency units.

The European Monetary System is considered here.

(Main Author: William J. Miller)