Editing Currency substitution (section)

{{Short description|Use of a foreign currency in parallel to or instead of a domestic currency}}
{{Use American English|date = February 2019}}
{{Use dmy dates|date=January 2022}}
{{More citations needed|date=January 2014}}
[[File:Foreign currency uses and pegs.svg|right|400px|thumb|Worldwide official use of [[:Category:Fixed exchange rate|foreign currency or pegs]]:
{{Legend|#006000|[[United States dollar]] users, including the United States}}
{{Legend|#00E000|Currencies pegged to the United States dollar}}
{{Legend|#0000FF|[[Euro]] users, including the [[Eurozone]]}}
{{Legend|#00A0FF|Currencies pegged to the euro}}
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{{Legend|#FFA000|[[Australian dollar]] users, including Australia}}
{{Legend|#808000|[[Indian rupee]] users and pegs, including India}}
{{Legend|#804000|[[New Zealand dollar]] users, including New Zealand}}
{{Legend|#FF0000|[[Pound sterling]] users and pegs, including the United Kingdom}}
{{Legend|#808080|[[Russian ruble]] users, including Russia and other territories}}
{{Legend|#400080|[[South African rand]] users ([[Common Monetary Area|CMA]], including South Africa)}}
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{{Legend|#800080|Three cases of a country using or pegging the currency of a neighbor}}]]
'''Currency substitution''' is the use of a foreign [[currency]] in parallel to or instead of a domestic currency.<ref>New estimates of U.S. currency abroad, the domestic money supply and the unreported Economy Edgar L. Feige September 2011.</ref>

Currency substitution can be full or partial. Full currency substitution can occur after a major economic crisis, such as in [[Ecuador]], [[El Salvador]], and [[Zimbabwe]]. Some small economies, for whom it is impractical to maintain an independent currency, use the currencies of their larger neighbours; for example, [[Liechtenstein]] uses the [[Swiss franc]].

Partial currency substitution occurs when residents of a country choose to hold a significant share of their financial assets denominated in a foreign currency. It can also occur as a gradual conversion to full currency substitution; for example, [[Argentina]] and [[Peru]] were both in the process of converting to the U.S. dollar during the 1990s.