Gresham’s law says that legally overvalued currency will tend to drive legally undervalued currency out of circulation.

Gresham’s law


Gresham’s law is a monetary principle stating that “bad money drives out good.” It is primarily used for consideration and application in currency markets.

Gresham’s law was originally based on the composition of minted coins and the value of the precious metals used in them. However, since the abandonment of metallic currency standards, the theory has been applied to the relative stability of different currencies’ value in global markets.

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