USD, EUR, CHF & Co.: How Do International Currency Codes Actually Come Into Being?

USD, EUR, CHF & Co.: How Do International Currency Codes Actually Come Into Being?

Clear identification of over 300 different currencies worldwide is crucial to the smooth functioning of financial transactions around the world, and this means that standardized currency codes are needed. Read in this article how they come into being and who determines them.

We encounter the currency abbreviations USD, EUR, and CHF constantly in everyday life, and most people know that they stand for the US dollar, the euro, and the Swiss franc, in that order. But how do currency codes come into being in the first place?

What Is ISO 4217?

The ISO 4217 standard creates clarity and minimizes errors regarding the designation of currencies. It establishes a uniform international format for currency codes. The codes normally consist of three characters. The standard covers all of the world’s currencies, starting with the Afghan afghani (AFN) and stretching all the way to the Zambian kwacha (ZMK). Two of the most well-known codes worldwide are EUR, for the euro, and USD, for the US dollar.

What Are the Rules for Assigning Currency Codes?

Currency codes are assigned in accordance with a clearly defined structure. The first two letters of the code refer to the country name while the third letter, wherever possible, corresponds to the first letter of the currency name. A good example is the code CHF for the Swiss franc: CH corresponds to the two-letter ISO country code for Switzerland, and the F symbolizes the franc. An example of an anomalous abbreviation is UYI, for the peso en unidades indexadas in Uruguay, or EUR, for the euro. Many deviations are observable in Central and South America, which has to do with the fact that this region frequently introduces new currencies.

Alongside the alphabetic codes, there is also a three-digit numeric code for each currency, which proves to be very useful particularly when currency codes are employed in countries that do not use Latin scripts. Wherever possible, the numeric currency code is the same as the three-digit ISO numeric country code. The code 840, for example, stands for the USA and thus also for the US dollar.


Who Issues the Currency Codes?

SIX is the national numbering agency for Switzerland, the Principality of Liechtenstein, and Belgium. At the same time, SIX is the official maintenance agency for all currency codes under ISO 4217 and is thus the world’s only recognized authoritative source on currency code designations. SIX provides these services on behalf of the International Organization for Standardization (ISO) and its Swiss member, the Swiss Association for Standardization (SNV). SIX maintains the code lists, updates them, and makes them available online free of charge.

Show More
Show Less

How Does a New Currency Code Come into Being?

It’s not every day that a new currency gets introduced. So, let’s run through the process of generating a code using a fictional example that is well-known, at least to film lovers. The 2014 movie “The Grand Budapest Hotel” from cult director Wes Anderson is set in the imaginary country of Zubrowka in eastern Europe. The film actually even makes mention of the country’s currency: the klübeck.

The code for that currency would come into existence through close cooperation between the government of Zubrowka and SIX, the official maintenance agency for currency codes. Following the normal procedure, the two-letter alphabetic country code for Zubrovka – most likely ZU in this case – would predetermine the first part of the currency code. Then a K for klübeck would be added to that. This way, the currency code for this country would be ZUK under the ISO standard. That code, incidentally, would still be available today. If it were already taken, alternatives such as ZBK, for instance, would have to be contemplated.

Why Are Standardized Currency Codes Necessary?

The global world of finance would be inconceivable without internationally standardized currency codes. Those codes make it possible to unambiguously identify currencies, and they contribute to ensuring the supply of capital in the corresponding countries and to securing efficiency in financial markets.