Why is the choice of a settlement currency important?

Because the choice of international currencies is mainly a market-driven process, money's functions as a medium of exchange and a unit of account tend to predominate over its function as a store of value and to lead to the use of a single international currency or, at most, several international currencies. To explain this phenomenon, consider that modern portfolio theory suggests that—in order to diversify their risks—investors will typically choose to hold a wide range of international currencies as assets, with the particular quantities of each currency depending upon their respective risk and return characteristics. Consequently, if the choice underlying the international use of currencies depended exclusively on asset motives, many currencies would be held and there would be no reason why the dollar should dominate investors' portfolios. Over the past twenty-five years or so, for example, deutsche mark-denominated assets and yen-denominated assets have provided considerably higher returns—in terms of nominal yields plus capital appreciations—than have dollar-denominated assets. Yet the dollar is the dominant international currency.

Some reasons are as follows:

• Local & global compliance.
• Easier payment mode.
• Gain or loss from currency value fluctuation.

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Because when choosing economically unstable currency harm you and your customers during banking transactions if the accelerated rise or fall suddenly by the exchange, and therefore prefers not work in the currency of the semi-fixed and economically strong

Choosing specific payment methods is one thing that’s crucial when you implement payments on your website. You decide to include your customers’ favorites, naturally, and those you can afford. In the end the whole business has to be profitable. Still, entangled in all these musings, it is quite easy to forget about another factor: the currency