Monetary systems are the frameworks that countries use to manage their money supply and facilitate economic transactions. They determine how money is created, distributed, and regulated. Common types of monetary systems include fiat money, where the currency has value because the government maintains it, and commodity money, which is backed by physical goods like gold or silver. These systems play a crucial role in shaping a nation's economy. They influence inflation, interest rates, and overall economic stability. Central banks, such as the Federal Reserve in the United States, oversee these systems to ensure that the economy runs smoothly and that the value of money remains stable.