Mrs.C.Jayashree Assistant Professor Ethiraj College for Women Chennai

2. Assistant Professor
Ethiraj College for Women
Chennai
Mrs.C. JAYASHREE

3. MONEY
• The word “Money” is derived from the Latin
word “Monet”
• Money is anything which is used as a medium
of exchange
• Money is an economic unit that functions as a
generally recognized medium of exchange for
transactional purposes in an economy.
• Money was developed according to the needs
& requirements.

4. Stages of Evolution of Money
• Barter System - Commodity
Money
• Metallic Money
• Paper Money
• Credit Money
• Electronic Money
• Cyrptocurrency- Bitcoin

5. Barter system- Commodity Money
• In the beginning of civilization the needs of
people were very limited and therefore they used
to exchange their goods with other people’s
goods or services.
• Barter is possible only if the wants of the people
are very few, area of exchange is limited and
people are living a very simple life.
• Goats , animal-hides, axe-heads, knives, arrows,
slaves etc., have been used as money in
different forms to perform the basic functions
of money.

6. • It was difficult to borrow and lend and it was more
difficult to measure and store the value of goods and
services.
• There were many difficulties associated with barter
system like storing , Durability, Transportation,
Divisibility, etc.,
• So gradually this system of exchange was replaced with
metallic money system of exchange.
Barter system- Commodity Money

7. Metallic money
• Money made of metal is called metallic money.
• In the beginning the pieces of gold and silver
were used as full bodied coins but latter on these
were replaced with token coins.
• Both uncoined and coined metals were used as
medium of exchange.
• uncoined metallic money faced many difficulties
like weight & Value.
• To solve this problem the metallic coins used with
specific weight and shape.

8. Metallic money
Metallic Money can be:
• FULLBODIED MONEY
Face value is equal to its intrinsic value
TOKEN MONEY
Face value is Higher than its intrinsic
value

9. Paper money
• To overcome the difficulties of Metallic money,
Paper money was discovered.
• In the 19th century commercial banks started
issuing their own notes of different colors and
denominations.
• In the beginning the paper money was fully
convertible into full bodied gold coins.
• Now almost all the countries issue currencies
according to the monetary requirements of the
economy and government provides securities for
issuance of currency.

10. Paper Money can be :
• Representative Paper Money
It is a money which is fully backe by equivalent metallic
reserves.
• Convertible Paper Money
Money can be convertible into coins on demand.
• Fiat Money
Not convertible into Gold or Silver on demand and it is
accepted & declared as legal tender by the authority.
The intrinsic value of the Fiat money is Nil

11. Credit money
• In the present day bank money is used for
making personal business payments.
• Transactions are taking place with the help
of deposits or checking accounts with paper
money.
• Demand deposits or money sited in current
accounts are easily convertible cash,
therefore they are convenient and safe.

12. Electronic money
 TODAY, The invention of computer and its
application, the form and shape of business are
changing fast.
 The mode of payment is being transformed
from cash to electronic transaction from one
account to another.
 This form of electronic payment is referred to
as electronic money.

13. BITCOIN
• Bitcoin is a crytocurrency invented in
2008 by an unknown person or group of
people using the name Satoshi Nakamoto
and started in 2009 as a opensource
software..
• It is a Crytocurrency and a digital
payment system
• The system is peer to peer and
transactions takes place between users
directly without an intermediary.

14. BITCOIN
• These transactions are verified by network nodes and
recorded in a public distributed ledger called a
blockchain.
• Since the system works without a central repository
or single administrator, bitcoinis called the first
decentralized digital currency.
• It is a digital asset designed to work in peer -to-peer
transactions as a currency.

15. Evolution of money has not come to an end, it will, never
come to an end..
• As economies of the world are
changing features and shapes, money
is also changing with the due course
of time.
• Globalization of the anomies and
expansion of e-commerce has given
new dimension to modes of payment
and has angled the nature and
features of money.

16. FUNCTIONS OF MONEY

17. PRIMARY FUNCTIONS
MEDIUM OF EXCHANGE
MEASURE OF VALUE

18. SECOUNDARY FUNCTIONS
STANDARD OF DEFFERED PAYMENT
STORE OF VALUE
TRANSFER OF VALUE

19. CONTIGENT FUNCTIONS
DISTRIBUTION OF INCOME
BASIS OF CREDIT
GENERAL FORM OF CAPITAL
MAXIMUM SATISFACTION

20. OTHER FUNCTIONS
• LIQUIDITY FUNCTION
• BEARER OF OPTION
• GUARANTOR OF THE
SOLVENCY

21. 1. Monetary Economics - M.L.Jhingan
2. Monetary Economics - R.R.Paul
3. www. Wikipedia.com
References