For other uses, see Money (currency).
Money is any medium of exchange common and generally accepted by a society that is used for payment of goods (goods), services, and any liabilities (debts).
The money derives from the Latin word denarius (the currency used by the Romans). This is one of the breakthroughs in the history of humanity that allowed the emergence and expansion of large-scale trade.
Money is one common means for the exchange of goods and services in an economy in a simple and efficient. Therefore, for property can be described as money must meet the following three criteria:
Medium of exchange: to avoid the inefficiencies of a barter system. When a property is required for the sole purpose of using it to be exchanged for other things, has this property. For example, few people retain market tickets for collection. banks In contrast, most people keep them for the opportunity to exchange them whenever they want for other goods. Besides, the money should be a quite light and easy to store and transport.
Unit of account: When the value of a good is often loans used to measure global and compare the value of other assets when their value is used to denominate debts, says the well has this property. For example, if people in a culture is inclined to measure the value of things in reference to goats, the goats would be the primary accounting unit. financial A horse could cost 10 goats and a cabin about 45 goats.
Conservation value: When a property is purchased company with the aim of retaining the commercial value for future exchange, then is said to be used as a conservative value. In the former case, a goat would have a problem when serving as money, since it is a perishable commodity: eventually dies. Other materials, like gold and silver properties preserved despite the passage of time. It is a way of accumulation or hoarding. Money, as representative of wealth, has the power to buy any merchandise and can be stored in any quantity. In other words, the function of hoarding money can only perform full value: coins and gold bullion, precious stones, gold, etc.. The well chosen as a way of accumulation must be always something that can be stored for long periods without deterioration.
Besides the above, the money must be accepted and recognized by the society that uses it, allowing their identification and assessment of a clear and simple.
It should equity be noted that money, as we know it today (notes and coins without eigenvalue), must be endorsed trading or certified by the issuing institution. Currently it is governments, through laws, management that dictate what type of legal tender, but are other entities such as central banks (Central Bank) and Mint (Mint), which charge, the first, to regulate money and control the monetary policy of an economy, and second, to create notes and coins on demand and the need for physical money.
In summary we can say that money is an asset that serves as a neutral “platform” intermediate to exchange goods and services in society, thus avoiding the inefficiency of a market for direct exchange of goods and services.
History of money
Formerly, the common form of trade was barter system, exchanging goods and services directly by others. This system is very inefficient and we can see by the following example:
A breeder is dedicated to raising goats and need wheat to make bread. The person who grows wheat does not need a goat and thus direct exchange is not possible. A blacksmith if you want a goat to eat, but the farmer does not require tools made by the blacksmith, but the grower if you need tools for their work.
You can clearly see account from this example that we need a common bond that unites them all and to enable the exchange of all such goods and companies services. That nexus is money, which facilitates all those transactions in an easy and simple, banking thus favoring the expansion of trade.
We have seen in the example consumer above as did the need for money, but money that was used in the beginning is group not as we know it today, different civilizations have adopted different goods to make the function of money: wheat, barley, rice, shells, metals (gold, silver and precious stones ,…) until the alcohol has been used even for exchanges for other goods and services.
Over time, gold and silver were widely used as money because of its world-wide accepted value, ease of transport over other solutions because they are metals which retain commercial their properties over time.
For other uses, see Money (currency).