Money Definition

conomics offers various definitions for money, though it is now commonly defined by the functions attached to any good or token that functions in trade as a medium of exchange, store of value, and unit of account. Some authors explicitly require money to be a standard of deferred payment, too [1]. In common usage, money refers more specifically to currency, particularly the many circulating currencies with legal tender status conferred by a national state; deposit accounts denominated in such currencies are also considered part of the money supply, although these characteristics are historically comparatively recent. Other older functions a money may possess are a means of rationing access to scarce resources, and a means of accumulating power of command over others.

The use of money provides an alternative to bartering, which is often considered to be inefficient because it requires a coincidence of wants between traders, and an agreement that these needs are of equal value, before a transaction can occur. The efficiency gains through the use of money are thought to encourage trade and the division of labour, in turn increasing productivity and wealth.

number of commodity money systems were amongst the earliest forms of money to emerge. For example

• the shekel referred to a specific volume of barley in ancient Babylon
• cowries were used as a money in ancient China and throughout the South Pacific.
• salt was used as a currency in pre-coinage societies in Europe.
• ox-shaped ingots of copper seem to have functioned as a currency in the Bronze Age eastern Mediterranean.
• state certified weights of gold and silver have functioned as currency since the reign of Croesus of Lydia, if not before.
• rum-currency operated in the early European settlement of Sydney cove in Australia