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Money
From Wikipedia,
the free encyclopedia
Money is anything that is generally accepted as payment for goods and
services and repayment of debts. The main functions of money are
distinguished as: a medium of exchange, a unit of account, a store of
value, and occasionally, a standard of deferred payment.
Nearly all contemporary money systems at the national level are fiat money
systems. Fiat money is without value as a physical commodity, and derives
its value by being declared by a government to be legal tender; that is,
it must be accepted as a form of payment within the national boundaries of
the country, for "all debts, public and private". By law, the refusal of a
legal tender (offering) extinguishes the debt in the same way acceptance
does. Some bullion coins such as the Australian Gold Nugget and American
Eagle are legal tender, however, they trade based on the market price of
the metal content as a commodity, rather than their legal tender face
value (which is usually only a small fraction of their bullion value).
The money supply of a country is usually held to consist of currency
(banknotes and coins) and 'deposit money' (the balance held in checking
accounts and savings accounts). These demand deposits usually account for
a much larger part of the money supply than currency. Deposit money
is intangible and exists only in the form of various bank records. Despite
being intangible, deposit money still performs the basic functions of
money, as checks are generally accepted as a form of payment and as a
means of transferring ownership of deposit money.
More generally, the term "price system" is sometimes used to refer to
methods using commodity valuation or money accounting systems.
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