Money surrounds people everywhere. This is a specific product, which serves as an equivalent for estimating the value of other goods and services. Everything can be exchanged for money. This is the only object that is created in order to get rid of it sooner or later. A kind of financial asset is used to make sales transactions. Without money, it is impossible to imagine life in a civilized society. But in fact once they did not exist at all.
When did the money appeal?
Money in its classical form arose spontaneously. Even in ancient times, there was a commodity circulation. People exchanged things and food. When there were surplus goods, there was a need for a special asset, which, upon admission, could be exchanged for a particular commodity. Such an asset was just the money. The main functions of money are precisely in circulation for the purpose of exchanging goods between consumers.
The main property of money for a long time was considered absolute liquidity. They can be completely exchanged for a product or service. At different times and in different countries precious metals, feathers, cocoa beans, cattle were used as money. Only in time people became clear that it is better to make money with constant weight and in a certain form. Thus, the coins that have become customary for many arose. Metal was the most suitable for manufacturing a financial asset. It was easy to handle and had good wear-resistant characteristics. The types and functions of money have changed over time. But their form has survived from a long time. This is a round coin or a piece of paper.
The very first coins that were used as financial assets, appeared in China in the XVII century BC. From the alloy of silver and gold, money was made. The functions of money were to exchange them for goods and services. Thus, barter was replaced by financial turnover. Paper money appeared much later, also in China. It was in this country that paper appeared for the first time. The first money was a receipt for precious metals and stones, which were surrendered to special stores for storage.
The essence of money
Money is the main component of the economy of any society. The financial relations of representatives of individual countries could not be adjusted without a special asset. The solvency of an individual or society as a whole expresses money. The essence and functions of money are closely related. The main nature of financial assets is that with their help you can assess the quality and relevance of a particular product or service.
Today, money is the universal equivalent. With the help of barter, of course, you can get the necessary goods. But you will not be able to accumulate assets. It is no coincidence that in ancient times a monetary turnover appeared, from which the division of society into classes began. It is money that divides people into the poor and the rich. The types and functions of money determine the development of the society in which they revolve.
In a market economy, money and their functions are constantly changing. Exchange rates depend on the events that occur in a particular society, natural disasters. One kind of money can be strengthened or fall in relation to another kind. Despite this, the sphere of use of money increases every year. There are new types of financial assets. A vivid example can be electronic money, through which you can pay for the same goods and services or increase your capital.
The main types of money
All kinds of money can be divided into two large subgroups. This is commodity finance and symbolic. More specific types and functions of money may depend on the society in which they apply. Proceeding from the fact that they arose due to the need for commodity exchange, the main type is commodity finance. Money is a commodity that can evaluate the value of all other goods and services. For a long time precious stones and metals were used as commodity money due to their properties.
Today, full-value money is used, the value of which fully corresponds to the actual value of the metal. Metal coins are produced in various denominations. Thus, it is much easier to pay for a particular product. The coin has established external signs. Money is made in a certain form, with a specific pattern.
Goods also include paper money. The types and functions of money in this format do not differ from coins. They were created to save metal. Paper is much cheaper. But in today's society, it is almost impossible to forge banknotes. They are produced in a special way by state enterprises. Dyes and paper of the highest quality are used. The difference between the real and nominal value of paper money is enormous. Thanks to this, the emissive income of the state treasury is formed. Money can cover the budget deficit.
Paper financial assets are of a special economic nature. They are almost always unstable. A fixed fixed rate can not exist. The issue of money is not regulated by turnover. That's why inflation takes place.
The total amount of services received, contracts and obligations entered into are all credit money. The essence, functions, types of this financial asset determines the agreement of the two parties. In any case, the essence of the loan is the return of money with interest. Credit finance can be issued in the form of banknotes, electronic money, bills or checks.
Separately it is necessary to allocate credit cards. They are the key to the bank account on which the money is located. The essence and functions of money of this kind are the same as those of other types of credit finance. The only difference is that the loan agreement is issued once. There is an opportunity to withdraw money from the account unlimited number of times within the limits provided by the bank. The only thing you need to do is make a monthly minimum payment.
Money as a measure of value
Money is for today the only tool of economic relations in any society. The functions of financial assets can not be realized without the participation of people. By setting prices, the value of a good or service is determined. In simple terms, the price is the value of a certain object in monetary terms.
Money performs an ideal function of a measure of value. In the modern world, banknotes of various denominations are issued. Thanks to this, you can set the most accurate price for a particular product. In these conditions, barter is losing its relevance.
Along with this, the function of circulation of money as a measure of value is performed virtually. After all, in order to determine the value of the goods and hang a price tag on it, real financial assets are not needed. The seller sets the price on his own, in his mind. Similarly, in order to find out the value of a good or service, it is not necessary to have real money. All you need to do is to learn the price tag or price.
Measuring the cost of various services and goods can be compared with measuring the distance in meters. The monetary unit serves as a scale. Thus, the value of individual resources, services and benefits is determined. Prices in a separate market can be formed under the influence of a huge number of contracts for the sale of goods and the provision of services. The more the demand for a separate object of the economy grows, the faster its cost increases. It turns out that the main functions of money are closely related. The functioning of financial means as a measure of value can not be carried out without real money turnover. Thus money act not only as a means of circulation, but also in the form of a means of payment.
Functions of money as a medium of circulation
Only real money can be used as a medium of circulation. The functions of money consist in the simultaneous circulation of goods and financial resources. The seller receives monetary assets, and the buyer at the same time becomes the owner of the desired product. In this case, the transaction is considered genuine only if there are relevant documents. When buying real estate or expensive objects is a contract of sale. Shops with small goods use checks.
In the world economy, all the functions of money are important. The means of circulation must necessarily be realized. If the seller does not enter into an agreement with the other owner on the proceeds of finance, the money will lose its value. Crisis phenomena in the economy are generated by the disruption of the chain of sale. It is the inability to realize the function of money as a means of circulation, which has become the impetus for the appearance of paper financial resources. The amount of money did not meet the need for financial circulation. In connection with this history, there are many cases of serious economic crises. In order for the function of the medium of circulation to be realized in full force, each commodity should be given an equivalent value with the weight part of this or that precious metal.
More correctly perform the function of money, as a means of circulation, metal coins. In this case, it should be taken into account that today metal for the production of coins is not of the highest quality. Money is erased, losing its initial weight. To ensure that the function of money continues to be performed correctly, low-quality coins must be disposed of in a timely manner.
Money is a means of payment
For most people who do not understand economic nuances, money fulfills the function of payment in the first place. In this case, the buyer can not necessarily pay for the goods immediately. The function will be implemented even if a loan agreement is drawn up. Often there are cases when the goods have already been paid for, but the owner can not use it yet (making furniture to order). At the same time, money also acts as a means of payment. To pay taxes, rent housing, wages, employees also need financial resources. In this, the functions of money are expressed. The means of payment can be either real or virtual. Electronic money has recently become more and more in demand. People buy goods through the Internet, pay for services through special services. It is not necessary to have a certain amount of money in your wallet. The main thing is to have an account opened in the bank.
With the function of money as a means of payment, there is another possibility of an economic crisis. Especially it became relevant with the development of the credit sphere. It often happens that the payer does not have the funds at the time of the end of the loan agreement. He can not fulfill his financial obligations. At the same time, many goods owners buy goods from each other on credit. Insolvency of one subject of the economy leads to insolvency of another. A vivid example are banking institutions. If one client can not pay the money on the loan, the financial institution will not be able to return the deposit funds to another client.
Money as a means of accumulation
Financial assets that do not participate in the turnover and are not used as payments can become an object of accumulation and augmentation of wealth. What functions carry out money, people understood from ancient times. But it was not always possible to implement them correctly. Accumulating wealth, many simply depreciated money. Inflation, economic crisis, military actions can lead to the fact that huge wealth will lose its value.
To accumulate money at home is inexpedient. In ancient times people kept treasures and gold coins in chests. Thus, the money was left without movement, withdrawn from the commodity turnover. To increase wealth in this way did not work. Correctly comes the one who does not store money, but lets them into economic turnover. A reasonable entrepreneur who spends a certain amount on the development of his business, only increases money. The functions of money, as a means of accumulation, are at the same time fully realized.
The accumulation of money today is an indispensable condition for the development of any production. At the same time, the state functions normally, inflation does not hit the pockets of citizens. All money and their functions are closely related. Finance - as a means of circulation - can simultaneously act as a means of accumulation. The main thing is to approach the issue of accumulating money intelligently.
What is world money?
The development of the country is impossible without international economic relations. What functions are performed by money, all heads of state should understand. In this case, each individual country can have its own currency. In the world market many monetary units lose their force. If the state does not have high economic development, its currency will not be in demand.
On the international market most often used are the currencies of individual developed countries (US dollar). In addition, artificially created currencies can be used. A bright representative is the euro. World money and its functions are closely related to the finances that operate within a particular state. The only difference is that the money turnover occurs at the international level. In the international market as sellers and buyers can act not only individual states, but also private organizations and structures.
Modern monetary system
To date, paper money is widespread. The functions of money determine the degree of development of a particular state. If they are fully implemented, the economic crisis is avoided.
Modern paper money has its own distinctive features. First of all, this is the abolition of the gold content. Paper can not act as an equivalent to a precious metal. Gold has left the international settlement system.
Over the last several decades, the monetary system has been characterized by a reduction in cash capital and an increase in the amount of electronic money. At the same time, the gold of its monetary functions is practically not being fulfilled today.
What functions of money would not be provided, they are necessarily regulated by the appropriate state body. From his work depends the financial condition of the country as a whole and its position on the international market.