evolution of money

1. UNIT 1 SESSION 1 DEFINITION OF MONEY & ITS VARIOUS FORMS
 LEARNING OBJECTIVE
Will be able to describe the origin, characteristics & functions of
money ,
 CONTENTS FOR THE TOPIC:
-Origin of Money
-Functions of money
-Qualities of money
-How money derived its value?
-Forms of Money
-Fungibility of money

2. ORIGIN OF MONEY
• Early History,
• Barter System,
• Cattle as measure of wealth
• Beads, Ivory,yarn,grains
• Advantage of grains as money
• Precious metals made of gold and silver
• Lydians – first to use precious metals as money -550 BC
• 39O BC-Rome won war against Gauls, by grace of Moneta- Goddess of warning
• Money derived from Moneta
• Alexander attacked Persia – converted gold stocks into gold coins
• 1 gold coin= 10 silver coins
• Paper Money- China using deer skin -200 years later Europe used paper money
• British War-1651 AD-1662AD-Common man depositing valuables with goldsmiths
• Who issued receipts used as money-Bank of England authorised to issue paper
currency
• In India- RBI issue paper currency- 5 Rs. and above
• Paper money earlier backed by gold .1816- Britain adopted gold standard- E
urope adopted later.USA adopted in j1900. During world War-1914-18 ,
Britain abolished Gold Standard – Europe and USA abolished later USA in 1973.

3. BANK MONEY
• To supplement paper money a new type of money known as bank money or
credit money was created by banks.
• It is in the form of cheques, drafts, bills of exchange.
• It is accepted as legal tender.
• It is safe and convenient and is used in the present economy for all
transactions.

4.  Functions of Money
 Store of Value
 Common measure of value
 Medium of exchange
 Unit of accounting and deferred payment
 Qualities of Money
 Durability, Portability, Divisibility, Acceptability, Relatively scarce availability
 Fungibility- Quality of goods or commodity whose individual units are capable of
mutual substitution- Eg- Crude oil, shares in demat form.
 Fiat Money- Money thaty derives its value through regulation of law as legal
tender

5. SUMMARY
In this Session we have learnt:
the origin, characteristics & functions of
money ,
 In the Next session we will discuss:
the origin, different phases of growth of
banking,