What is Money?

They call it Shillings in Uganda; they call it Rand in South Africa; they call it Yen in Japan; they call it Pounds in Britain; and we call it Dollars in North America. What is it?

At a glance the answer to this question seems obvious. It’s money!

You would agree on coins and banknotes as money, but would you accept them from any country? I am sure you would be less willing to accept shillings than dollars. What about cheques, credit cards, bank drafts, money orders and gold? All these objects are accepted as money at one time or another. What is the origin, the function and the value of money?

Origin

All sorts of things have been used as money at different times in different places. These include

beads, cowries, salt and gold, among others. To this day many rich people in different parts of the world keep their wealth in the form of gold instead of national currencies that are prone to inflation. In complete contrast, a form of money with no tangible properties whatsoever is becoming popular. That is the electronic money.

It is almost impossible to define money in terms of its physical form or properties since these are so diverse. Therefore any reasonable definition should be based on its functions.

Money as a means of payment

Many societies had laws requiring compensation in some form. Bridegrooms paid for brides in order to compensate the head of the family for the loss of a daughter’s services. Rulers imposed…