Money: Its Type and Function

Short Notes on Money - All You Need to Know

Introduction: 

In general use, which we use to pay for things are referred to as meaning. But the definition of money is still an unresolved issue of financial economics. Through the meaning of a concept which still lacks absolute transparency in scientific terms. 

There are two approaches to defining money – 

1. Empiricists Approach 
2. Traditional Approach 

• In Empiricists approach, money is a complex phenomenon. It does not define itself in the deposits of the currency and the bank's eggs, but includes a host of financial assets such as time deposits with government securities, bonds, banks and equity shares, which serve as a store of value. 
• In the traditional approach, money is considered an object which is generally acceptable in return for the money paid for goods or services. Traditional approach is based on two criteria one is its general acceptability and its functional aspects. 

Static Functions of Money: 

• As a standard of deferred payment. 
• As a medium of exchange. 
• As a store of value. 
• As a measure of value of unit of account. 

Dynamic Role of Money: 

• It influences the process of the general process and operates a very active and high-end part of the financial system. Whether it comes from the state of motivation or the fall of the general level of value that comes from the common people, its size and effectiveness of money can be increased. 
• Money can make it possible to have financial planning as effective application of micro-level and macro level physical planning. 
• Money refers to the drained assets on productive channels and there is the impact of productive income, employment, expenditure and, consequently, the large economic welfare of the community. 

Near Money: 

There are various financial resources to preserve a modern community value. Meaning all resources are the most liquid. They talk about half-money or near-money. 

The following items are generally considered as near money – 

1. Savings bonds and certificates. 
2. Bill of exchange. 
3. Cash-surrender values of life insurance policies. 
4. Re-purchasable shares in saving and loan association. 
5. Bankers’ acceptance. 
6. Deposits of building societies. 
7. Negotiable credit instruments. 
8. Time deposits and saving deposits with commercial banks and other banks. 
9. Traveler cheques. 
10. Shares of joint stock companies. 
11. Guiled Securities and all other refundable and marketable government securities. 
12. Shares of investment trusts. 
13. Postal saving deposit 
14. Savings in units of unit trust.