Money is a specific form of goods, due to which it is possible to determine the equivalent value of a product or service. If you trace the history of their occurrence, it becomes obvious that the types of money were and are completely different. Currently, the currency has not so much a commodity as a “binding” type, which takes the form of a banknote. As a result, money is called upon to fulfill certain functions that characterize their essence. First of all, it is a method of accumulation, circulation, payment and a certain criterion of value.
In order to fully present the financial system of our time, which was formed and formed historically, it is necessary to consider the main types of money and their features. So, first of all, you should remember about commodity money. It is noted that they appeared as the very first type of exchange equivalent. Their species differed at certain times and among certain peoples. So, seashells, salt, tea, fish, ivory, animal skins, some common valuables (for example, spearheads) once served as commodity money. When civilization reached a higher level of its development, gold and silver coins began to play this role.
All types of money characterize this or that era. However, each of them had to meet the same requirements:
1. Possession of a relatively constant and high degree of value.
2. High prevalence.
As economic activity expanded, commodity money could no longer fully satisfy the economic demands of the market. Therefore, metallic ones appear. A person mastered certain crafts, therefore, lead, tin, iron, copper and, finally, silver and gold coins began to play the role of currency. The first of them date back to the 7th century BC.
Such types of money appeared because people needed a currency that was distinguished by ease of use, safe and convenient transportation, and a low degree of spoilage.
The next form that has appeared in everyday life is a symbolic currency. These are modern banknotes, the issue of which is fully in the competence of banks. This money has a certain value, which is determined by their quality, namely the degree of fulfillment of their functions and the level of recognition by their participants of payment processes. The level of their value is also determined by the extent to which the state allows their use as a legal means to pay taxes and payments throughout the country.
In general, paper money is a sign that completely replaced a full-fledged currency. They are an unsustainable equivalent because they are completely dependent on inflation. Very often, paper money depreciates because the purchasing power of the population decreases.
The last type is credit money, the emergence of which became necessary due to the development of credit relations. Today, this type of currency is the most popular method of calculation. Credit money determines the rights to property that are vested in individuals or legal entities.
The most striking example of this type of currency is the WebMoney system, which is so firmly rooted in our lives that it is hard to find someone who would not hear about it or use it.
There are such types of money as cash and non-cash. Moreover, the former include not only banknotes, but also some credit ones, for example, a bill, a check and a banknote. As for non-cash, they include credit card entries, especially plastic cards, credit cards and electronic money.