Modern money, like banknotes that were in circulation many years ago, is a kind of conditional product. It is he who is the general equivalent for everything, a measure of the price of a wide variety of goods and services. It is an essential part of the economy of each country and the world as a whole. The basic functions of money express their essence as an economic category, their internal basis and content.
The most important function that they perform is their application as a measure of value. In this case, money expresses the price of absolutely all goods. However, it should be noted that the goods are commensurate with labor, which is expended directly on their production. At the same time, the value of the product, expressed in money, is usually called the price.
Money also acts as a medium of circulation. So, during the circulation of goods, money must necessarily be present in reality. The circulation of products takes place according to this scheme: first the goods are sold (T), that is, they are converted into money (D), which are then spent on the necessary goods (T '). In fact, this scheme represents commodity and monetary relations: T-D-T '. Thus, banknotes play the role of an intermediary and allow you to overcome the various borders that are present in case of exchange of goods for another product.
Any money can act as a means of accumulation and savings. Since they are the universal equivalent, the embodiment of wealth, it is quite natural that this encourages people to accumulate them. In this case, money is extracted from commodity-money circulation.
They received widespread distribution as a means of payment. They are used when there is a need for the sale of goods on credit, that is, by installments. In this case, there is no counter movement of goods and money, repayment of the loan (debt) is the last stage in the process of sale. Performing this function, modern money is increasingly presented in non-cash form.
Also another feature that is endowed with money is their use as a means of payment and purchase. They act as world money. They are used in settlements on international balances.
Modern money is usually divided into the following types:
- natural or commodity (in their quality they allocate goods that are endowed with usefulness and value: livestock, furs, jewelry);
- secured money (in this form (signs, certificates) they can be exchanged for a certain amount of goods);
- fiat (implies a discrepancy between their face value and real, however, at the state level they are a means of payment: banknotes, non-cash money);
- credit money (basically these are securities by means of which a debt obligation is specially drawn up and through which purchases can be made).
Modern money in the course of its evolution for many centuries has been studied and considered by various schools and their representatives, in connection with which it is customary to distinguish the following theories of money:
- metal (its followers saw the main function of money as a measure of value and opposed the addition of other metals to coins);
- nominalistic theory (involves the determination of the value of money by their nominal value, in connection with which their function as the universal equivalent was denied and the function of the medium of circulation was supported);
- monetary theory (it was believed that the market establishes the purchasing power of funds and prices for goods, and the entire mass of money issued must be in circulation);
- Keynesian theory (John Keynes believed that with a change in income level the speed of money movement also changes);
- synthetic theory (combines the elements of monetarism and Keynesianism, which should be based on a well-built fiscal and monetary policy of the state).