THE CONCEPT AND DEVELOPMENT OF MONEY

1. The word "money" was derived from the Latin word moneta, surname of the Roman goddess Juno.
2. Money is anything authorized by law to be generally accepted as legal tender. It is used as a medium of
exchange and a standard of value in payment of goods and services.
3. Barter was the system used by men to get the goods they wanted in exchange of what they had before
money was developed. It is the exchange of a good or service for another good or service. For example,
rice was traded for fish or meat; coconut was traded for sugar or coffee.
4. Coinage is the process of turning metals into coins with a fixed weight. The process is done in a mint.
Coin is an ingot of metal, the weight and fineness of which are certified by the integrity of the design on
its surface or by the power of the issuing authority. Only the government, specifically the central bank
of a country, is given the power to mint coins and print bills or paper money. In the Philippines, Bangko
Sentral ng Pilipinas, which has its own mint, is the only government agency solely vested with the power
to mint coins.
5. Other than paper, plastic/polymer is also used by some countries as currency. While it is more durable,
it has a permanent crease when folded and sticks together when wet.
6. Plastic money is a hard plastic card used for exchange transactions. They can be:
a. Credit card used like money, but with credit limits and accompanying charges. Amounts
charged to the card are paid at a later date.
b. Debit card also used like money, but the amount used is immediately deducted from the
account of the holder held with the bank issuing the card.
c. Prepaid cash card purchased from stores or financial institutions. It can be used like
money, but the card can only be used up to the amount paid upon purchase. This includes store cards,
gift cards, and gift certificates.
7. Barter exchange is a network of business owners who trade products and services to increase sales
and profits online. Barter exchange members are given a plastic card called barter card that is credited
with barter money or trade points plus a line of credit which the members use to purchase from the
exchange.
8. Money has several functions which inClude:
a. medium of exchange used to purchase goods and services;
b. standard of value used as the common denominator or basis for comparison of goods
and services;
c. store of value to be used in the future;
d. means of deferred payment to be used in the future in payment of debt or other
obligation; and
e. conveyance used to transfer ownership from seller to buyer.
9. Forms of money include:
a. commodity money cowries, wampums, cattle, and other items used as a medium of
exchange;
b. currency bills and coins issued by the government as a medium of exchange; and
c. check.
1. Personal check issued by individuals with checking/current account in a bank
2. Business check issued by businesses with checking/current account in a bank
3. Cashier's/manager's check purchased from a bank
4. Certified check -- personal or business check certified by the bank that funds are
available to pay the same
5. Bank draft also purchased from the bank, like cashier's or manager's check; it can
be:
a) sight or demand draft to be paid upon presentation;
b) time-draft to be paid at a future date;
c) traveler's check can be purchased from certain stores or financial
institutions generally used by travelers; and
d) money order can be purchased from the post office, certain stores, or
financial institutions that can be used like 'money for payment of any
obligation.

10. Other classifications of money:

a) Fiat/fiduciary money issued by the government without any gold or precious metal or dollar backup
and in which face value is higher than the material of which it is made of; also called fiat because money
is given value by a government edict or decree as the medium of exchange, which is legal tender
b) Representative money issued by the government backed by metal or dollar

11. Characteristics of a good medium of exchange:

a. Scarcity hard to find or rare that makes it valuable

b. Divisibility -- quality of being broken down into small units
c. Portability ease in handling or carrying
d. Durability -- quality of lasting long