The World of Money and Banking
Money is an abstract value or item that normally accepted as payment for services and products and repayment of debts, including interests, in a given economy or socio-economic context. Money, unlike money benefits from its age-old bartering system. This value may be expressed numerically in terms of cash, which represents a definite quantity of goods or services that are bought or sold, or in terms of monetary units (denominated by weight), which represent the actual value of money. It is a standard unit of measurement in the international financial market. The various types of money are listed under the following sections.
Mediums of exchange include currency (both foreign and domestic), bank checks, bills, coins, and stamps. Medium of exchange facilitates the transactions between buyers and sellers in the market-determined money. Money, which may be a bill, a coin, a bank check, or a traveller’s cheque, usually travels from one place to another on the basis of an agreed exchange rate between two countries or between any number of countries. When these exchanges are made between different points of the world, they are called cross transactions.
Deferred payment takes place when goods or services are bought or sold on a deferred date for a fixed price. Money, which can be the purchase of goods or services or a loan, is usually transferred in terms of a deferred payment over a period of time so as to provide consumers with the right to purchase goods or services when they require them at a later stage. The transfer of money is typically made between two countries through the central banks of the countries.
Cryptocurrency are a special type of money that are based on an agreement between two entities. A digital asset like a token or virtual currency can be traded and exchanged easily over the Internet. There are currently seven recognized virtual currencies including Dash, Doge, Zcash, Lite, Peci, Monero, and Dooble. These currencies are traded and exchanged on the same general marketplaces as regular currencies but with less risk of fraud and higher efficiency through speedy transfer.
Fiat money substitutes are used in most modern societies and are usually referred to as legal tender. Fiat money substitutes are issued by central banks on the basis of their depositors’ deposits in the bank. Fiat money substitutes are issued by governments in the form of either bills of currency or coins. Fiat money substitutes are backed by government reserves in order to back up the currency. These guarantees are usually backed by the country’s gold reserves.
In order to understand the relationship between MONEY and its many forms, it is useful to first explore the world of finance and the different types of transactions that take place throughout the process. By knowing the various types of currency, you will be better able to understand the various relationships between monetary currency and other financial instruments. A basic understanding of money and banking will give you a much deeper appreciation for how these services and products come to be. You may even find that you enjoy engaging in money transactions and investing because you know more about how they work.