Introduction: The Nature Of Money

Money is a good, but if it is to function as a legal tender, all agents in the market must consent to use it as a vehicle of economic exchange. If such an agreement is reached, prices for other goods will be measured in terms of money, which is a surrogate for other goods and services. In this way, it makes possible the commercial exchange process and hence flows between final market users, nations and firms which again influences decisions to pay taxes or exit (Kosikowski et al., 2008; cabelkova and Strielkowski, 2013; Strielkowski and Cbelkova, 2015). Money is used for many purposes, except the basic one as a legal tender for which it is in common use.

People exchange their goods and services in terms of money, and they use that money to buy their necessary goods and services. All activities put this function of an exchange medium into practical operation. Labor is the form in which the worker exchanges his services into money. People sell or buy their goods in terms of money. This facilitates the process, making it relatively easy to go about business matters and favoring social production. Its function simplifies the exchange from barter deals (commodity for commodity) to a non-sweat-and-dry economy. Other functions of money are used as a form of measurement of value Because of the essential value concluding in the assessment of the value of goods, and also services, people hold the notion that money is a saving means of enabling holding value in future reference.

There is also an option that a person can hoard or save money and therefore, after a certain period of time has elapsed; use it for any transaction (Mansfield, 2002). The role of holding value is related to money stability. Houses, collections of stamps and interest-bearing deposits in banks can be mediums of holding value. In addition to its role and importance for the economy, money is also an element of social life. On the one hand, it determines human behavior because it is equivalent to everything that a human being needs in life. It gives rise to desires, a way of thinking, a lifestyle or consumption. It gives motivation to act. It invokes the desire to develop, to improve and to multiply measurable achievements. On the other hand, it then becomes the absolute value of people, but never in a positive phenomenology. In fact there is a phenomenon where money provokes the imposition of different social structures with new ones.

When in their search for wealth, this occurs in the context of bringing differences between many different social groups. This continues with social stratification regarding the ownership of their wealth, starting from power to influence and prestige. In this way, the power of money leads to the pathology of social relations. Money also carries information. Society learns about the financial situation of the State and institutions. Within the framework of the theory of money, the literature presents different opinions on the values ​​(properties) of money. In trying to synthesize those views, some universal characteristics from the point of view of knowledge about money should be drawn into account.

The stability of the purchasing power of money appears to be the most important characteristic of money. In practice, this means that the useful value acquired by money should not fluctuate too much over time. Money should also be denominated; this is when the same denomination has the same meaning in a given place, and this denomination cannot change from one place to another. Nevertheless, this does not mean that in other different places different denominations can mean differences in purchasing powers. For example, 50 kg of bread can be purchased using $10 in Libya, while 5 kg of bread will only be acquired at the same price in the USA. However, a ten-dollar bill will be the same ten-dollar bill—paper money. It must also be recognised and have a personality of its own, that is, an easily recognisable characteristic, which should help make counterfeiting more difficult. Money must also be divisible into smaller units to improve exchange and opportunities in creating value. Practically, it must be convenient and durable for the following: to carry; to keep; banknotes made of durable material.

Read Also:

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2. Demerits / Disadvantages Of Money
3. Money: Concept, Functions and Role
4. 5 Functions Of Money
5. Forms Of Money
6. Evolution Of Money
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