Evolution of money

M WASEEM 3509 SAQIB RIAZ 3519

M USMAN 3529 M

RIZWAN 3513 M SHEHZAD 3507

HASSAN ALI 3517 M AMMAR

3540

TOPIC OF PRESENTATION

EVOLUTION OF

M

ONEY

MONEYMoney is any thing which is used as a medium

of exchange.

EVOLUTION OF MONEY

The word “money” is derived from the Latin word “Monet”

The origin of money is lostHunting society, skin of wild animals were

used as moneyPastoral society used livestock Agriculture society used grain and foodsThe Roman used cattle and salt.

EVOLUTION OF MONEY

Money was developed according to needs & Requirements.

Main aim was to remove the shortcomings of the Barter System.

DIFFERENT STAGES OF EVOLUTION OF MONEY

1. COMMODITY MONEY2. METALIC MONEY3. PAPER MONEY4. CREDIT MONEY5. ELECTRONIC MONEY

1. COMMODITY MONEY

When different commodities were used as a medium of exchange (BARTER SYSTEM)

Cow , Goats, Axes, Dried Fishes etc were used as medium of exchange.

1. COMMODITY MONEY Commodity money had different problem

like:1. Storing Problem2. Durability problem3. Transportation problem4. Divisibility problem

2. METALLIC MONEYThe next step in the evolution was the discovery of precious metals like Gold, Silver, Copper.

“ Metallic Money consist of coins made of Gold, Silver, Copper or nickel as a mode of payment.”

2. METALLIC MONEYUnCoined MetalsMetals were not used as a coin but as a

Bullion.This created the problem of measuring the

weight & Value.Supply of money also became problem when

the mines were fully used up or new mines were discovered.

2. METALLIC MONEYCoined Metals.As a next step, standard coins were created.They had a standard weight & value.Problem of un coined metals dissolved by the

use of coined metals.

2. METALLIC MONEYMetallic money can be: FULLY BODIED

Whose Face Value is equal to the value of metal contained in it.

TOKEN MONEYIts Face Value is Higher than Intrinsic Value (Value of Metal)

3. PAPER MONEY

3. PAPER MONEYWhen paper currency was introduced as a

mode of payment.Originated as a receipt issued by Goldsmiths.These receipts were then later on used for

payments.Difference in the value of receipts was

becoming a problem then.

3. PAPER MONEYPAPER MONEY Refers to the Notes issued by the State or

by the Bank, usually the Central bank. Paper Money can be:1. Representative Paper Money.2. Convertible Paper Money.3. Fait Paper Money.

3. PAPER MONEYRepresentative Paper Money.

It is that money which is fully backed by equivalent metallic reserves.

Convertible Paper MoneyWhich is convertible into coins on demand.

Fait Paper MoneyWhich is not redeemable or convertible into Gold or Silver on demand. It is accepted because it is declared legal tender by the issuing authority and has general acceptance as a medium of exchange. The intrinsic value of Fait money is Nil.

4. CREDIT MONEY

4. CREDIT MONEY

Includes Bank money (different instruments offered by the Banks.)

Cheques, Drafts, etc are examples.Convenient, Safe and easily convertible into

cash.Its like Near Money.

5. ELECTRONIC MONEY

5. ELECTRONIC MONEYElectronic money (also known as e-money, electronic cash, electronic currency, digital

money, digital cash or digital currency) refers to money or scrip which is exchanged only

electronically. Typically, this involves use of computer networks, the internet and digital

stored value systems.

CHARACTERISTICS OF MONEY

CHARACTERISTICS OF MONEYGeneral Acceptability.Stability of Value.Transportability.Storabilitydivisibility.