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    Functions of Money

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    Yannah Hidalgo
    Money functions as a medium of exchange, measure of value, and store of value. It allows for easier business transactions when accepted in exchange for goods and services. Money provides a standard measure to compare the value of goods and services, and can be saved and used later while retaining its value over time. Characteristics of good money include durability, portability, divisibility, difficulty to counterfeit, and acceptability within a jurisdiction. While a global currency backed by precious metals could simplify pricing and currency exchange, establishing one remains challenging due to concerns over loss of independent local monetary policies. In the Philippines, coins up to 1,000 pesos and banknotes of any value are considered legal tender for debt repayment.

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    Functions of Money

    Uploaded by

    Yannah Hidalgo
    83 views2 pages
    Money functions as a medium of exchange, measure of value, and store of value. It allows for easier business transactions when accepted in exchange for goods and services. Money provides a standard measure to compare the value of goods and services, and can be saved and used later while retaining its value over time. Characteristics of good money include durability, portability, divisibility, difficulty to counterfeit, and acceptability within a jurisdiction. While a global currency backed by precious metals could simplify pricing and currency exchange, establishing one remains challenging due to concerns over loss of independent local monetary policies. In the Philippines, coins up to 1,000 pesos and banknotes of any value are considered legal tender for debt repayment.

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    Money (1)

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    Money functions as a medium of exchange, measure of value, and store of value. It allows for easier business transactions when accepted in exchange for goods and services. Money provides a standard measure to compare the value of goods and services, and can be saved and used later while retaining its value over time. Characteristics of good money include durability, portability, divisibility, difficulty to counterfeit, and acceptability within a jurisdiction. While a global currency backed by precious metals could simplify pricing and currency exchange, establishing one remains challenging due to concerns over loss of independent local monetary policies. In the Philippines, coins up to 1,000 pesos and banknotes of any value are considered legal tender for debt repayment.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    83 views2 pages

    Functions of Money

    Uploaded by

    Yannah Hidalgo
    Money functions as a medium of exchange, measure of value, and store of value. It allows for easier business transactions when accepted in exchange for goods and services. Money provides a standard measure to compare the value of goods and services, and can be saved and used later while retaining its value over time. Characteristics of good money include durability, portability, divisibility, difficulty to counterfeit, and acceptability within a jurisdiction. While a global currency backed by precious metals could simplify pricing and currency exchange, establishing one remains challenging due to concerns over loss of independent local monetary policies. In the Philippines, coins up to 1,000 pesos and banknotes of any value are considered legal tender for debt repayment.

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    © All Rights Reserved
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    Download as docx, pdf, or txt
    of 2

    Functions of money

    Money is any item that may be used in paying an obligation. History tells us that
    money has no specific form in early of part of human business interactions. Various
    objects have been used to represent value just to facilitate the commercial transactions.

    The following are the functions of money:

    1. Medium of exchange – this is the most important function of money. Through it,
    business transactions can be facilitated with much ease. People will generally
    accept money in exchange of goods they will deliver and/or services they will
    render.

    2. Measure of value – the use of money in business transactions removes the usual
    difficulties that the parties may encounter in barter trade. Both parties will know
    exactly the amount of money to give or to receive to consummate an agreement.

    3. Store of value – A person who received money as form of payment, may decide
    to keep it for a while and just spend it in the future knowing that the value of it will
    generally remain the same.

    Characteristics of Money
    The following are some of the important characteristics of money:

    1. Durable – after a period that the money is transferred from one person to
    another, it still retains its form and shape.
    2. Portable – it is easy to carry it from one place to another.
    3. Divisible – it can easily be divided into small increments making it easy to give
    the exact amount of payment up to the last centavo.
    4. Difficult to counterfeit – money that is easy to counterfeit will become worthless.
    Its function as a medium of exchange will be lost since no one will trust its
    intrinsic value anymore.
    5. Acceptable in a particular jurisdiction – generally, the creditor can be compelled
    to receive it as payment.

    Global currency
    Ideally, money must be backed with something of value, such as gold or silver.
    Its worth will be more meaningful, and its transferability will be enhanced. It would be
    nice if the world will have just one currency with such intrinsic value. If this happens, the
    prices of the commodities in various countries can be easily compared, and the hassle
    of converting different currencies will be eliminated.

    However, it remains a plan to have a global currency. Perhaps this is because of


    the fear of possible loss of independent local monetary policy 1 that will govern and
    address the economic problem in a particular country.

    Legal tender

    Legal tender is the currency which if offered as payment, in proper amount, by


    the debtor, the creditor cannot refuse to accept. In Philippines, “The maximum amount
    of coins to be considered as legal tender is adjusted as follows:

    1. One thousand pesos (P1,000.00) for denominations of 1-Piso, 5-Piso and 10-
    Piso coins; and
    2. One hundred pesos (P100.00) for denominations of 1-sentimo, 5-sentimo, 10-
    sentimo, and 25-sentimo coins.”2

    There is no limit on Philippine currency notes.

    XXX

    1
    “The primary objective of BSP's monetary policy is to promote a low and stable inflation conducive to a
    balanced and sustainable economic growth.” [http://www.bsp.gov.ph/monetary/overview.asp]

    2
    BSP Circular No. 537, Series of 2006, dated 18 July 2006

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