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Modern Money

Modern money takes various forms and serves important economic functions. It includes currency like paper notes and coins issued by central banks, as well as non-physical forms like bank deposits and central bank reserves. Unlike commodity-based currencies of the past, modern money derives its value from government regulation rather than precious metal content. It facilitates transactions through features like durability, divisibility, and uniformity across units. Emerging digital technologies may further transform how money is created and exchanged in the future.

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773 views7 pages

Modern Money

Modern money takes various forms and serves important economic functions. It includes currency like paper notes and coins issued by central banks, as well as non-physical forms like bank deposits and central bank reserves. Unlike commodity-based currencies of the past, modern money derives its value from government regulation rather than precious metal content. It facilitates transactions through features like durability, divisibility, and uniformity across units. Emerging digital technologies may further transform how money is created and exchanged in the future.

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julia1212marshmellow
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Modern Money

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Presented by Yuliia Kalashnikova
Definition of Modern Money

Modern money is any item or medium of exchange


that symbolizes perceived value. It is accepted by
people for the payment of goods and services, as
well as the repayment of loans. Modern forms of
money include currency - paper notes and coins.
Unlike the things that were used as money earlier,
modern currency is not made of precious metals
such as gold, silver, and copper. The basic form of
money is numbers while the basic form of currency
is paper banknotes, coins, or plastic cards like credit
or debit cards.
Types of Modern
Money

Currency: This includes paper notes and coins issued by the central bank of a country.
Bank Deposits: In addition to currency, bank deposits are counted as part of the money
holdings of the public. Most money in the modern economy is in the form of bank deposits.
Central Bank Reserves: These represent an IOU from one sector of the economy to another.
Fiat Money: These are the notes and coins backed by a government.
Commodity Money: A good that has an agreed value.
Fiduciary Money: Money that takes its value from a trust or promise of payment.
Commercial Bank Money: Credit and loans used in the banking system.
Electronic Cryptocurrencies: Digital or virtual currency that uses cryptography for security.
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Main Features of
Modern Money
Durability: Money can withstand
Medium of Exchange: Money is used wear and tear and last for a long
to purchase goods and services. It time.
facilitates transactions, making trade Divisibility: Money can be divided
easier. into smaller units to facilitate
Unit of Account: Money serves as a transactions.
way to measure value. Uniformity: Every unit of money is
Store of Value: Money provides a the same, making it easy to
means for people to store value. It recognize and value.
serves as a standard for economic Limited Supply: The value of money
transactions. is maintained over time by ensuring
Portability: Money can be easily a limited supply.
transported from one place to Acceptability: Money is recognized
another. and accepted by all parties involved
in a transaction.
The Future of Money

End of Cash Rise of Cryptocurrencies


Increasing use of credit ryptocurrencies like Bitcoin and
cards, mobile payment Ethereum are gaining
apps, and online popularity as a new form of
banking. money.

Digital Innovation Financial Inclusion


New financial Digital money has the potential
technologies are to increase financial inclusion by
transforming the world providing access to financial
of finance. services for people who are
currently unbanked or
underbanked.
Conclusion

In conclusion, modern money, in its various forms, plays a crucial role in


our economy. It serves as a medium of exchange, a unit of account, and
a store of value. The evolution of money from physical currency to digital
forms, including cryptocurrencies, is a testament to the innovation and
adaptability of our financial systems. As we look to the future, we can
expect further advancements, which will continue to shape the
landscape of money and finance.
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