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Summary of Money

Any unit or instrument generally accepted as having value to effect the purchase of goods or services, or to settle debts. All money enjoys three characteristics:

  • it is a unit of account in which values can be measured;
  • it is a medium of exchange; and
  • it is a store of value (i.e., a seller of goods can take money in exchange for the property he gives up, and can hold the money until a future time when it may be exchanged in satisfaction of a purchase).

Over the centuries, various commodities have been used as money including, inter alia, metals, stones, shells, salt, cattle, and tobacco. The most recent (1980) pronouncement of the Federal Reserve Board embraces the following definitions of money:

1. M-1A is coin and currency in circulation, plus demand deposits at commercial banks, excluding demand deposits of foreign banks, and official institutions.

2. M- IB is M-1A plus all other demand deposits at any depository institution, including negotiable order of withdrawl (NOW) acounts, credit union share drafts, automotive transfers, et cetera.

3. M-2 is M-1B plus savings accounts and small- denomination time deposits, money market mutual funds shares, overnight repurchase agreements at commercial banks, and overnight Eurodollar deposits held by U.S. residents (other than deposits at Caribbean branches of Federal Reserve system member banks);

4. M-3 is M-2 plus large-denomination time deposits, and term repurchase agreements at commercial banks and savings and loans.

(Main Author: William J. Miller)

Flow of Money

Monetary exchange between countries as a result of cross-border transactions.

In a modern economy, adequate access to credit and foreign exchange are essential for efficient, secure trade and competitiveness. Poor access to credit, on the other hand, impedes start-ups of domestic-owned traders and stifles expansion by the country’s producers. Burdensome foreign exchange requirements also increase the costs of doing business and ward off foreign investors.

A country’s legal framework, along with its public and private institutions, is critical in supporting access to credit and trade-related money flows. A sound regulatory environment and a supervisory framework raise the confidence of domestic and foreign investors alike. Of significant importance are laws that enable the oversight of financial transactions. Sound laws enable the financial sectors ability to facilitate trade through many of the traditionally recognized mechanisms utilized internationally.

Another critical element to facilitating trade-related financial flows is the strength of a country’s banking sectors. Basic trade finance products should be widely available, and foreign currency should be easily exchanged by all traders. These countries also need to deepen their offerings of both bank and nonbank trade-related financial instruments. It is equally important to increase the number of long-term credit providers, which can be very difficult to find due to market volatility. When providers of long-term credit are few, costs are high, and market coverage is minimal. But if these products are offered by more institutions, interinstitution competition reduces cost to trade financiers and dramatically increases usage among small and medium-sized enterprises (SMEs).

Moreover, organizations that provide financial services, such as banks and export credit agencies, should be required to register and operate under licenses issued by a competent authority, and subject to financial crimes–reporting regulations. The penalties for violation should be significant enough to compel performance, and the judicial system should be robust enough to create incentive for compliance. A country’s weak and inactive dispute resolution system is more often the driving factor in noncompliance cases than a weak legal framework.

Bolstering trade finance ought to be a priority of the government. Only then will a country be on a progressive path toward developing a more sophisticated and diversified financial system that will bring improved access to longer-term capital, increased credit access for SMEs, and product and service innovations that meet the needs of businesses conducting international trade.

Real Estate meaning of Money

In the words of the Encyclopedia of Real Estate Terms about Money: Believed to be derived from Moneta, the temple of the Roman goddess Juno, which housed the mint in ancient Rome. Anything that passes from hand to hand as a readily acceptable medium for the exchange of articles of value, or is kept as a store of value. An item or commodity used to express debts or liabilities, or that is acceptable as a means to discharge debts or liabilities. “The natural and primary meaning of money is cash or coin of the realm … Still, in the common acceptation of the word there is a more extensive meaning given to it.” Barrett v White (1855) 24 LJ Ch 724, 726(53A Am.Jur.2d., Money, § 1). Money has been defined in a literal sense “by Mr. Walker in Money, Trade, and Industry as that which passes freely from hand to hand through the community in final discharge of debts and full payment for commodities, being acceptable equally without reference to the character or credit of the person who offers it and without the intention of the person who receives it to consume it or apply it to any other use than in turn to tender it to others in discharge of debts or payments for commodities.” Moss v Hancock [1899] 2 QB 111, 116.

In economics, money is reputed to serve four basic functions: (i) as a unit or medium of exchange “it is a machine for doing quickly and commodiously, what would be done, though less quickly and commodiously, without it.” John Stewart Mill, Principles of Political Economy (1848), Book III, Ch. VII, para. 3; (ii) as a measure of value or wealth” in the first place money appears in the function of a mere instrument for measuring the value of individual parts of wealth … But money also appears in a second or higher function, that is, it embraces the value itself that is measured by it … therefore money gives its owner a general power of wealth … and … appears as an independent bearer of such power”, Fredrich Karl von Savigny, Das Obligationenrecht [“Law of Contracts”] (1851), vol. i. p. 405; (iii) as a store of value or purchasing power—”It is not for its own sake that men desire money, but for the sake of what they can purchase with it.” Adam Smith, The Wealth of Nations (1776), Book Four, Ch. I. Although it may be asked, “why should anyone outside a lunatic asylum wish to use money as a store of wealth? Because … our desire to hold money as a store of wealth is a barometer of the degree of our distrust of our own calculations and conventions concerning the future … The possession of actual money lulls our disquietude.” J.M. Keynes, The General Theory of Employment (1937) Quart. J. Econ. p. 216; (iv) as a standard or means for deferred payment, a link between the present and the future&mdas;money “acts as a guarantee that we may have what we want in the future: though it is not needed at the moment, it insures the possibility of satisfying a need when it arises.” Aristotle, Ethics, Book 5. Money may take the form of coins, bank notes or similar currency; negotiable paper money, promissory notes (e.g. checks, postal orders, money orders); precious metals; or any goods that are accepted by society as readily exchangeable, without question and without being used up in the process. In some contexts or uses it may be more limited, but money may also be used to refer to any capital, property and anything else that is transferred in commerce.

More about Money in the Encyclopedia of Real Estate Terms

In law, money must be acceptable as a medium of exchange and must be capable of being expressed authoritatively as a recognized unit of account; in particular, it means legal tender. This quality may be attributed to “all chattels which, issued by the authority of the law and denominated with reference to a unit of account, are meant to serve as a universal medium of exchange in the State of issue.” F.A. Mann, The Legal Aspects of Money (5th ed. 1992), p. 8. “‘Money’ means a medium of exchange authorized or adopted by a domestic or foreign government as a part of its currency.” United States Uniform Commercial Code § 1-201(24). The Uniform Commercial Code does not require that “money” be ‘legal tender’, although it should be something that is “given credence or honor by the authority of a government”, UCC § 1-201:362. The Code expressly includes federal reserve notes and excludes checks and coin collections from the definition of money (UCC §§ 1-201:363, 1-201:362;


See Also

Notes and References

Annotation: 40 ALR4th 346: UCC—”Money”). “[M]oney as commonly understood is not necessarily legal tender. Any medium which by practice fulfils the function of money and which every one will accept in payment of a debt is money in the ordinary sense of the word”, Reference re Alberta Legislation [1938] SCR 100, [1939] 2 DLR 81, 92 (Can)

In its contemporary usage money, or ‘money supply’, refers to the sum total of cash and credit available in the economy, including cash, legal tender, demand deposits at the bank (or similar guardians of such liquid assets), accountable credit extended to facilitate the acquisition of goods, and, sometimes, time deposits. The precise meaning of money depends on the time, place and context. In a primitive economy, it may be limited to coins. For the modern execution of a debt, it may be limited to legal tender. In economic management, it may mean all or part of the money supply. In a will it may, if the context so implies, extend to the worth or value of a person’s total estate, or especially the residue of an estate after taking account of all other bequests or devises(Re Mellor [1929] 1 Ch 46; Re Barnes’s Will Trusts, Prior v Barnes [1975] 1 WLR 515, [1972] 2 All ER 639; In re Williamson’s Estate, 302 Pa 462, 153 A 765 (1931); Haynes v. Henderson, 345 SW.2d 857, 861 (Tex Civ App 1961)).See also capital money, interest, money’s worth.

53A Am.Jur.2d., Money, §§ 1-87.

32 Halsbury’s Laws of England, Money (4th ed. 2005 Reissue), paras. 101-222.

Hierarchical Display of Money

Finance > Monetary economics > Money market
Industry > Iron, steel and other metal industries > Metals > Precious metal > Gold
Finance > Monetary economics > Exchange policy > Currency convertibility


Concept of Money

See the dictionary definition of Money.

Characteristics of Money


Translation of Money

Thesaurus of Money

Finance > Monetary economics > Money market > Money
Industry > Iron, steel and other metal industries > Metals > Precious metal > Gold > Money
Finance > Monetary economics > Exchange policy > Currency convertibility > Money

See also

  • Currency

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