Evolution of money and functions.pdf

It's a PPT presentation on Evolution of money and it's functions.

1. St. Mary's Convent School
Sonatalab, Varanasi
Evolution of money and
it's functions.
01
Name : Samridhi Verma
Class : XII - C
Subject : Economics

2. 02
Begin by highlighting the central role
that money plays in today's economies.
Money is the lifeblood of economic
transactions and is essential for the
functioning of modern societies.
Furthermore, money is the medium of
exchange.
Begin by highlighting the central role
that money plays in today's economies.
Money is the lifeblood of economic
transactions and is essential for the
functioning of modern societies.
Furthermore, money is the medium of
exchange.
Introduction
The system of commodity money
eventually evolved into a system of
representative money. This occurred
because gold and silver merchants or
banks would issue receipts to their
depositors, redeemable for the
commodity money deposited.
The system of commodity money
eventually evolved into a system of
representative money. This occurred
because gold and silver merchants or
banks would issue receipts to their
depositors, redeemable for the
commodity money deposited.

3. 03
Defination of
money
Money, in the context of economics, is a universally
accepted and standardized medium of exchange that
serves as a store of value and a unit of account within
an economy. It represents a tangible or digital
representation of value that facilitates transactions,
enables economic activities, and serves as a reliable
measure of worth.

4. 04
functions of
money
3. Store of Value:
Money allows individuals to save and
store wealth for future use. Unlike
perishable goods, money retains its
value over time, providing a means for
people to defer consumption and plan
for the future.
1. Medium of Exchange:
Money serves as an intermediary in
transactions, allowing
individuals to exchange goods
and services without the need for
direct barter.
2. Unit of Account:
Money provides a standard
measure for valuing goods and
services. It simplifies the process of
comparing prices, making informed
purchasing decisions, and
conducting economic
calculations.

5. 05
Evolution of money
Precious metals like gold
and silver gained
prominence as currency
due to their durability,
divisibility, and uniformity.
Fiat Money:
With advancements in
governance and finance,
governments started
issuing fiat money.
Paper Currency :
The invention of paper
money further
revolutionized currency. It
represented a claim on a
commodity (usually gold
or silver) held in reserve.
BARTER SYSTEM:
In ancient times, direct
exchange of goods was
the primary method of
trade.
Commodity Money:
Commodity money had
intrinsic value due to its use
in other contexts (e.g., grains,
livestock, metals).
Throughout history, the concept of
money has evolved in response to
the changing needs of societies.
Metallic Money:

6. 06
Characteristics of Good Money:
Durability:
Good money must
withstand wear and tear
over time. It should
maintain its physical
integrity through
repeated use without
deteriorating.
Divisibility:
Money should be easily
divisible into smaller
units without losing its
overall value. This
divisibility enables
transactions of various
sizes and values.
Acceptability:
Money, to be effective and widely accepted, must
possess specific characteristics that enhance its
functionality, stability, and usefulness.
For money to be
effective, it must be
widely accepted by
individuals, businesses,
and institutions as a
legitimate medium of
exchange

7. 07
Types of Money:
Digital Money: Commodity-backed
Currency:
Representative
Money:
Digital money exists in
electronic form and is
used for online
transactions and
electronic banking.
This is similar to
representative money, but
the backing commodity
(like gold) is directly
redeemable upon demand.
Representative money is
backed by a physical
commodity, often precious
metals, held in reserve by an
issuer (such as a central
bank).
Different types of money have
been used to facilitate economic
transactions and store value. Let's
explore some key types:

8. 08
Importance of stability:
Promoting Savings:
Stable money
encourages people to
save for the future,
knowing that their
wealth will not be
eroded by
hyperinflation.
Encouraging Investment:
Investors are more likely to
commit funds when they
can predict the future value
of their investments. Stable
money mitigates the risk of
losses due to currency
depreciation.
Facilitating Economic
Planning:
Stable money allows
businesses and individuals to
make informed decisions
about production,
consumption, and investment
without the fear of rapid
changes in purchasing power.

9. 09
Significance of Evolution
of Money :
1. Progression of Efficiency
2. Economic Growth and Specialization
4. Enhancing Economic Stability
5. Global Trade and Connectivity
3. Reflection of Societal Values

10. Evaluating Money's
Performance
Assessing the performance of a nation's
currency involves a careful examination
of various economic indicators. This
evaluation provides insights into the
stability, strength, and effectiveness of
the monetary system.
10
Changes has been seen due to
evolution :
1. Exchange Rate Stability
2. Purchasing Power
3. Inflation Rate
4. Currency Reserves
5. Interest Rates
6. Economic Growth

11. Global Reserve
Currencies:
EURO (EUR)
U.S. Dollar (USD)Global reserve currencies
are pivotal in international
trade, finance, and the
stability of the global
economy.
They represent currencies
that central banks and
international institutions
hold as part of their
foreign exchange reserves.
The U.S. dollar
holds a dominant
position as the
world's primary
reserve currency.
The euro is the
second most
held reserve
currency.
11

12. 12
Challenges and Future
of Money:
1. Privacy Concerns
2. Decentralization and Blockchain
4. Cryptocurrency Debate
5. Financial Literacy
3. Digital Disruption
The landscape of money is
undergoing rapid
transformation due to
technological
advancements and
changing consumer
behaviors. As we evaluate
the current state and
anticipate the future,
several challenges and
trends emerge.

13. Conclusion:
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In conclusion, the evaluation of money and its functions unveils a rich
tapestry of historical, economic, and technological significance. From its
origins in barter to the emergence of cryptocurrencies, money's
evolution reflects human ingenuity, adaptability, and the ever-changing
dynamics of trade and commerce.
The challenges and opportunities
presented by digital currencies,
cryptocurrencies, and emerging
technologies underscore the
need for continuous adaptations
As we navigate the complexities of
modern economies, we recognize that
money is more than a medium of
exchange; it's a pillar that supports
economic growth, stability, and the
aspirations of societies.

14. 14
That is it for the brief
explanation on :

Evolution of money and it's
functions