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Money refers to any object or otherwise any record, that generally has been accepted as payment to cater for the goods and services and also in repaying debts in a particular nation or even socio-economic context. The major functions of money are actually distinguished as; a unit of account, a medium of exchange, a store of value and, occasionally, a standard of deferred payment. Specialists allege that any object or any secure and verifiable record that fulfills the given qualifications can serve as money.
Money tends to have originated as commodity money, but almost all contemporary systems of money happen to be based on 'fiat money'. Fiat money is the one lacking intrinsic use value as a tangible otherwise physical commodity. It owes its value through being declared as legal tender by a particular government. This consequently that it must be acceptable as a form of payment within the boundaries of a given country, to cater for all forms of debts regardless of whether public or private.
A country's money supply entails either bank notes or coins and bank deposits in other words bank money (the balance accrued in checking accounts and also savings accounts). Bank deposits as is the custom forms the greater part of money supply in a given country.
It is relevant to highlight few things as pertains to history, making an attempt to scrutinize the origin of money. The use of barter that preceded the use of currency dates back to at least five decades. It is though notable that there exists no evidence that any society whatsoever relied primarily on barter. Instead, non-monetary societies operated largely under the principle of gift economics. When barter came into existence, this took place between either total complete strangers if not potential enemies.
Various cultures worldwide then developed the use of commodity money. The 'shekel' was originally the preferred unit of weight, then would be referred to a particular weight of barley which was used as currency. The term money owes its origin from Mesopotamia circa 3000 BC. Almost the entire universe, otherwise societies in the Americas, Africa, Asia and Australia could what was then referred to as 'shell money'- often the shells of money cowry
As Herodotus suggested, the introduction of gold and silver was by the Lydians. Modern scholars think that these stamped coins were minted at around 650-600 BC. The system of commodity money then evolved into a representative system.. This was owing to the fact the gold and silver merchants or even the banks would issue receipts to their depositors -redeemable for the commodity money. Eventually the receipts became acceptable as means of payment and used as money.
Bank notes were first used in China during the song nasty's era. They known as 'jiaozi' and they evolved from promissory notes usable since the 7th century. They were used together with the coins meaning that they never displaced the commodity money. In Europe, bank notes were first issued by Stochholms Banco, in the year 1661 whereby they were still used alongside coins.
The gold standard, a well established monetary system whereby the medium of exchange are notes convertible into pre-set, fixed quantities of gold, replaced the coins in the 17th -19th centuries in Europe. The gold standard notes became the legal tender, and gold coins redemption was discouraged. At the eve of the 20th century, most of nations had adopted the gold standard, hence backing their legal tender notes with fixed amounts of gold.
After World War 11, the Bretton Woods Conference marked the adoption of fiat currencies by many countries. The currencies were fixed into the US dollar. After that the US dollar was fixed to gold. The US government come in the year 1971 abandoned the convertibility of the US dollar to gold. Owing to this most of the countries pegged their currencies out of the US dollar and this meant that their currencies became unbacked by anything other than the government's fiat of legal tender and the ensuing ability to convert their currency into goods via payment.