On January 1, 2002, Germany officially adopted the euro as its currency, and deutsche mark stopped being legal tender. According to the Article in the Wall Street Journal, even 10 years later many stores in Germany continued to accept it. Briefly explain how possible for people to continue to use a currency when government replaced it with another currency. Source: Who needs the euro When You Can Pay with Deutsche Marks? Wall Street Journal July, 2012 Solution The most important function of money is that it is used as medium of exchange. In other words, it can be used for payment of goods and services. Money is able to act as medium of exchange because it possesses the quality of general acceptability. Anything that is generally acceptable can act as money and thus can be used as medium of exchange. Quality of general acceptability is the key and not the government undertaking. Many people across Germany are still accepting deutsche mark as medium of exchange and due to this general acceptability it is still being used as medium of exchange even though German government has discontinued deutsche mark and adopted the Euro. Adoption of a currency by government makes it legal tender in the country concerned but it does not guarantee that it will be used as medium of exchange unless and until it is generally acceptable. Thus, it is possible for people to continue using a currency when government replaced it with another currency if the currency being used by the people is still generally acceptable as medium of exchange. This quality of currency keeps it in circulation and prolongs its usage even though government has dumped it..

1. On January 1, 2002, Germany officially adopted the euro as its currency, and deutsche mark
stopped being legal tender. According to the Article in the Wall Street Journal, even 10 years
later many stores in Germany continued to accept it. Briefly explain how possible for people to
continue to use a currency when government replaced it with another currency.
Source: Who needs the euro When You Can Pay with Deutsche Marks? Wall Street Journal July,
2012
Solution
The most important function of money is that it is used as medium of exchange. In other words,
it can be used for payment of goods and services.
Money is able to act as medium of exchange because it possesses the quality of general
acceptability.
Anything that is generally acceptable can act as money and thus can be used as medium of
exchange.
Quality of general acceptability is the key and not the government undertaking.
Many people across Germany are still accepting deutsche mark as medium of exchange and due
to this general acceptability it is still being used as medium of exchange even though German
government has discontinued deutsche mark and adopted the Euro.
Adoption of a currency by government makes it legal tender in the country concerned but it does
not guarantee that it will be used as medium of exchange unless and until it is generally
acceptable.
Thus, it is possible for people to continue using a currency when government replaced it with
another currency if the currency being used by the people is still generally acceptable as medium
of exchange. This quality of currency keeps it in circulation and prolongs its usage even though
government has dumped it.