it deals Money evolution of money, types of money and functions of money.

1. N.DHINAKARAN
ASSISTANT PROFESSOR OF ECONOMICS
VIVEKANANDA COLLEGE
TIRUVEDAKAM WEST
MADURAI
Course Title : Money and Banking
Course Code: 01CT31 ( Unit – I)

2. UNIT-I:
Money: Barter System –Meaning and Defects -
Evolution of Money - Meaning and Definitions
of Money - Functions of Money
Kinds of Money - Defects of Money- Qualities
of Good Money.

4. BARTER SYSTEM
• MEANING:
There is no use of money or any medium of exchange in a barter
economy. “Barter” means direct exchange of goods for goods . Such
exchange was known as barter. For example Corn may be exchanged for
ox hides, house for horse, lemons for oranges, shoes for shirts and so
on.

5. Defects of Barter System OR
Difficulties of Barter System
 Lack of Double Coincidence of Wants
 Lack of a Common Measure of Value
 Indivisibility of Certain Goods
 Lack of Standard of Deferred Payments
 Lack of Efficient Store of Value
 Lack of Specialization
 Problem of Transportation

7. Evolution of Money
The word “ money” is derived from the Latin word “Moneta” which was
the surname of the Roman Goddess of Juno in whose temple at Rome,
money was coined.
 Development of Money in Different Stages
I. Animal Money
II. Commodity Money
III. Metallic Money
IV. Paper Money
V. Credit Money
VI. Near Money

8. Meaning & Definition of Money
A thing which is commonly accepted as a medium of exchange is called
money. Example : a rupee in India is money, as it is a commonly accepted
medium of exchange here. Likewise , a dollar in USA is money , as it is a
commonly accepted medium of exchange there.
According to Walker “ Money is What Money Does”.
D.H. Robertson defines money as “ anything which is widely accepted in
payment for goods, or in discharge of other kinds of business obligations.
Seligman defines money as “ one thing that possesses general acceptability.
G.D.H. Cole, “ the essence of money is that it can be passed from hand to
hand in one act of circulation after another”.

9. Functions of Money
1. Primary Functions
i. Money as Medium of Exchange
ii. Money as unit of Value
2. Secondary Functions
i. Money as a standard of Deferred Payments
ii. Money as a Store of value
iii. Money as a Transfer of Value

10. 3. Contingent Functions
i. Money as the Most Liquid of all Liquid assets
ii. Basis of the Credit System
iii. Measurement of National Income
iv. Distribution of National Income
Other Functions
i. Helpful in Making Decisions
ii. Money as a Basis of Adjustment

11. KINDS OF MONEY
1. Metallic Money
i. Standard Money
ii. Token Money
iii. Subsidiary Money
2. Paper Money
i. Representative Paper Money
ii. Convertible Paper Money
iii. Inconvertible Paper Money
iv. Fiat Money
v. Fiduciary Money
3. Credit Money

12. Defects of Money or Evils of Money
Economic Defects
1. Instability in the value of Money
2. Unequal Distribution of Wealth and Income
3. Growth of Monopolies
4. Money encourages Wastages of Resources
5. Money Gives ways for Black Money
6. Money Gives Birth to Trade Cycles
7. “Money” and “ Purchasing Power” may not be synonymous
8. Instead of being a servant ,Money tends to become the Master
Non – Economic Defects
1.Money leads to corruption
2.Political Instability
3.Tendency to Exploit

13. Qualities of Good Money or Characteristics of Money
1. General Acceptability
2. Durability
3. Portability
4. Cognisability
5. Homogeneity
6. Divisibility
7. Stability

14. THANK YOU