Money, money circulation and credit - стр. 15

The function of world money is performed by the modern money but at limits. First of all nowadays it is not performed by all the money. For the second even those currencies (for example US dollars, euro, yens) which are actively used today in the international relations are not universal either and they don’t cover all the system of the World money circulation.

All the listed functions were fully performed by money in the condition of the gold standard, i.e. when the role of the total equivalent was played by gold. The suspension of gold standard led to the fact that money stopped to perform their two traditional functions (treasures and world money) which couldn’t be performed without gold in the quality of money. That’s why in the modem conditions the economic literature often indicates only three functions of money: standard of value, instrument of circulation and mean of payment though this is a debatable opinion.

A consideration must be given to that actually in performing by the modern money its functions the fundamental changes took place but it doesn’t mean that two of five functions do not exist at all.

The function of treasures forming actually transforms into the function of value store when money is considered as a special liquid asset which saves after the good sale and provides its owner with a purchasing power in future.

Reviewing the initial analysis results of the money functions we can determine their interaction and also pay attention that the function of instrument of circulation and payment should determine the level of the total monetary stock in the country and the function of saving is directly linked with the State monetary policy.

The basic requirement of the money functions performing is the stability of the money circulation whole system.

The comprehension questions

1. Name two basic theories of money origin in the World Economy.

2. What are the basic history stages of money development according to the evolutional theory?

3. List the money functions and elaborate the concepts.

4. The essence of money consists of three features, name them.

In the course of historical development initially the system of metal money circulation formed which was based on the metal money usage.

The money qualification which is based on the materially substantial features of the total equivalent allows classifying conventionally the metal money on full-bodied and token money.