Page 6 - Mega Digi Page: General Awareness - Jan 2016
P. 6
www.bankersguru.org
(General Awareness)
Types of Money
Money is the medium of exchange in our society which has also been accepted by
the law.
There are various types of money:
Commodity Money
It is the simplest kind of money which is used in barter system where the valuable
resources fulfill the functions of money.
These money have intrinsic value.
Whenever any commodity is used for the exchange purpose, the commodity becomes
equivalent to the money and is called commodity money.
Ex : gold coins , beads , shells, pearls, stones, tea, sugar, metal
Fiat Money
The word fiat means the ”command of the sovereign”
Fiat currency is the kind of money which don’t have any intrinsic value
The value of fiat money is determined by government order which makes it a legal
instrument for all transaction purposes.
Fiat money is the basis of all the modern money system.
Ex : Paper money, Coins
Fiduciary Money
Whenever, any bank assures the customers to pay in different types of money and when
the customer can sell the promise or transfer it to somebody else, it is called the
fiduciary money.
Fiduciary money is generally paid in gold, silver or paper money.
Representative Money
It represents a claim on commodity and it can be redeemed for that commodity at a
bank.
It is a token or paper money that can be exchanged for a fixed quantity of commodity.
Its value depends on the commodity it backs.
Date of Release - 09-Jan-16 SUBJECT: GA www.bankersguru.org
(General Awareness)
Types of Money
Money is the medium of exchange in our society which has also been accepted by
the law.
There are various types of money:
Commodity Money
It is the simplest kind of money which is used in barter system where the valuable
resources fulfill the functions of money.
These money have intrinsic value.
Whenever any commodity is used for the exchange purpose, the commodity becomes
equivalent to the money and is called commodity money.
Ex : gold coins , beads , shells, pearls, stones, tea, sugar, metal
Fiat Money
The word fiat means the ”command of the sovereign”
Fiat currency is the kind of money which don’t have any intrinsic value
The value of fiat money is determined by government order which makes it a legal
instrument for all transaction purposes.
Fiat money is the basis of all the modern money system.
Ex : Paper money, Coins
Fiduciary Money
Whenever, any bank assures the customers to pay in different types of money and when
the customer can sell the promise or transfer it to somebody else, it is called the
fiduciary money.
Fiduciary money is generally paid in gold, silver or paper money.
Representative Money
It represents a claim on commodity and it can be redeemed for that commodity at a
bank.
It is a token or paper money that can be exchanged for a fixed quantity of commodity.
Its value depends on the commodity it backs.
Date of Release - 09-Jan-16 SUBJECT: GA www.bankersguru.org
