Money banking and foreign
exchange
Chapter no 1 :-
meaning and functions of money !!
The world ‘money’ is derived form the latin world ‘ moneta’ which was the surname of roman
goddess juno. In Rome minting of coins was used to be done in the temple of Juno .
concept of money
Money is money is one of the greatest invention of mankind. oney is something which is
Generally Accepted of money , barter system was in existence which refers to direct exchange of
goods. Difficulties and in conventions of the barter system lead to the invention of money.
Problems of barter system
1. Double coincidence of wants Double
2 absence of common measure of value
3 lack of divisibility (life of a living creature cannot be divided)
4 problem of storing wealth
5 difficulty of deferred payments
6 problems of transferbility
Definition of money
1 Narrow view ( robertson )
Money is a commodity which is used to denote anything which is widely accepted in payment
for goods or in discharge of other obligation.
2 wide view ( francis walker )
Money is what money does .
3 descriptive / dunctional ( nagaro )
Money banking and foreign exchange 1
, Money is a commodity which serves as an intimated in exchange and as a common Major of
value.
( marshall )
Money includes all those things which are at any time and place generally current without doubt
or special enquiry as a means of purchasing commodities and services and of the defraying
payments .
4. leagal (knapp )
Anything which is declared as money by States becomes money.
Note - all currency is money but all money is not currency.
Approaches to definitaion of money
( on the basis of contituents of money )
1. Traditional approach
M = C + DD
( based on medium of exchange )
M. Money
C Currency
DD. Demand deposits
2. Monetarist approach
M=C+DD+TD
( developed by milton friedman )
( includes money and near money
TD - time deposits
3. Liquidity approach
M = C + DD + SB +S +B
( Developed by curley and redcliffe
committee, based on
Money banking and foreign exchange 2
exchange
Chapter no 1 :-
meaning and functions of money !!
The world ‘money’ is derived form the latin world ‘ moneta’ which was the surname of roman
goddess juno. In Rome minting of coins was used to be done in the temple of Juno .
concept of money
Money is money is one of the greatest invention of mankind. oney is something which is
Generally Accepted of money , barter system was in existence which refers to direct exchange of
goods. Difficulties and in conventions of the barter system lead to the invention of money.
Problems of barter system
1. Double coincidence of wants Double
2 absence of common measure of value
3 lack of divisibility (life of a living creature cannot be divided)
4 problem of storing wealth
5 difficulty of deferred payments
6 problems of transferbility
Definition of money
1 Narrow view ( robertson )
Money is a commodity which is used to denote anything which is widely accepted in payment
for goods or in discharge of other obligation.
2 wide view ( francis walker )
Money is what money does .
3 descriptive / dunctional ( nagaro )
Money banking and foreign exchange 1
, Money is a commodity which serves as an intimated in exchange and as a common Major of
value.
( marshall )
Money includes all those things which are at any time and place generally current without doubt
or special enquiry as a means of purchasing commodities and services and of the defraying
payments .
4. leagal (knapp )
Anything which is declared as money by States becomes money.
Note - all currency is money but all money is not currency.
Approaches to definitaion of money
( on the basis of contituents of money )
1. Traditional approach
M = C + DD
( based on medium of exchange )
M. Money
C Currency
DD. Demand deposits
2. Monetarist approach
M=C+DD+TD
( developed by milton friedman )
( includes money and near money
TD - time deposits
3. Liquidity approach
M = C + DD + SB +S +B
( Developed by curley and redcliffe
committee, based on
Money banking and foreign exchange 2
