Money: essence, types, functions

First, let's define what money is: the essence of them is that it is a universal equivalent of the value of other services and goods.

In those days, when there were surplus goods, it took a universal means of payment. At first, people produced what they needed for their needs, some changed their food for clothes and vice versa. Over time, the exchange process became popular, and then there was a need to create a product that could serve as a means of payment for any other type of service. So there was money.


The essence of money is divided into 5 points:

- Means of saving and accumulation;

- means of payment;

Means of circulation ;

- measures of value;

- World money.

Let us take a closer look at each of the points.

Measure of value

Appears at the time of the price, determining the cost of services or goods. The monetary value changes (price), it depends on the following indicators:

- exchange conditions;

- production conditions.

Means of circulation - money

The essence of the payment means is to make an exchange for both sides (seller-buyer). And money is the intermediary in the transaction. In addition to being a means of circulation, it is also a functional means of calculation (loans, mortgages, loans). The latter was the beginning of the appearance of plastic cards.

Instrument of payment

If there is not enough money to pay for a product or service, then there is an opportunity to take the necessary on credit or with a deferred payment: goods-delay-money or commodity-credit-money.

World Money

The essence of money is that they are used for international settlements. Today, the main international unit of payment is the dollar.

Types of money

They are divided into two groups: cash and non-cash. Then they are divided into six subgroups.


- small coin;

- paper money;

- credit (money) cards.


- credit cards (plastic);

- payment cards (plastic);

- Electronic finance.

Consider some of the subgroups in detail

To paper money include treasury tickets, which are issued by the state, do not have value as material. But they are used in all calculations and payments. Also, paper money includes banknotes.

Credit money means checks, bills of exchange, banknotes.

Electronic funds are money, the essence of which is that they can pay for purchases / bills on the Internet, that is, they are in the electronic payment system (WebMoney, Yandex-money, etc.) and on bank accounts in electronic form .

Functions of money

1. Money - a universal opportunity to assess the value of goods (a measure of value).

2. Money - a universal means of purchase (medium of circulation).

3. Distribution function. It implies a transition from the owner to the recipient.

4. Savings and accumulative.

5. Currency exchange.


This article discloses what is money, types, essence, functions. Payment facilities are needed to service the national economy. Their main function is payment for goods and services. The type of money depends on the material of manufacture.

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