Describe the various types of money in English..........

Contents

Describe the various types of money.

Types of Money

(1) Physical Characteristics: These are 3 types:

(a) Metallic Money: Any material which is used for money like gold, silver, copper and alloys is known as metallic money. Metallic money is used for minting coins which are generally of alloys whether in India or in other countries.

(b) Paper Money: All over the world it is paper money that is notes of different denominations which are in circulation and all payments when made in cash are done through these notes.

(c) Credit Money: When cheques are issued or received in making and receiving payment, it is called credit money.

(2) Nature of Money: These are 2 types :

(a) Legal Tender Money: Legal tender money is that money that is notes issued on the authority of the state and coins which are obliged to be accepted in payment of dues.

(b) Optional Money: The cheques, bankdrafts, bill of exchange, hundies etc. are not legal tender money and it is the option of creditor to accept them or refuse them.

(3). On the basis of Money Commodity: These are 2 types:

(a) Money on Account : Money on account refers to that money in which accounts are maintained like rupee in India, dollar in USA, pound sterling in Great Britain, Dutch Mark in Germany or in different currencies in other countries.

(b) Intrinsic Value: The intrinsic value is considered only for the purpose of policy making and development plans. The government and the central banks generally try that intrinsic value of money is stable so that full confidence is maintained in it.

(4) Basis of Liquidity: These are 2 types :

(a) Actual Money: By actual money one means the money which is actually in circulation irrespective of its value. The liquidity is highest of actual money that is of coins and notes.

(b) Near Money: When actual money is converted into bank fixed deposits, life insurance policies, company deposits, securities and debentures, shares and stocks they are classified as near money.