Money and Banking

Money and Banking

Introduction

Money is much more than legal tender. It depends on social interactions, shared understandings, and trust to function and to be recognized as having the qualities of money. Money does three things: (1) it facilitates the transfer of the rights to goods and services (transfer facilitation); (2) it may be used in a variety of social locations, across various interaction partners, and for diverse sets of rights (generalized use); and (3) it enables the storage of economic value (storage capacity) (Zelizer 2001).

Money has taken a number of different forms throughout history, and these forms have been matched to particular categories of practice. For example, in Monomotapa at the Gulf of Guinea, slave traders used the local currency (cotton cloth) to pay for slaves and valued the price of a slave as a large piece of cloth called “a piece of India,” denoting its size. In time, the expression became synonymous with a male slave between the age of fifteen and forty (Braudel 1981, 442). In other words, the language of money constituted the language of everyday life. Other pre-modern currencies included copper bracelets (manillas), seashells (zimbos and cowries), coral, dried fish, furs, and nails, to name but a few. (Milton, & Schwartz, 1986)

This use of money as a means of communicating social identity was not new. In a study of how money was used in Roman society between 200 BCE and CE 200, Michael Crawford recalls how a person's relationship with money affected his dignity and reputation. As a result, Tiberius intervened in the dispute between the moneylenders and members of the upper classes to preserve their social status and to maintain the social order (Hoppe, Guido, & Walter, 1998).

Discussion

Money functioned as a communicative instrument of social status and as a social mechanism for stability. In this instance, the social status of a particular category of individuals (not society's economic well-being) was threatened and therefore warranted an intervention in the money market. Had a different category of individuals been threatened by the moneylenders, the informal rules about how money should be used, against whom an economic threat could be made, and from whom the rule's enforcement would come may have differed (Crawford, 1970).

Characteristics of Money

The characteristics to be met by money to be considered as such are:

Universal acceptance: the money has to be a desirable by all.

Easy: you accumulate a lot of value in light weight and does not require fragile containers (not worth both the oil and the wine).

Divisible: serving to property acquired expensive and cheap. That can be broken down without losing their value.

Incorruptible: the feature that has proved easier to achieve: you do not lose value over time.

Functions of Money

The functions listed above are essential for the money to fulfill their functions:

Medium of exchange and payment: eliminates the complex barter system allowing the exchange of goods and payment of debts more quickly and easily.

Store of value: the income arising from work can accumulate in the form of money to buy goods and ...