Evolution of Money (Types of Money) and its functions

1. INTRODUCTION

In our world today, money is high-tech. People not only use coins and dollar bills issued by the
government as money, but also increasingly cheques and credit cards. Banks are able to move
millions of dollars by touching only one button on their computers.

Money has always been important to people and to the economy. Many economists, like Keynes
(Skidelsky, 2000, pp.110,112), have dealt with the question of money already. The forms money has
taken on over centuries have always been closely connected with the technological developments in
the economy. As simple economies evolved into more complicated economies, money has always
adapted to the different economic circumstances. With respect to the latest innovations in the
computer industry a new form of money has evolved: e-money.

This paper describes the transition from traditional government money to privately issued electronic
money. It examines the current innovations in the payment technologies by exploring how today’s
forms of money have evolved over time. It also reflects the reasons for inventing electronic money
schemes.

2. AIMS AND OBJECTIVE

Following objectives we will discuss in detail.

Concept of money

In this section we discuss the concept of money.

Anything that is generally acceptable as a means of payment in the settlement of all transactions,
including debt, is money. Money is the generally-used medium of exchange or means of transferring
purchasing power. The unique feature of money is that it is generally accepted as a medium of
exchange or as a means of payment. Money has the power to buy things directly in all markets. It
need not require to be converted into something else before it can be spent or used for the
settlement of debt. In simple terms what we use to pay for things or services is referred to as
money.

Evolution of money

After discussing the concept of money along with the various definitions of money and approaches
to them, let us now discuss the evolution of money. With the development of the society, the
division of labour and specialisation increased. This results in the expansion of the volume of
production and trade. In such conditions, the barter system created difficulties, such as, the problem
of double coincidence of wants, the problem of common measure of value, the problem of
divisibility, the problem of storing wealth, the problem of transportation, etc. In order to overcome
these difficulties, money was invented. According to Crowther, ‘Money is one of the most
fundamental of all man's inventions
Different types of money

Broadly speaking, there exist three main types (forms) of money in a modern economy : (1) metallic
money, (2) paper money, and (3) credit money. Economists, however, further classify money into
many other forms.

Characteristics of money

To perform its functions well, money must possess the following characteristics.

1. General Acceptability : Money should be universally acceptable to all without any hesitation.
Because of the general acceptability of money, we can use it widely as a medium of exchange.

2. Divisibility : Divisibility is one of the important characteristics of money. Money must be easily
divisible into small parts to allow for the purchase of smaller units of the commodities.

3. Homogeneity : Money must be homogeneous. The units of money should be identical. They
should be of equal quality.

4. Durability : Money must possess durability. It must be storable and sholud last for a long
time without losing its value.

5. Cognisability : Money must have the quality of cognisability i.e. it must be easily recognised.

6. Stability : The value of money should remain stable. Because it has to serve as a measure of
value, as a store of value, and as a standard of deferred payment.

7. Portability : Money must possess the portability characteristics. It should be easily carried or
transferred from one place to another.

Functions of money

After discussing different types of money let us now discuss the functions of money. Money
performs a variety of functions in modern economy. The various functions of money can be divided
into three broad groups :

(A) Primary functions –

(i) Medium of Exchange and

(ii) Measure of value.

(B) Secondary functions –

(i) Standard of deferred payments

(ii) Store of value and

(iii) Transfer of value

(i) Measurement of National Income

(ii) Distribution of National Income

(iii) Maximisation of Satisfaction

(iv) Basis of credit

(v) Liquidity to wealth

(vi) Productivity of capital.

Money has many uses that was usually take for granted. We can realize that its wide use has
profound reasons.

Medium Exchange. A system of barter means that we would have to find people willing to trade
their goods for the goods we have. There has to be a "double coincidence of wants" for a barter
system to succeed. That is, an economics teacher would have to find a food producer or clothing
seller willing to trade their goods for economics lesson. A barter system is difficult, and the invention
of money made transactions much easier. An economics teacher can simply pay them for their
goods rather than exchanging a lesson for their food and clothing goods.

Standard of Value. Money also sets the prices of everything into a common measure. Without
money, goods would have to be valued according to every other good. Let us assume that there
were three goods in the economy: pork, mangoes and bibingka. What quantity of pork would be
equivalent to one mango and one bibingka? And how much bibingka would be worth one mango
and one unit of pork? The same applies to mangoes. That is, each good would have to be valued in
terms of the other two goods. If there were thousands of goods in the economy, that would mean
thousands of prices to value each good according to the other goods.

Standard of Deferred Payments. Business borrow money and pay their loans back inthe future.
Money is never out of season. Rather than using it now, a person can spend his money in the future,
and it will still be accepted as a form of payment. Even if inflation may decrease its value, it's still
accepted as a form of payment.

Reserve Value. Because of money, the value of goods and services is preserved. Without money,
goods would have to be consumed so they don't lose their value. Money allows certain goods to be
kept over time and still retain their value. With perishable goods, however, like food, their value
decreases as they lose their quality.
3. METHOD AND METHODOLOGY

Evolution of Money is probably one of the biggest invention in human history.The money was not
invented but it evolved with passage of time according to the changing requirements of
economies.It is not a result of brain storming of some economist rather there is a long process of
evolution since start of civilization to this modern complicated credit system.

It is generally believed that evolution of money has passed through following six stages.

Barter

Commodity Money

Metallic Money

Paper Money

Credit Money

Electronic Money

These stages of evolution of money are discussed as under.

1 Barter.

In the beginning of civilization the needs of people were very limited and therefore they used to
Exchange their goods with other people’s goods or Service. Such a system of exchange where goods
and services are directly exchanged for each other without the use of money is called barter system.
Barter is possible only if the wants of the people are very few, area of exchange is limited and people
are living a very simple life. There were many difficulties associated with barter system. So gradually
this system of exchange was replaced with money system of exchange.

2 Commodity Money:

Money is in fact discovered to remove Difficulties of barter. In fact money has evolved in response to
the urgent needs of the various stages of economic growth. In the beginning of civilization goats,
animal-hides, axe-heads, knives, arrows, slaves etc., have been used as money in different

Perform the basic functions of money. It was difficult to borrow and lend and it was more difficult to
measure and store the value of goods and services. Further the volume of trade remained very
limited due problem of transportation of commodity money.

3 Metallic Money.

Money made of metal is called metallic money. In the beginning the pieces of gold and silver were
used as money but it did not solve the complicated problems of exchange. It was very difficult to I
measure the value with these jaw pieces of metal. Another problem was transportation and storage
of precious metals. This problem was solved by making standardized coins. In the beginning full
bodied coins of gold and silver were introduced but latter on these were replaced with token coins.
Now a day’s different alloy are being used for minting of coins.
The metallic coins have a specific weight and shape. Coins are only used for smaller retail payments
because it is difficult to count, transport and store them.

(4) Paper Money

In the third stage of the evolution of money paper money was discovered. It is believed that the
start of paper money was issuance and acceptance of receipts of gold smiths who were acting as
money lender in old Iraq.

These goldsmiths were rich, respectable and were men of repute. They used to keep the valuables of
the people in the safe rooms and issued receipts as a proof for the goods stored. These certificates
became a convenient credit Instruments and were freely used for borrowing and lending and making
payment. In the 19th century commercial banks started issuing their own notes of different colors
and denominations.

It created confusion and were not generally acceptable. Central bank removed this confusion by
taking over the power of issuing bank notes. In the beginning the paper money was fully convertible
into full bodied gold coins. During the period between the two world wars, it became difficult to
convert the paper money into gold. Now almost all the countries issue currencies according to the
monetary requirements of the economy and government provides securities for issuance of
currency.

5 Credit Money:

In the present day modern economies or bank money is used for making personal business
payments. In the developed countries, transactions are taking place with the help of deposits or
checking accounts with paper money. Demand deposits or money sited in current accounts are
easily convertible cash, therefore they are convenient and safe.

6 Electronic Money

TODAY THE invention of computer and its application, the form and shape of business are changing
fast. The concept OF commerce is gaining vast popularity. The mode payment is being transformed
from cash or quest to electronic transaction from one account another. This form of electronic
payment is early referred to as electronic money. There are many problems in this type of
transactions, but it aiming popularity day by day. i evolution of money has not come to an end, it
will, never come to an end.. As economies of the world are changing features and shapes, money is
also changing its m with the due course of time. Globalization of the anomies and expansion of e-
commerce has given new dimension to modes of payment and has angled the nature and features of
money.
4. DETAIL REPORT OF PROJECT

The Meaning of “Money“

To understand how modern money developed, one has to comprehend exactly what money is and
what its functions are.

The word "money" can mean many things. It is used with different connotations in our everyday
speech. On the one hand, if people say that a person has a lot of money, they usually mean that the
person is wealthy. On the other hand, to economists money has a very specific meaning. They define
money as “anything that is generally accepted in payment for goods and services or in the
repayment for debts.” (Mishkin, 1992, p.G-7) It should be mentioned at this point that currency, e.g.
the euro (€), is one type of money. However, to define money merely as currency would be too
narrow for economists.

Functions of money

No matter whether money is gold or paper or beads or knives, in any economy it has three
functions. It is a medium of exchange, a unit of account and a store of value. (Mankiw, 1999, pp.155-
156) These three different functions can be distinguished in the following ways:

3.1. Medium of exchange

Money in the form of currency or cheques is a medium of exchange, since in our economy people
use it to buy goods and services. Without a medium of exchange we would live in a barter economy
where goods and services were exchanged directly for other goods and services. When relying on
barter, people have to satisfy the “double coincidence of wants”. (Mankiw, 1999, p.156) In order to
trade, people have to find someone who has a good or service they want and who also wants the
good or service they offer. In a society with millions of people and with millions of different goods
and services, the system of the barter economy becomes too complicated to be realised. Money as a
medium of exchange greatly simplifies the transactions which take place in an economy. The time
spent trying to exchange goods or services is lowered and consequently transaction costs are
reduced as well. The resulting ease and speed with which money is converted into other things –
goods or services – is called “liquidity of money”. As Keynes stated, money is the most liquid asset.

3.2. Unit of Account

A second function of money is its serving as a unit of account. Unit of account means that money
provides standardised terms in which prices are quoted and debts are recorded. It is also called the
standard of value with which economic transactions are measured.

With money, all prices, i.e. the values of goods and services, can be expressed in the same way, in
terms of units of money. In the USA, for example, the unit of account is the U.S. Dollar.
3.3 Store of value

Finally, money also functions as a store of value. This means that purchasing power is transferred
from the present to the future. A person might decide to keep a fraction of the money that she or he
received by exchanging his or her labour in order to spend it later. Then this saved money serves as a
store of value. John Maynard Keynes placed great emphasis on money as a store of value. This
observation was made by Lord Skidelsky: “The emphasis Keynes placed on money as a store of value,
as an escape from commitment to activity, was one of his original contributions to economics.”
(Skidelsky, 2000, p.112)

Keynes argued that money was “... the perfect store of value, that it is the only asset which
possesses perfect liquidity... .” (Hicks, 1989, p.42) In times of inflation however, when an increase in
the overall level of prices can be observed, money does not serve very well as a store of value. Thus
Keynes’ argumentation was much more true for the time when inflation did not exist or for times
with very low inflation.

There are other assets which serve much better as a store of value, e.g. stocks, bonds, land, houses,
art, or jewellery, since many of these have advantages over money as a store of value. Among those
are the facts that they pay the owner higher interest rates than money, or that they experience price
appreciation. If other assets exist which are a better means of storing wealth than money, then it is
natural to raise the question: Why do people hold money at all?

The same question was also asked in Keynes’ theory of the demand for money, the “Liquidity
Preference Theory”. Keynes put much emphasis on what influences people to hold money as it was
observed by Skidelsky: “The psychological propensity to “hoard” is not just a quasi-rational response
to uncertainty but expresses a perverted human longing: a “love of money” for its own sake.
Depressions, then, are the fruits of sin as the classical economists taught – not of the sin of
extravagance, however, but for usury, a medieval concept Keynes took to be identical with his own
“liquidity preference” theory of the rate of interest.” (Skidelsky, 2000, p.112) Keynes postulated that
there are three motives describing what induces people to hold money (Mishkin, 1992, pp.530-533):

(1) The transactions motive: People hold money because it is a medium of exchange that can be
used to carry out everyday transactions. Contrary to other assets, e.g. land, there are no transaction
costs involved. For example, if a piece of land has to be sold in order to get cash quickly, one might
have to settle for a lower price.

(2) The precautionary motive: People also hold an additional amount of money as a precaution
against an unexpected need, e.g. a person might need some medicine immediately, because she or
he suddenly feels ill.

(3) The speculative motive: Keynes believed that interest rates also play an important role. As
interest rates rise, the demand for money falls. This means with rising interest rates people want to
hold bonds rather than money. People are more likely to expect a higher return from holding a bond
than from holding money.
4. The Evolution of payment systems

To understand the functions of money better and to obtain an idea over the forms money has taken
over time, we now take a look at the evolution of the payment system, the method of conducting
transactions in the economy. The payment system has been changing and evolving over centuries,
together with the form of money.

A long time ago, gold served as the main form of money. Later, paper assets, such as cheques and
currency were used as money. The coins and notes which are used in most economies today are
called fiat money. (It is money that has no intrinsic value and declared to be legal tender.) It is worth
exploring the evolution of the payment system, since the direction the payment system has been
heading to has an important influence on how money will be defined in the future. (Mishkin, 1992,
p.25)

4.1 How fiat money has evolved

In the past, most societies used a commodity with some intrinsic value for money. In order to
function as money, the commodity had to be widely acceptable, which means that everyone had to
be willing to accept it as a payment for goods or services. Early forms of commodity money were, for
example, animal skins in Alaska, salt in Nigeria, cattle in East Africa, tobacco in America, or shells in
Thailand. (Rabley, p.3) Objects like these were not only used to buy goods, but also to pay for
marriages, fines, and debts.

Although everyday objects were extremely practical forms of money, they nevertheless had
disadvantages as well. Firstly, it was a problem to store some of them for a long time. Secondly, the
accurate measurement of their value was not easy. Difficulties arose when using these objects to
plan financial activities for the future or when splitting commodities into smaller amounts or units.

For the above reasons, some societies started to use precious metal, such as gold and silver. They
have been popular commodity monies because they could be used for various purposes – jewellery,
dental fillings etc. - as well as for transactions. People in Mesopotamia e.g., began using such metals
about 4,500 years ago. Later, these metals were also used in Ancient Egypt, China and elsewhere. At
this time they were not exactly coins yet, because they had no fixed shape. Around 2,700 years ago
the first coins were produced in the ancient kingdom of Lydia. They were made of a mixture of silver
and gold. (Rabley, pp.3-4)

Until several hundred years ago, these metals functioned as a medium of exchange in most societies,
except for the most primitive ones. This new metal money was an important advance, since it was
easier to carry and lasted for a long time. This money could be divided into different values, and it
made planning for the future easier.
When people only used gold as money, the economy was said to be on a Gold Standard. The Gold
Standard was common throughout the world during the late nineteenth century. (Mankiw, 1999,
pp.156-157)

Despite the advantages of metal money, these metals were still quite heavy and it was hard to
transport bigger sums, e.g. for large purchases, such as land or houses. It was also easy to steal
them. Furthermore, some countries only had limited amounts of precious metals. They could not use
all their resources to make coins, for instance.

Other problems with gold and silver have occurred when governments debased them. In ancient
Rome, for example, the commodity money was based on gold and silver. Emperors in the second
and third centuries often reduced the amount of gold and silver in their coins if they needed more
funds. Consequently, at the end of the third century, these coins did not contain any precious metal
at all and the Roman Empire had serious inflation as only worthless coins were produced. (Schenk,
1997- 8, http://wueconb.wustl.edu/E1043S00/schenk/Money/Commodities.html)

Due to the above mentioned disadvantages of gold and silver, banks evolved in 16th and 17th
century in England. Merchants used to store their gold there and in return received a statement
indicating how much they had deposited. This statement could be signed over to other persons
when the merchants wanted to buy something. As a result, paper currency, which are pieces of
paper that function as a medium of exchange, developed. (Schenk, 1997-8,
http://wueconb.wustl.edu/E1043S00/schenk/Banking/Commodity.html)

Initially, paper money was guaranteed to be convertible into an adequate quantity of precious metal
or coins. In most countries this system has evolved into paper currency that is issued by the
government’s decree (“fiat”). This means that this currency has to be accepted as legal tender. It is
called fiat money which is not convertible into precious metal anymore and has no intrinsic value.
For instance, today’s coins only have a token value, that means the face value exceeds the value of
the metal. The value of fiat money derives from the perceived authority and creditworthiness of the
issuer. Fiat money is the norm in most societies today. National currencies are issued and managed
by the central bank’s fiat. (Central Banks are institutions which control the money supply of the
country.) If the monetary authorities are both competent and honest, fiat currencies are stable,
reliable and efficient.

4.2 Development of new payment technologies

Paper currency and coins can easily be stolen and can be expensive to transport because of their
size. As a consequence, with the development of modern banking, cheques were invented. Cheques
are a type of IOU payable on demand that allows transactions without the use of currency. No
money needs to be moved when using cheques, because payments balance out such that both
cheques are cancelled. They can also be written for any amount up to the balance in the account.
This simplifies the transactions for large amounts of balances a lot. As a result, it reduces
transportation costs and therefore, improves economic efficiency. (Mishkin, 1992, p.27)

Despite the advantages, it is very time consuming to trade a cheque for currency. This may result in
difficulties if something has to be paid quickly. Furthermore, it takes a few days until the bank will
credit the account with a cheque that a person has deposited. To process cheques is very costly. For
example, it has been estimated that it costs over 5 billion U.S. Dollars per year to process cheques
written within the USA. (Mishkin, 1992, p.27)

Due to the development of the computer and advanced telecommunication technologies, new
advances in the payment system were made, like the invention of the electronic funds transfer
system (EFTS). This technology introduced individual access to the payment system by means of a
debit card reader or a personal computer. Deposits are simply transferred from payer to payee using
electronic devices. Nowadays, for example, central banks, commercial banks, or corporations can
transfer funds to other institutions by using EFTS. The whole paperwork can actually be eliminated
by converting it to the EFTS. It is much more efficient than payment systems based on paper,
because it reduces the cost of transferring money and, therefore, decreases the frequency of using
cheques and paper money. During the last years, people have begun to use EFTS more and more in
daily life. In connection with EFTS the evolution of plastic cards, e.g. debit and credit cards (American
Express, Visa, etc.), should be mentioned. These cards allow people to make purchases which are
paid for by booking the amount from the person’s bank account either immediately or at the end of
a month. (Goede, 2000, pp.309,342) The main difference between credit and debit cards is that
credit cardholders can extend their credit up to a given limit. Today, credit cards are the most widely
used method of payment. (Besson, 1999, p.58)

EFTS, debit and credit cards are basically the beginning of electronic payment systems. Innovations
of these electronic payment systems helped to reduce transaction costs a lot and initiated the
creation of digital money.

5. Digital money

Currently, there are various approaches to set up and implement electronic payment systems. To
understand the evolution of electronic money one has to take a look at the historical improvements
in computer technologies.

5.1 Electronic commerce

For a few years, now computers and networks have been widely used. In 1993 the aggressive
expansion of the internet started. (Besson, 1999, p.14) Electronic commerce was heavily enforced by
this development. This expression refers to ‘on-line selling’, what means doing business through web
stores. (Besson, 1999, p.15) This will and partially has already changed the way business is carried
out. Every company will be affected by electronic commerce, even companies that do not think of
themselves as being involved in the on-line business. Electronic commerce directly leads to the
reasons why electronic money has developed.

If somebody wants to operate fully in the digital market place, commonly accepted payment
methods may not always be appropriate or efficient. Since different kinds of transactions take place
within electronic commerce, e.g. the purchase of an expensive house or of something very
inexpensive, the idea of electronic money (equivalently, e-money or digital money) arose.
5.2 Why electronic money is required

As mentioned before, the most widely used ‘digital payment methods’ are credit cards. Cardholders
used to send their cardnumber via e-mail without any encryption in order to pay for purchases.
Thanks to improvements in technology, credit card encryption has become more and more usual.
This reduces the risk of misuse a lot and increases the number of people who are willing to pay by
credit cards in the internet.

However, when making micropayments (or minipayments), e.g. buying a good for 28 Cents, it is
neither efficient to pay by credit card nor by cheque or bill, since transaction costs would be much
higher than the price charged. So other forms of electronic payments for low-price goods which are
more efficient, such as e-money, have to be implemented.

5.3 What is e-money?

There are many different names which are currently used to specify electronic money: Digital Cash,
Digital money, Cyber-coins, E-cash, Digital Token, etc. Electronic money is a digital payment message
which serves as a medium of exchange or store of value. (Besson, 1999, p.21) According to Lawrence
H. White a more precise definition of digital money can be obtained:

“The currency balance information, an encoded string of digits, can be carried on a “smart” plastic
card with an implanted microchip, or kept on a computer hard drive. Like a traveller’s check, a digital
currency balance is a floating claim on a bank or other financial institution that is not linked to any
particular account. One cardholder can make a payment to another without bank involvement, by
placing both cards in a “digital wallet” that writes down the card balance on one card and writes up
the balance on the other by the same amount.” (White, 1996, http://cato.org/moneyconf/14mc-
7.html)

The greatest differences to earlier forms of money are, that e-money is impersonal and virtual.
Contrary to credit or debit cards, it is always pre-paid. The private issuer of any form of e-money
allocates value to a coded digital message which is stored on a computer system or a smart card
chip. The issuer guarantees a fixed reimbursement value.(Besson, 1999, p.22)

5.4 Types of e-money

There are various e-money systems which are technically different, for example electronic coins,
credit card chips, digital cheques, etc. Most of these types of digital money still use national currency
as a denomination of the value they store and transfer.

In addition to credit cards, which are the most widely spread payments, electronic cheques are used.
They are well suited for minipayments and may be sent through e-mail. One example for electronic
cheques is the NetCheque™. (Besson, 1999, p.62) For secure transactions people prefer smart cards
(also called digital wallets), e.g. for paying underground fares. Here, a small computer chip is
attached to these cards which allows one to store cash electronically. For example, MONDEX ™ is a
plastic card which can store up to five currencies. (Besson, 1999, p.64)
5.5 Properties of e-money

Digital money can be absolutely anonymous. This means that the customers have the freedom of
usage, and the bank is not able to identify their clients via their payments.

In order to replace cash or traditional money as a standard medium of exchange, emoney has to
have equivalent characteristics of traditional money. For example, it must have a monetary value
(backed by cash), furthermore, it must have a global acceptance.

5.6 What makes e-money business attractive?

Contrary to traditional currency, the banks pay no interest for digital currency balances. Therefore,
banks receive an interest-free loan from customers. On the other hand, although, hard (i.e. stable)
currency has been a successful payment instrument over centuries, the production cost of paper
money is becoming higher due to security requirements. As a result, paper currency will become
more expensive. If e-money schemes are able to eliminate transactions or handling costs, and can
offer high security standards, it is rather likely that digital money reduces or even replaces the use of
money issued by the central bank. From the central bank’s point of view, digital currency is a
substitute for traditional money issued by governments. 6. Monetary freedom vs. government
regulation

Monetary freedom is essential for a free-market economy. This implies that in order to ensure the
independence of money and its value, the latter one needs to be determined by open-market
operations, as with the price for any other good. Following this reasoning, e-money and thus
electronic commerce must also be supported by market competition freely since it relies on a
flexible monetary system. As various organisations are allowed to issue their private currency in a
freely competing market some risks also become obvious.

For example, only a single private currency issuer might be able to gain control over the whole
economy or at least major parts of it. This applies particularly to large companies that already
participate in e-business. Therefore, money manipulation and the complete control over the supply
of e-money of one economy (as central banks do in almost all countries) might become a
threatening issue for governments. (Besson, 1999, p.77)

Further, it must be ensured that digital money schemes are strong and stable enough in terms of risk
management. As a result, to avoid one free-market clearinghouse becoming established and acting
as a central bank, government regulation is necessary.

This observation, that market capitalism should never be left alone, but rather be regulated by
governments to stabilise the economy, has been already made by Keynes. According to Skidelsky, he
observed the following: “Governments, that is, retain their role as an uncertainty-reducing
resource... .” (Skidelsky, 2000, p.112)
5. ANALYSIS OF DATA

6. CONCLUSION

To sum up, money has taken different forms over time. As discussed in the paper, today’s money has
evolved over centuries. Due to many innovations and technological advances in the computer
industry, money has become finally what it is today: high-tech. It acts like a symbol of the
commercial structure we operate in. By examining the history of money, it becomes obvious that a
higher number of societies with sophisticated economies has resulted in money adapting to the
technological advances in the economies. The more sophisticated the society the more the use of
traditional money has declined. All the transition steps from a barter economy to today’s high-tech
world have always been followed by the evolutionary steps of money. From commodity money over
fiat money, it has evolved into digitised money.

Digital money makes it possible to undertake cash transactions over the internet. “By doing so, it will
be the basis for a new generation of digitised business.” (Besson,1999, p.79) It can be safely
assumed that e-money will diminish the use of government issued money.

7. DISCUSSION

8. YOUR OPINION/SUGGESTIONS

9. BIBLIOGRAPHY/REFERENCES

Books

Acocella, N. (2000). The Foundations of Economic Policy – Values and Techniques.

Cambridge, University Press

Besson, F. (1999). E-Money A New Private Currency?. Bern, Stuttgart, Wien, Verlag

Paul Haupt

Chown, J.F. (1994). A History of Money: From AD 800. London, New York,

Routledge

Goede, G.W. (2000). Wirtschaftsenglisch-Lexikon, Band 1: Englisch-Deutsch, A-K.

München, R. Oldenbourg Verlag München Wien

Hicks, J. (1989). A market theory of money. Oxford, Clarendon Press

und Risiken des Zahlungsverkehrs via Internet. Wien, Wirtschaftsverlag

Ueberreuter

Mankiw, N.G. (1999). Macroeconomics. New York, Worth Publishers

Mishkin, F.S. (1992). The Economics of Money, Banking, and Financial Markets.

New York, Harper Collins Publishers

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Rabley, S. Money. Singapore, Macmillan Publishers

Journals, Periodicals

Skidelsky, R. (November 25th, 2000). ‘Skidelsky On Keynes’, The Economist

Webpages

Dorn, J. A. The Future of Money in the Information Age.

http://www.cato.org//pubs/books/money/money1.htm

Schenk, R. (1997-8). Commodity Monies.

http://wueconb.wustl.edu/E1043S00/schenk/Money/Commodities.html

Schenk, R. (1997-8). From Commodity to Bank-Debt Money.

http://wueconb.wustl.edu/E1043S00/schenk/Banking/Commodity.html

White, L.H. (1996). The Technology Revolution and Monetary Evolution.

http://www.cato.org/moneyconf/14mc-7.html