Monetary Policy and Central Banking

MONEY AND ITS

EVOLUTION

Group 1
MONEY
is what people use to pay for goods and
services. Money has evolved from fiat to digital
currencies over the past few years. But before
both fiat and digital currency, money was
simply barter; two people would agree to
exchange their goods and services in amounts
that they believe had equal value.
THE MAJOR STAGES
OF EVOLUTION OF
MONEY
• Commodity Money
• Metallic Money
• Paper Money
• Credit Money
• Plastic Money
COMMODITY MONEY - is money CREDIT MONEY - is the creation of
that has intrinsic value, meaning that monetary value through the
it has value even if it is not used as establishment of future claims,
money. obligations, or debts.

METALLIC MONEY - refers to PLASTIC MONEY - is your debit or

coins made of various metals such as credit card, although it can also refer
gold, silver, bronze, nickel, and so on. to the wire transfers of funds from
one bank to another.

METALLIC MONEY - refers to

coins made of various metals such as
gold, silver, bronze, nickel, and so on.
FUNCTIONS
OF MONEY
Money is often defined in terms of the
three functions or services that it provides.
Money serves as a MEDIUM OF
EXCHANGE , as a STORE OF VALUE ,
and as a UNIT OF ACCOUNT .
MEDIUM OF
EXCHANGE
Money's most important function is as a medium
of exchange to facilitate transactions. Without
money, all transactions would have to be
conducted by barter, which involves direct
exchange of one good or service for another.
STORE OF
VALUE
In order to be a medium of exchange, money
must hold its value over time; that is, it must be
a store of value.
UNIT OF
ACCOUNT
Money also functions as a unit of account,
providing a common measure of the value of
goods and services being exchanged.
 FEATURES OF GOOD
MONEY
1. GENERAL ACCEPTANCE
2. PORTABILITY 5. DURABILITY
3. STORABILITY 6. ECONOMY
4. DIVISIBILITY 7. UNIFORMITY
1. GENERAL ACCEPTANCE
The necessary quality of a good money is that it
should be acceptable without any hesitation in the
exchange for goods and services.

2. PORTABILITY
It is also an important quality of good money. Money
should be easily transferable from place to another.

3. STORABILITY
Money should be storable and it should not depreciate
with time. If the money is perishable, it will loose it’s
value in a few days.
4. DIVISIBLE 7. UNIFORMITY
The money which can be divided into small units Money should be homogeneous. It’s unit should
without loosing any value is good money. be identical. For ex all 10 pesos notes should be
identical in shape, size, weight and content.

5. DURABILITY
Money should be durable. It shouldn’t loose it’s
value with the passage of time.

6. ECONOMY
It is also an important quality of good money.
Money should be made economically. Good
money is that which has low cost and more
supply.
 KINDS OF
MONEY
Money is a fundamental medium of exchange used
to facilitate transactions in modern economies.
Throughout history and across the world, various
forms of money have emerged to meet the needs of
different societies and economies.
COMMODITY
MONEY
Commodity money is a type of currency
that has intrinsic value due to the
materials from which it is made.
EXAMPLE INCLUDE:
A. PRECIOUS METALS : Gold,
silver, and copper have historically
been used as commodity money. Their
inherent value is derived from their
rarity and utility.
B. AGRICULTURAL PRODUCTS :
Some societies used goods like grain,
livestock, or spices as a form of
money because they had tangible
value.
 FIAT MONEY
is currency that has value because a
government declares it to be legal
tender. It is not backed by a physical
commodity but relies on trust in the
issuing authority.
EXAMPLE INCLUDE:
A. PAPER CURRENCY : Most
modern currencies, such as the US
Dollar or Euro, are fiat money and
exist in the form of banknotes and
coins.
B. DIGITAL CURRENCY : With the
rise of digital technology, many
countries have introduced digital fiat
currencies, like the Chinese Renminbi
or the European Central Bank's digital
euro.
 CRYPTOCUR EXAMPLE INCLUDE:

A. BITCOIN (BTC) : The first and

RENCIES
are decentralized digital currencies that
use cryptographic techniques to secure
transactions.
most well-known cryptocurrency,
created by an anonymous person or
group known as Satoshi Nakamoto in
2009.
B. ETHEREUM (ETH) : Known for
its smart contract capabilities,
Ethereum has become a platform for
decentralized applications (DApps).
 LOCAL AND COMMUNITY
CURRENCIES
Some regions or communities
create their own localized forms of
money to encourage spending
within the local economy.
Examples include the Bristol
Pound in the UK and the
BerkShares in Massachusetts,
USA.
BARTER AND ALTERNATIVE
SYSTEMS
In some situations, people may resort to barter
systems, where goods and services are exchanged
directly without the use of traditional money.
Additionally, alternative systems like time
banking allow individuals to exchange services
based on the amount of time they contribute.
MANAGED
CURRENCY
MANAGED
CURRENCY
is one where a nation's government or central
bank intervenes and influences its value or
buying power on the market, especially in
foreign exchange markets. Central banks
manage currency by issuing new currency,
setting interest rates, and managing foreign
currency reserves.
 • is the process by which
CURRENCY companies can capture the growth
MANAGEMENT opportunities that result from
buying and selling in multiple
currencies. Currency management
• BSP's notes and coins are issued
is therefore of strategic value to
against, and in amounts not
most firms.
exceeding, the assets of the BSP. All
notes and coins issued by the BSP are
fully guaranteed by the government
and are considered legal tender for all
private and public debts.
DIFFERENT
TYPES OF
MONEY USED
IN THE
PHILIPPINES
Currently, coins of 1, 5,
10, and 25 cents and 1, 5,
10, and 20 pesos are in
use. Banknotes of
denominations of 20, 50,
100, 200, 500, and 1,000
pesos are also in
circulation.
 DIFFERENT TYPES
OF PISO BILLS

THEY CONSIST OF SIX

DENOMINATIONS: 20, 50, 100, 200, 500
AND 1000 PESOS.
WHAT IS PHILIPPINE
MONEY made of?
Made from 80% cotton and 20% abaca (locally
produced), these new bills contain more vivid
colors, improved security features and the theme of
highlighting Filipino world heritage sites and
natural wonders such as the Banawe Rice Terraces,
the Chocolate Hills, and the Tubbataha Reef.
.
THANK YOU!
REPORTED BY:
DE CASTRO
SIERRA, R.
MABONG
MALMIS
JALOSJOS