Money is anything generally accepted as a means of payment and settling debts. Its importance lies not in its physical form but in the functions it performs in an economy, which are grouped into primary, secondary and contingent functions.

Primary functions

• Medium of exchange: money is accepted by everyone in return for goods and services, so exchange no longer requires a matching of wants. This is the most fundamental role.
• Measure / unit of value: money acts as the common yardstick in which the value of every good and service is expressed (its price), making comparison possible.

Secondary functions

• Store of value: purchasing power can be saved and carried into the future — money is the most liquid asset one can hold.
• Standard of deferred payment: contracts, loans and future payments are written in money terms, enabling credit and borrowing.
• Transfer of value: value can be shifted from one person or place to another (e.g. selling property in one city and buying in another). …