Meaning, Forms and Functions of Money

Money is a concept which we all understand but which is difficult to define in exact terms. This is because it fulfills many functions and comes in many forms, each of them providing a criterion of moneyness.

For this reason, Prof. Walker defines money as: “Money is what money does.”

Since general acceptability is the fundamental characteristic of money, in simple words, money may be defined as anything which is generally acceptable by the people in exchange for goods and services or in repayment of debts.

One of the traditional definitions of money calls it “a unit of account, a means of payment, and a store of value.” Professor Coulborn defines money as “the means of valuation and of payment; as both the unit of account and the generally acceptable medium of exchange.” These are the functional definitions of money because they define money in terms of its functions.

Some economists define money in legal terms, saying that “anything which the state declares as money is money.”

Forms of Money
There are many forms of money. Following are the main forms of money: