Historically, and narrowly, money referred to cash (notes and coins) in official currency backed by the relevant government.
Such money may be legal tender.
More generally, money is anything accepted for the settlement of debts in an economy or jurisdiction.
To the economist, money is whatever is used for four roles:
- Medium of exchange.
- Unit of account.
- Store of value.
- Standard for deferred payment.
Money, then, can be many things, but most often today is fiat (let it be) money, i.e. tokens provided by a government and accepted by them for payment of taxes, or abstract representations of it. The latter are mostly as electronic representations in the accounts of banks and other monetary financial institutions, including central banks. Most money in developed countries consists of these records rather than of the tokens issued as fiat money.
In the past money has been commodity money, for example gold or silver or valuable spices or shells, the value of which is in the valuable material or object rather than a nominal value ascribed to (a portion of) it. A government can issue tokens (e.g. notes or coins) exchangeable for a fixed quantity of such a commodity. Such tokens are known as representative money.
- Broad money
- Central bank money
- Fiat currency
- Financial stability
- Gold standard
- Legal tender
- Narrow money