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CURRENCY AND MONEY

currencyCurrency is a unit of exchange which facilitates the exchange of goods and services. Money emerges as a tool that is necessary for enabling the circulation of relationships between people. During its development money adopts a different outlook, passing through barter, commodity money, "measured" (metal) money, gold, securities and credit money. Functions that money performs in modern times are: a means for calculating values, means to address, means of payment, a means of accumulation, means for transferring values, means for the valuation of goods and services.

The concept of currency means the legal regulation of monetary policy in one country. In a narrower sense with this term is indicated a foreign currency. Depending on the material of which are made the located money in circulation, there could be distinguished the following exchange systems: on the one hand these are currencies that are tied to gold or such with gold coating and on the other hand are the free currencies. Money’s value (the internal value of money) is its purchasing power. External value of money shows what amount of foreign goods can be purchased with a unit of national currency. This value varies with the exchange rate. According to the quantity theory of money there is a right –proportional relation between money and price level. The process of increasing the prices of goods or the process of devaluation of money is called inflation. The process of prices’ reduction or cheaper goods is understood as deflation. Money exists more than five thousands of years.It emerges and evolves in parallel with the emergence and development of commodity production. From the very beginning currencies have been products with a relatively durable use that could be used for consumption in case of need. Such kinds of currencies were for example the precious materials, arrowheads and spears, animals, pearls and precious jewelleries such as shells.

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