In modern society, money plays a huge role. The functions of money, that is, the role they play in a market economy, cannot be overestimated. Science defines only five of them.
In classical economic theory, money functions as a medium of exchange, a measure of value, a means of payment, a means of treasure formation, world money. Each of them will be described in more detail below.
So, the money. Functions of money as a measure of value are determined by their ability to be equivalent to the value of any goods. This role is reflected in the price of any item or service. Thus, a certain number of banknotes corresponds to the true value of the goods, the costs of its production. This is a quantitative expression of all economic processes. Another economic term is associated with this function of money - the scale of prices, which means a certain weight of a precious metal established by law as a monetary unit of the state.
As a means of circulation, money acts as a kind of intermediary in trade in the process of exchanging goods, displaying their exchange value. Since the middle of the last century, gold money has completely gone out of circulation. They were replaced by paper banknotes, which in different countries have their own name and appearance. As a rule, these are paper bills and bargaining chips of various denominations.
Money is also used as a means of payment. Functions of money in this role are the ability to repay any obligations (debt) between several economic entities. This function works when buying and selling goods on credit, when repaying a debt, paying salaries, taxes, and so on. Such securities as checks, banknotes, bills are related to it.
As a way of accumulating treasures, money temporarily interrupts its circulation, leaves the movement, accumulates and increases its value over time. The best way is to buy "real money" - gold, silver, platinum in the form of ingots. Also, luxury goods made of precious metals, stones, and jewelry are considered to be accumulations. But you can also save paper money, preferably in a banking institution with interest.
Functions of money "world money" suggest their use to service international trade, interstate economic relations. Previously, exclusively gold was used for these purposes, however, with the transition of society to paper money, the role of precious metal was much reduced. Today, for that kind of money, they buy and sell goods on the international market, they are borrowed if necessary.
Money, the function of money is the object of close attention of all scientists. Western economic science is of the opinion that in the modern world, money performs only three tasks: the means of accumulation, value accounting and the means of circulation. And the function of "means of payment" combined with the latter - "means of circulation." However, the role of money cannot be underestimated.