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Money and Its Functions
| Nr. | Chapter | Page. |
| Introduction | 3 | |
| 1. | History of money | 4 |
| 2. | Money supply | 5 |
| 3. | Types of money | 6 |
| 3.1. | Commodity | 6 |
| 3.2. | Fiat | 6 |
| 3.3. | Coinage | 6 |
| 3.4. | Paper | 6 |
| 3.5. | Electronic or digital | 6 |
| 4. | Functions of money | 7 |
| 4.1. | Measure of value | 7 |
| 4.2. | Medium of exchange | 7 |
| 4.3. | Means of accumulation and savings | 8 |
| 4.3.1. | Gold reserve | 9 |
| 5. | Money in Latvia | 10 |
| 5.1. | Bank of Latvia | 10 |
| 5.1.1. | The banking sector in figures | 10 |
| 6. | Modern money | 12 |
| 6.1. | Plastic cards | 12 |
| 6.1.1. | Bilateral and multilateral system | 12 |
| 6.1.2. | Credit and debit cards | 12 |
| 6.2. | Plastic cards in Latvia | 13 |
| 6.2.1. | Payment card statistics as of 31.03.2015 | 13 |
| 6.2.3. | Number of payment cards and ATM as of 31.03.2015 | 14 |
| 7. | The role of money in the economy | 16 |
| Conclusions | 17 | |
| Bibliography | 18 |
Conclusions
Analysing done work, it is essential to repeat again that in the modern economy money plays significant role. Appeared thousands years ago, it always stays same important until nowadays. It means that money will never lose the role that plays.
Looking into history, it may be assumed that in the future the money will somehow modify, but argue that they someday will disappear- impossible. People will always need money.
Money is money, because the government declared them legal tender. Government, issuing banknotes does not guarantee that their return it for any other commodity, such as gold, as it was before, since gold has ceased to play the role of money in the modern economy:
• Value of the goods does not depend on gold;
• Gold can not perform the function of accumulation (no exchange gold for money)
• Gold does not function as a payment;
• Gold can not perform the functions of money in the international exchange.
Despite the fact that gold has no functions of money, nearly every country has a gold reserve. Currently, the gold reserve is part of the gold and currency reserves, acting as anti-crisis reserve and stabilization of the national currency. Furthermore, since gold can be used at any time as a means of payment, big gold mean greater economic independence.
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The paper is course paper for 1st year of Bachelor Degree in European Studies for Economics.The aim of the paper is to make a single and the general understanding of money, their function and role in the economy by explaining definition of money and kinds of it, looking in a history of money, understanding meaning of gold reserve and comparing statistical data about reserves in Latvia and Worldwide. In addition considering Latvian bank and modern money by definition and in real examples in Latvia, compiling statistical data about payment cards.
