Economics bank

Monetary policy

Markets

Money

Europe

Money

Introduction

Image: Conch shells have been used as money in the past. Copyright: E_B_A, stock.xchng

Money, as the song goes, makes the world go round. This is certainly true as money is vital to all economic activity. But what exactly is money? In the past, sea shells, gold, tobacco and a range of other commodities have been used as money. Clearly our modern form of money is superior to these, but why? What makes a good form of money? In this section we explore all about money and the financial system.

There is a brief explanation of the financial system and the institutions within it and then more detail on money and the functions that money has to fulfil. Choose from the sections below:

• Explanation - a good starting point for finding out the financial system - a simple overall guide.
• Theories - more detail on all the theories about money. The functions and attributes of money, the money supply, different measures of money, liquidity and so on.
• Worksheets - some worksheets to help you test your understanding of the role of central banks.
• Gold - a brief guide to the role gold has played in the economy over time and the London Gold Market.