Understand
the Economy and Banking

Money is the payment instrument commonly used to purchase goods and services, and represents the unit of measurement of the value of goods.

Acceptability
It must be generally accepted by everyone within an economic system. Without broad acceptance, money cannot effectively fulfil its role as a medium of exchange.

Divisibility
It must be easily divisible into smaller units to allow trading of any value (units of currency).

A store of value
Money can be preserved over time.

Transportability
It must be easily transportable, allowing individuals to carry out transactions without difficulty.
Banknotes and coins are physically transportable, while electronic money can be transferred digitally.

Uniformity
The units of currency must be homogeneous, that is, each unit must be identical to any other of the same value.

Value stability
It must maintain a relatively stable value over time. High inflation can compromise confidence in money as a store of value.

There are different types of money. They are not all the same and have different characteristics. The main types are:

Commodity money
Objects that have intrinsic value, such as gold or silver, that can be used directly as money.

Legal tender
State currency considered as a valid legal tender, which must be accepted as a means of payment and may also have its own intrinsic value.

Bank money
Amounts available in banks, which can be used to make payments.

Electronic money
The electronically stored monetary value represented by a claim on the issuer, issued against the receipt of funds, and accepted by natural or legal persons other than the issuer. Among them, the digital euro is an electronic currency that the European Central Bank (ECB) could issue as a complement to the physical euro (banknotes and coins).

Confidence
Acceptance as a means of payment depends on the degree of public confidence in the currency.

Trade facilitation
Money facilitates domestic and international trade and commerce, expanding the possibilities of the market.

Inflation
The value of money can change over time due to inflation or deflation (see below).