Money is everything nowadays. Everyone talks of money, making more and more money, saving money. What do exactly money means? If we go back in the history we would come to know that in the past people used barter before when there was no concept of money. In this act two groups of people exchange goods and services with each other. Then the concept of coin currency emerged. Early these coins were made up of gold and silver and were known as Dirham and Dinars respectively. Later paper currency was introduced. This thing was named money.
What is the new concept of money? Nowadays money is thought to be anything that is accepted worldwide for the exchange of goods and services. Following are the most common types of money that are currently being used in the present world.
Commodity money is the first one. Commodity money can be anything or good that is valuable and people exchange goods of its equal worth. The most common examples are silver and gold. People are exchanging these valuable products for the goods and services they require to fulfill their desires and needs.
Another type of money is fiat money whose original value is far less the one it is representing. We are talking of paper money. What is the Worth of paper? It is nothing in front of 100$, but, once a hundred dollar bank note is printed on it is of great value. It is representing the worth of that cash held by that paper. So now it is of great significance. Now to mange that paper currency we need a proper system to monitor the supply growth and utilization of that money. For this purpose a banking system was introduced. People deposit their money in the banks which are being governed by governments an nowadays by private firms in which their money is secure and a balanced amount is mentioned over there. Central bank is the largest bank to which almost all the banks are interconnected. Most of the countries get their money from the central bank. In America Central bank is the federal bank. Every country has a federal bank which not only supplies money on the federal level but also determines the worth of that money and monitors it for the liquidity of that money according to world rules by various mechanisms based on international rules and regulations.