In this chapter, we talked about the definition of money and its basics. We outlined types of money including commodity money, for example, gold; fiat currencies, for example, USD; fiduciary money, for example, bank-issued checks; and commercial bank money, for example, bank-issued credits.
The characteristics of money were discussed in detail. Money's six characteristics are divisibility, durability, limited supply, portability, uniformity, and acceptability. It was pointed out that commodity money has two types of value: the absolute (intrinsic) value and the relative value. Commodity money has both intrinsic and relative values. Fiat currency has only the relative value. Currently, there are 180 fiat currencies worldwide. USD is the most important fiat currency. It is widely used in international trading and financial activities. USD is the top reserve currency...