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Man's economic activity aims at satisfying his multiple needs, through what he
provided for himself or offered to him by other members of the community of
.goods and services

:Barter system
The system of economic exchanges has been found since the inception of
creation and before the emergence of money. After man exceeded the primitive
stage of life, when he had been living on the gathering and hunting to satisfy his
needs and needs of his family, he entered another stage, and then evolved to
specialize in the production and division of labor. So it became necessary to
"conduct economic exchanges, which is called "barter

The barter system is a commodity exchange with another commodity equivalent
in value and importance. For example, if one person produces wheat in big
quantities more than his needs, he replaces a specific quantity of wheat in excess
of his needs wit other commodity from someone else, such as the plow where he
.is in need to plow his land

Therefore, we find that barter was a step towards the development of exchanges
.and filling the needs of society in those days
:The most important of difficulties of barter are the following

Two persons are needed; each owns a commodity in excess of his needs and -1
wants to be dispensed with for another commodity owned by the other party.
For example, if the first party ha a quantity of barley in excess of his needs, and
wishes to obtain in return of another commodity in need, such as margarine,
provided that the other party possesses the quantity of margarine in excess of
.his needs and at the same time wants the quantity of barley

There must be a corresponding approximately of the value at least of each of -2
the two things subject of swap
It is necessary to identify the rate of exchange for the two things subject of -3
swab prior to the swap process
The difficulty of storing the commodity for exchange in a timely manner due -4
to the ease of damage

Functions of money :
:Money as a standard of value (1)

( 1)

The monetary unit is used as a unit for measuring the value of goods and services, so
this function of money is known as a standard of value or unit of value

:Money as a mediator of the swap (2)
) 2)
This means that money mediates between two people, each of them possesses a
commodity wants to exchange with the other person, but they could not
.exchange it directly

Money as a tool for deferred payments (3)
( 3)
Of the most important functions of money is its usage in the acquittal of due
debts. It facilitates the process of determining what will the borrower pay when
due date of payment the value o the loan to the lender

Money as a tool to store values (4)
( 4)
It is known that the goods are often subject to damage, some of which require a
certain method of storage so that it remains stored for a certain period. And
others are difficult to be stored for a long time and cost a lot of money and effort
to maintain it for a certain period. There are other goods that are often
damaged if stored even for a short period and thereby changing their
nutritional value, as well as their financial value


In addition, man can not estimate the quantity of goods for consumption
.throughout the entire year
For these reasons, the benefit of money as a tool to store values becomes
apparent, where it can be use when needed to buy certain goods at affordable

:Properties of money
:There are properties of money, summarized in the following
money shall have general acceptance among community members, gain their -1
trust, and shall be characterized as an obligation to obtain goods and services,
and settlement or acquittal of debt

Amongst the properties of money is the similarity of its units -2
Money shall be easily portable. That is, small size and light weight -3

Money shall be divisible, possibility of dividing big unit- like Egyptian pound- -4
into several small units, such as half-pound, quarter pound, ten piaster, five
piaster or a piaster

Money shall have relative stability in value -5 -5
Money shall be sustainable. That is, they are made of materials that bear -6
.frequent circulation for a long time and not be damaged


One of the most important events in the history of money development is the
emergence of paper money. Since this form of money helps to achieve many
benefits, but also it caused similarly many damages

The first appearance of the paper money took place in the seventeenth century
in Europe, when coins were exploited at that time. The merchant receive for
leaving this money in trust of goldsmiths a paper receipt or certificate whereby
the goldsmith undertakes to refund such gold and jewelry to the merchant upon

This phenomenon has increased due to its many benefits, including the failure to
steal what the buyer or seller carries of coins, easy to carry the receipt instead of
carrying gold, goldsmiths have the honesty sufficient to keep the money they
have, and their refund of such amounts immediately upon submission of the
proofing receipt

The situation evolved when banks replaced goldsmiths, banks received gold
against delivery of a receipt to its owner. This happened since the sixteenth
century by the bank of Stockholm. In the seventeenth century paper money
issued by banks was called banknotes and the bank is its source. Such banknote
.worked as a monetary tool that performs all the functions of money
. .
:The evolution of paper money
:(Paper money convertible into gold (the gold standard -1

( ) -1
The gold standard is the most important monetary rules known to mankind and
practiced for a long time. The gold standard is characterized with some key
:features, including the following

Under this rule, the state is working to identify a certain weight of gold with a *
certain degree of purity, and make it the standard unit of money. This money
becomes a means of payments and unit of account, with an unlimited power of
financial acquittal
the state determines the relationship between these standard money and the *
other remaining types of money, in terms of their convertibility, and the
precautions to be maintained

According to this standard, every person can convert any amount of money *
into gold
Government ensures free conversion of god from home to abroad. So, any *
individual can export abroad or import home any quantity of gold he desires,
.whether it is for investment or for the settlement of international payments
:The gold standard has many benefits summed up in the following
To stabilize the value of money - find a way of international payments achieve balance of the balance of payments
:Bank money
Bank money is registry in the accounts maintained by banks, this type of money
is the last type of money. The paper money has appeared before as a result of
the deposit of coins-gold- by the citizens at banks. Where its use has led to the
emergence of this kind of money and a new way (to convert deposits and values
from one account to another, in the form of writing or record in an account
opened in name of the depositor in the bank). Thus, the depositor is entitled to
withdraw what he wants from his account or deposit, where he pays for
.purchases, services or obligations

. .

:Types of deposits
There are two types of deposits at banks, the first is called cheque account, and
the second is deposit accounts

cheque deposits: are called current accounts, characterized with the ability (1)
of depositor to withdraw any amount from it at any time in cash upon request
and without prior notice in that regard to the bank
:( 1)

Deposit accounts: the depositor shall notify the bank prior to withdraw or (2)
remittance if the depositor fails in commitment to the procedures and the
schedule, besides the depositor at deposit accounts does not obtain any interests
but he obtains interests on the deposit accounts
:( 2)

Deposit accounts are considered as deposit money because its owner can
withdraw from it at any time and requesting any amount he desires, whereas
the depositor of cheque accounts does not possess this possibility. it is possible to
consider the current deposits and deposit accounts at banks as bank money


The nineteenth century had witnessed increase importance of current deposits
.as a tool for settlement of debts in many countries
:The reasons of the deterioration of the value of the Egyptian pound

Continuous increasing deficit in the balance of trade and balance of -1
Egyptian balance of payments is still suffering from a persistent deficit,
especially in the years after the October 1973 war. The important causes of such
:deficit are as follows
: .1973
a- shortcomings in the earnings of our commodity export in covering the gap
between increased payments than the imported goods
b- this deficit reflects the effects of global inflation on the egyptian economy in
terms of higher import prices of necessary production requirements,
consumables and capital goods

c- the magnitude of the economic, social and military burdens, and the
requirements of reconstruction and development
d- The growing burden of foreign loans and commitments
:Fixed and low interest rate of the Egyptian pound -2
: -2
One of the most important reasons for the increase of the value of any currency
(its exchange rate is the increase of demand for such currency). There has been
arising in interest rates in the global markets, according to the economic
situation and the balance of payments of countries possessing such convertible
coins. While there had been stability in interest rates of the Egyptian pound
.( )


Increasing rates of payment -3 -3

Central bank reports indicate that the current means of payment has risen in
recent years. The total increase during 1980 was about 654.2 million pounds
(around 15 % hen reached $ 5.008.4 million pounds until the end of June 1980.
that is compared to an increase of 545.3 million pounds (15.4 % during 1979).
This reflects the continued increase in rates of the amount of money for the
appropriate limits of monetary expansion
1980 .
15.4) 545 .1980 5.008.4 15 )654
( 1979

:The current status of the city of Port Said as a free zone -4

: -4
States seeking to grow in order to boost production and manufacturing, increase
external resources of foreign exchange, increase employment of national
manpower establish free zones, thus causes some kind of economic recovery at
these countries

The exit of the city of port said from its intended objective as a free zone aims at
establishing some advanced industries and foreign capital, and as a transit area,
which adds new income to the national income, and helps to raise the value of
the egyptian pound against foreign currencies. This city has followed a contrary
trend to the goal of establishment of the free zone and became focused
consumables trade, which achieve a quick and high return for traders, but
hardly achieves some of its real goals


Import system without a currency -5
The state had established a system of import without currency for several goals,
:including the following
a- facilitate the import of capital and intermediate goods and production inputs
to the private sector without exhausting the limited resources of foreign
currency available via the foreign currency fund at commercial banks

b- Attraction of more savings from Egyptians working abroad. The goods
authorized for import in the scope of this system are 79 items, increased to 86
items in 1975, then decided to allow the import of all goods, except for a limited
.list of ration goods of a strategic nature
. -
1975 86 79

:Factors for improvement of the value of the Egyptian pound

improving the balance of payments position, and reduce the growing deficit in -1
the trade balance, through setting a new strategy for foreign trade, development
of exports and removal of all obstacles that limit the competitiveness of our
products in international markets

Mobilize all efforts to boost production rates in all production sites in the -2
country. Where the imbalance between supply and demand, and restore the
balance between them must be addressed, this increases the state's ability to
control the price level, and accordingly support the Egyptian pound
. -2

raise operating efficiency which reduces wastage, work on optimization of -3
usage of the production inputs and imported raw materials, as well as the
development of the administrative, technical, and economic competence of the
public sector, which production represents the bigger share of the industrial

Encourage savings of Egyptians working abroad, with increasing their flow -4
through normal channels (accredited banks, along wit provision of appropriate
investment opportunities by the state in a manner consistent with the nature of
(the Egyptian investor abroad
( -4

Study of the current structure of interest rates in Egypt, and evaluate the -5
effectiveness of the gradual payment policy of interest rate in limiting
conversion of savings from Egyptian pound to savings in foreign currencies

Development of the tourism materials, through development of a long-term -6
comprehensive tourism policy in Egypt with involvement of all the concerned
. -6

Stimulate the stock market, to provide the opportunity to attract Arab, and -7
foreign capital and their circulation smoothly for investment in productive
.projects in Egypt