Professional Documents
Culture Documents
FINANCIAL MARKETS
Chapter 1: Development of Money in the Monetary System
- used by society as medium of exchange and is widely acceptable for the payment of
goods and services without questioning the integrity of the person offering it.
- In Philippine setting, money supply consists of deposit that is withdrawable by means of
checks and currency which consist of coins and notes.
- In primitive times, Barter System was the first stage of monetary development which is
the direct exchange or swapping of goods and services.
Kinds of Money
1. Commodity Money – the type of money that has a commodity value or a value of its
own.
2. Credit Money – credit instrument that is widely acceptable in payment for goods and
services and in the settlement of existing debts and obligations.
Types:
a. Representative paper money – backed up by 100% gold or silver reserves
b. Fiduciary paper money – backed up by partial gold or silver reserve
c. Bank Note – refers to the promise of a bank to pay the bearer or holder of the note
a sum certain in standards money upon demand or upon presentation of the note.
3. Flat Money – issued during a war whereby the occupying country circulates paper money
that has no relationship at all with its intrinsic value.
4.Legal tender money – circulates because of its legal tender power whereby the debtor is
authorized by law to offer it in payment of his debt or of his existing obligation.
COINANGE
- the process of making uniform coins from metals and stamping them with a specific
design as a guaranty of its weight and fineness and the integrity of the country it
represents.
- COIN is the product of coinage
- Fineness – the ratio of pure gold and silver to the total weight of the coins
- is the place of a factory where coins are manufactured or minted that is operated gy the
government.
KINDS OF COINAGE
1. Gratuitous Coinage ( Free Coinage) – s system whereby money metal or metals may be
brought into the government mint and converted into standard money without any charge
or any expense except for the delay involved in the process
2. Brassage – coinage where the fee charged by government to mint metals into coins is just
sufficient to cover the cost of minting.
3. Seigniorage – coinage where the fee charged by the government is more than the cost of
minting, the government earns a profit
4. Limited coinage – system adopted by a country whereby the government converts metals
into coins only at its option. The face value of the coins is considerably greater than the
value of the metal they contain.
COINS
1. Even flow of metallic grains
2. High relief of letters and numerals
3. Regularity of readings and beadings