B.

EARLIEST FORMS OF MONEY:

1. Commodity Money = this was believed to be the earliest form of money as a medium of
exchange. This is a kind of money whose face value is equal to the value of the commodity used
as money which maybe either metallic or non-metallic in nature.
2. Metals Used as Money = these are the latter forms of regular medium of exchange because of
the difficulties of using commodities as money.

Copper == the first metals used as money, most of

Iron == which were in the form of useful tools or
Lead == implements such as: bows and arrows, spears,
Tin == knives, swords, forks, fishhooks & axes, etc.

Today, monetary units of many countries of the world are defined in terms of a certain
weight of a precious metal, gold or silver of a given fineness or purity. Philippine Peso = is
defined as 7 and 13/21 grains of gold with 0.9 fineness.
3. Paper Money = this was developed in connection with the use of gold or silver as standard
money. It was used to overcome the inconveniences of carrying large quantities of heavy
metals and to avoid the risk of losing them. It was also used to minimize or eliminate the loss
through wear and tear as well as their physical appearance.

Before the affectivity of the Central Bank's Act, the Philippine Peso Bill- used to bear the
promise of the Philippine Treasury to redeem such notes in gold or silver coins to bearer on
demand. But at present money now circulated by the Bangko Sentral ng Pilipinas are mere
liabilities of the bank and fully guaranteed by the government of the Republic of the Philippines.
Here, the amount of money issued by the BSP shall be backed up/supported by its assets. Its
general acceptability is by force of law and the government makes them legal tender for all
debts, public or private.

4. Coins= these are the mass of metals shaped in convenient forms and contain specific weight
and purity guaranteed by the government for use as medium of exchange. Coins are used to
facilitate the settlement of small transactions involving less than a peso.

Kinds of Coins:

1. Standard Coins = these are made up of standard metal gold or silver based from the
mint rules and regulations. It is one wherein its bullion value is equal to its face value. These are
also known as full-bodied money.

2. Subsidiary/Token Coins = these are made up of cheap metals

and their face value is greater than their bullion value. These are
known as representative full-bodied money.

Coinage = is defined as the act of manufacturing uniform coins and stamping them as a
way to guaranty their purity and of their weight.
(by Prof. Ray Westerfield).

It is also the act or process of cutting the metals designated as money by the authorities
into pieces of uniform weight and quality certified by the government seal.

Today, coinage is not only a function, but also a monopoly of the government through
the Bangko Sentral ng Pilipinas and any private coinage is considered a counterfeit.

Terms in Coinage:

1. Coin= a shaped-metal with specific weight and fineness, stamped with some particular
design and denomination intended for use as money.
 2. Fineness= it is the purity of the precious metal contained in the coin. It is the ratio of
pure gold or silver to the total weight of the coin.

3. Weight= it refers to the heaviness/bulkiness of the precious metal contained in the coin.

4. Mint= it is the place or factory where coins are manufactured or minted.

Kinds of Coinage

1. Free/Unlimited Coinage = this exists when a person is given the privilege to take any
amount of metals to the mint for coinage.

2. Limited Coinage = this exists when coinage is solely on the account of the government
where it purchases metals in the market and manufactures them into coins and to be made
available to the general public for circulation

3. Gratuitous Coinage = this exists in a country if the owner of the mint does not charge
the owner of the metals a fee for coinage, in short, it is free of charge.

Fees Charged in Coinage:

1. Brassage Fee = it is defined as a coinage fee charged by the

government or the mint that is just enough to cover the actual cost of minting (e.g. cost of
cutting the metal, cost of stamping and assaying the metal)

2. Seigniorage Fee = it is a coinage fee charged by the government or the mint which is
sufficiently high to yield profit. In short, the amount to be collected by the mint is more than
the actual cost of minting.

C. KINDS OF MONEY

On the Basis of Material Used/Evolution

1. Commodity Money = a kind of money whose face value is equal to the value of the commodity
used as money which maybe either metallic or non-metallic in nature.

2. Paper Money/ Fiat Money = this is made up of special kind of paper so as to be able to
withstand the normal or legitimate wear and tear which used in transaction. Paper Money
carried a guaranty that it was convertible into coins or a fixed quantity of precious metal. Fiat
Money was decreed by the government as legal tender but not convertible into coins or
precious metal.

3. Bank Money/Check = this comes in the form of checks which are made up of special kind of
paper and thicker than paper money issued by the Bangko Sentral ng Pilipinas.

E-Money = electronic payments technology can substitute not only for checks, but also for cash
in the form of e-money= this comes in the form of debit/credit cards, stored value card/ smart
card, e-cash, etc.

Debit/Credit Card = enable customers to purchase goods & services by electronically

transferring funds directly from their bank accounts to a seller's account. In supermarkets, you
can swipe your debit card through the card reader at the checkout station, press a button and
 the amount of your purchases is deducted from your bank account.

Stored-Value Card/Smart Card= it contains a computer chip that allows it to be loaded with
digital cash from the owner's bank account whenever needed. Smart cards can be loaded from
ATM machines, personal computers with a smart card reader or especially equipped
telephones.

E-Cash = a customer gets e-cash by setting up an account with a bank that has links to the
Internet and then has the e-cash transferred to her PC. When he wants to buy something with
e-cash, he surfs to a store on the Web and clicks the "buy" option for a particular item,
whereupon the e-cash is automatically transferred from her computer to the merchants
computer.
On the Basis of the Nature/Character of the Issuer

1. Treasury Money = treasury money are those that were issued by the National Treasury before
1949 which consist of treasury notes and coins in varying denominations.

2. Commercial Bank Money = these were issued and circulated by the Bank of the Philippine
Islands and the Philippine National Bank which were circulated to supplement the treasury
notes issued by the Philippine government.
3. Central Bank Money = these are issued and circulated by the Central
Bank of the Philippines since the effectivity of its operation in 1949.

On the basis of their popularity

1. Paper Money = paper money does not have any commodity value nor
intrinsic value which is less popular and less acceptable.

2. Fiat Money = these are issued by a financially embarrassed government

as a result of a breakdown in its monetary system. And a "command" or an order of the
government issues these where there is no gold reserve to back them up.

3. Subsidiary Coins = these are coins whose face value is greater than their bullion value.

On the Basis of Face Value in Relation to Intrinsic Value

1. Standard Money = this includes all those authorized by law as the ultimate basic measure of all
values and to which other kinds of money are finally redeemable. It is called the "money of final
redemption"

2. Representative Money = these are in the form of certificates issued by the government
certifying to the effect that the government has on deposit standard money which would be redeemed
to the bearers of such money on demand.

3. Credit/Convertible Paper Money = these are notes promising to pay on demand standard
money or some other kind of money.

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