Broadly speaking, money may hold upwards classified into 3 principal categories. Those are,
These may hold upwards considered along amongst several other types of money.
- Commodity Money : Primitive money consisted of but about commodities such every bit rice, cattle, goat, etc.
- Metallic Money : In course of pedagogy of fourth dimension pieces of gold, silver, copper or bronze came to hold upwards used every bit money. These may hold upwards regarded every bit metallic element money. To get-go with, the value of such money inwards telephone commutation (i.e., inwards price of goods commanded past times the same) was equal to their intrinsic value (i.e., the value of their metallic element content). Metallic money could hold upwards of 2 types. Those are, Full Bodied Coins together with Token Coins.
- Full-Bodied Money / Coins : Coins of which the value inwards telephone commutation was equal to their intrinsic value are called total bodied money. Thus, when one-rupee money contained ane rupee worth of silver, it was a full-bodied money.
- Token Money : Coins which practice non comprise metallic element worth their value inwards telephone commutation are collectively known every bit ‘token money’. A token money is a money of which the value-in-exchange is greater than its intrinsic value.
- Paper Money : Paper money refers to depository fiscal establishment notes together with authorities notes which are used every bit money. The circulation of newspaper money began every bit a substitute for metallic element money. It represented a sure enough character (weight) of gilt or silver. Later on newspaper notes acquired the characteristics of token money, beingness to a greater extent than oftentimes than non acceptable without reference to their metallic element equivalent. Paper money may hold upwards regarded every bit a shape of token money.
- Currency : The discussion ‘Currency’ is used to betoken the aggregate coins together with newspaper notes (paper money). Currency inwards this restricted feel agency all tangible media of exchange.
- Representative Money : Paper notes together with token coins which are freely convertible at fixed charge per unit of measurement into fully-bodied coins or equivalent bullion (gold, silvery etc), are collectively known every bit ‘representative money‘. This type of money was adopted inwards Bharat inwards the twelvemonth 1927 when rupee notes together with coins were freely convertible into gold
- Flat Money : When notes together with token coins are non convertible into full-bodied money or bullion, but are to a greater extent than oftentimes than non acceptable on the basic of authorities decree (order or fiat), they are known every bit ‘fiat money’.
- Unlimited Legal Tender : Money which is decreed past times authorities to hold upwards legal tender to an unlimited extent inwards known every bit ‘unlimited legal tender’. Creditors are outflow to convey payment inwards such money to an unlimited extent. In India, the rupee annotation together with coins are unlimited legal tender.
- Limited Legal Tender : When notes together with coins are legal tender solely to a express extent, they are known every bit ‘limited legal tender’. Small coins inwards Bharat are legal tender to the extent of ane rupee.
- Optional Money : Notes together with instruments such every bit bills of exchange, cheques, promissory notes, hundis etc., are oftentimes accepted inwards discharge of debts together with obligations although they are non legal tender. Collectively such instruments perchance called ‘Optional Money’. Their acceptability is based on the usual consent of parties.
- Bank Money : Bank deposits which are withdrawable past times cheques are oftentimes included inwards the category of money together with known every bit “Bank Money”. Banks practice deposits when they extend credit ti individuals together with work organisation firms. These deposits are too included inwards the category of depository fiscal establishment money. Notes issued past times banks shape but about other purpose of depository fiscal establishment money.
- Credit Money : The total of depository fiscal establishment credit extended to individuals together with work organisation houses are mostly held past times them inwards the shape of depository fiscal establishment deposits. These deposits are withdrawable past times depository fiscal establishment agree but similar primary deposits made past times depositors. This purpose of depository fiscal establishment money is known every bit ‘Credit Money’.