Commodity Money and Paper Money

Commodity & Paper Money Assignment Help

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Commodity Money and Paper Money

In the process of evolution of money, various commodities have been used to as a medium of exchange from time to time. Bows and arrows were used as money in primitive times while cattle were used in the pastoral age. In the recent past certain metals have been used as money. Coins of gold and silver were used in most of countries prior to the world War. Thus, when a country, money is made of some metal or any other commodity, it is called commodity money.

But as we know, these days most of the money consists of paper notes issued by the government or the Central Bank of country. Commodities are rarely used for purpose of money. Thus, when paper notes are being used as money, it is known as paper money. Paper money is said to be convertible when the government promises to pay gold and bullion to those who want to give paper money and get it. In this case paper money represents a certain amount of gold and silver which can be had from the government at any time. Thus, it is known as Representative money. But when the money, it is said to be inconvertible paper money.


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