The Monetary System

Monetary System

Introduction

Money , the significant factor in bettering human lives , has been in use since ages . The form of money has changed with times but the importance to it , remains the same in all periods . Money is the medium which has been accepted all over the world as the means to buy various commodities and services . It is the medium of exchange , on the basis of which all trade and business are carried out . Money is also used as the unit of account and store of value . And to facilitate the

smooth functioning of money , there is the need of a proper monetary system in any economy . The monetary system aims at maintaining the money supply by supervising the financial agents and the various forms of transaction The government of the country is responsible for forming the monetary system , according to which trade is carried by its people . Although monetary system is treated as the national issue , the trend is changing with the influence of international trade on the policies of national governments . In this we are going to analyze the monetary system by discussing its general meaning and role played by it in the development of nations . The needs of the people and resources available with it shape the monetary system of a country

Monetary System

How much money can the government produce ? What is its market value Which currency is used by the people in the nation ? What are the inflation rates in the nation ? Which banking system exists in the nation ? All these factors are decided by the monetary system , adopted by that country . The monetary system of a country is very vital to its economic development , for it is the monetary system which determines the financial planning of a nation . The value and supply of money , provided by the government is controlled by the monetary system . The value of money is measured from the amount of goods and services can be bought by it . The availability of wealth , needed for the advancement of the nation and its people , is depended on the success of the monetary system . Roger Langrick (n .d ) has mentioned in his article that everyone has some ideas about money , who controls it , where it comes from and how it operates Some say the government prints it others say hard work makes money while others would guess that it 's something to do with gold (A Monetary System for the New Millennium , para .4 . People are aware of the fact that money is produced by the government but they are ignorant about the rules of monetary system , which the government has to abide by while producing money . Although government is the creator of money but it is the monetary system which regulates the supply of money . The government cannot produce money without any limitations . These limitations are the outcome of the monetary system of the nation . All the areas of financial aspects of a nation are covered by the monetary...