2.1 Money: Concept, Role and Functions

Concept: money is anything generally accepted as a medium of exchange — not a thing but a social convention of acceptance. Evolution: barter (the double-coincidence problem) → commodity money (grain, salt, cattle) → metallic coin (the first standardised state money — History's Lydia; Nepal's Mahendra-malli — NEH U4) → paper currency (claims on metal, then pure fiat: money by state decree) → bank deposits and cheques (most money today is bank debt, not notes) → electronic money (cards, wallets, mobile banking) — with the frontier question: cryptocurrencies (private, algorithmic) — which the Nepal Rastra Bank has declared unrecognised and unlawful to deal in: a live seminar on what makes money money. Functions (the standardfour + two):1. Medium of exchange — the double coincidence solved; transaction costs collapse;2. Measure/unit of value (account) — the common denominator pricing everything (without it, n goods need n(n−1)/2 exchange ratios — try the barter arithmetic once);3. Store of value — purchasing power carried over time (imperfectly — inflation the tax on holding it);4. Standard of deferred payment — debts, wages, taxes contracted in money terms (the lawyer's function: nearly every contract is a money promise — inflation silently rewrites them);5. (Transfer of value across space; liquidity's definition — money as the perfectly liquid asset.) Role in the economy: the price system's language; specialisation and scale…