Money and its functions

Money as a Standard of Deferred Payment
The above function is somehow related to the first, as it creates credit and allows transactions to be settled in the future. To be a standard of deferred payment, money must be an accepted way to value and settle a debt in the future.
Money as a Store of Wealth
As services can’t be stored and a lot of goods are perishable, society requires more effective ways of storing wealth. Money can be easily stored, retrieved, and used at a later time, and, at least in times of low inflation, it’s able to maintain most of its value.
Money as a Measure of Value
Money can be used as a universal unit of account to measure the value of all the goods and services exchanged in an economy.
In a money-based economy, prices can be indicated using only one measure of value, simplifying transactions and people’s understanding of how much a good or service is worth.
Conversely, in a barter economy, the prices for a good or service should be established based on all the other goods or services produced and exchanged.
Precious Metals as Money
Especially in the past, gold and other precious metals have been successfully used as money in many societies. It is due to the following:

1. 
   They were a good medium of exchange for transactions settled immediately or in the future, as their value was known, they could be easily divisible, were difficult to counterfeit, and had a high value relative to their weight.
   
2. 
   Precious metals are considered a good store of wealth, as they are not perishable goods. However, others would argue that their success as stores of wealth also depended on people’s expectations. They are expected to maintain their value because others would keep valuing them in the future due to the expectations that the demand for items, such as jewelry and ornaments, would continue to be strong.
   
3. 
   They were good and simple measures of value. Anybody could easily use grams or ounces of gold to measure the price of goods and services.
   

More Resources
CFI is the official provider of the Commercial Banking & Credit Analyst (CBCA)™ certification program, designed to transform anyone into a world-class financial analyst.
To keep learning and developing your knowledge of financial analysis, we highly recommend the additional resources below:

• 
  Definitions of Money
  
• 
  Currency
  
• 
  Paper Economy
  
• 
  Virtual Currency