A first definition of money is to define money as the mean of exchange between individuals. In a capitalist economy, this is a too simple definition. The fundamental purpose of money is a way to distribute the ownership in the society. And, by a consequence, money is also used as a mean of exchange. Furthermore, it should be analyzed that money is also a social instrument which help to coordinate social relation between individuals.

? Specific functions (mostly micro-economic)

č Common measure of value (abstract)

č Standard for deferred payments (abstract)

? General functions (mostly macro-economic and abstract)

Some customers leave money in the bank earning interest. A bank can use these idle deposits to make loans to people who then buy goods. Shopkeepers receive extra money which they redeposit with the bank. Some of this redeposited money is left to earn interest and can be re-lent. The bank has therefore created money. If all customers were to try to cash their deposits at once, there would not be sufficient cash. The amount of money the bank can create therefore depends on the ratio of cash to liabilities that they hold. The higher this cash ratio the less money the bank can re-lend or create.

Some topics in this essay:
Institutions Types, Banks Banks, TYPES BANKS, Money Term, Money Specific, Credit Creation, Account Banks, Association Financial, Investment Banks, Bank Loan, savings banks, commercial banks, abstract Æç, financial institutions, loans funds, credit unions, money bank, primary functions, loans investments, savings deposits, investments commercial real, money mean exchange, loans funds obtained, issue checking accounts, mutual savings banks,