- Medium of exchange - an object that is generally used in exchange for goods and services. If it didn't exist we would need to barter.
- Unit of account - an agreed measure for stating the prices of goods and services.
- Store of value - money can be held for a time and used later in exchange for goods and services.
The importance of money in any economy can be seen from the role it plays:
1. Money acts as a medium of exchange. It allows society to make unlimited exchanges and transactions so goods can move around the economy. Money also allowed individuals and firms to generate wealth and increase it. This is achieved when one can readily purchase produced ...view middle of the document...
It is here that the world is being held to ransom by the US and is the fundamental reason why the world needs to return back to the Gold standard.
- Trade among the early Filipinos and with traders from the neighboring islands was conducted through barter. The inconvenience of barter later led to the use of some objects as medium of exchange. Gold, which was plentiful in many parts of the islands, invariably found its way into these objects that included the piloncitos, small bead-like gold bits considered by the local numismatists as the earliest coin of the ancient Filipinos, and gold barter rings.
Spanish Era (1521-1897)
- At the end of the Spanish regime, Philippine money was a multiplicity of currencies that included Mexican pesos, Alfonsino pesos and copper coins of other currencies.
- The cobs or macuquinas of colonial mints were the earliest coins brought in by the galleons from Mexico and other Spanish colonies. The silver dos mundos or pillar dollar is considered one of the world’s most beautiful coins. The barilla, a crude bronze or copper coin worth about one centavo, was the first coin struck in the country.
- Gold coins with the portrait of Queen Isabela were minted in Manila. Silver pesos with the profile of young Alfonso XIII were the last coins minted in Spain. The pesos fuertes, issued by the country’s first bank, the El Banco Espanol Filipino de Isabel II, were the first paper money circulated in the country.
Revolutionary Period (1898-1899)
- Asserting its independence, the Philippine Republic of 1898 under General Emilio Aguinaldo issued its own coins and paper currency backed by the country’s natural resources.
- One peso and five peso notes printed as Republika Filipina Papel Moneda de Un Peso and Cinco Pesos were freely circulated. 2 centimos de peso copper were also issued in 1899.
The American Period (1900-1941)
- The Americans instituted a monetary system for the Philippine based on gold and pegged the Philippine peso to the American dollar at the ratio of 2:1. The US Congress approved the Coinage Act for the Philippines in 1903.
- The coins...