Merchandise money

economic-dictionary

Merchandise money refers to a class of money that bases its value on the good to which it refers. That is, a money in which the instrument of exchange is a good or an object that has a value in itself, as well as exchange value.

Commodity money is also called real money. This money, unlike fiat or representative money, bases its value on the value of the good that is used as exchange currency. That is, a good that has an exchange value, as well as a real value, and that is used as payment in transactions.

A clear example of commodity money is raw materials. Raw materials or commodities have a value that enables their exchange as if it were money. Therefore, raw materials can be considered as commodity money.

Among the examples of commodity money, in the case of a raw material, is gold.

Example of commodity money

As we mentioned, an example of commodity money could be gold, or raw materials in general.

In this sense, gold is an economic good that has a market value set by it. In this way, that good, having a value, can be exchanged for another good as if it were money.

In addition, specifically, gold is a commodity that has supported the value of fiat money on numerous occasions in history. In this way, producing situations such as those that occurred during what is known as the "gold standard".

Barter Origin of money

Tags:  derivatives passes banks 

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