IN the early times, people used to exchange one commodity for another, depending on their requirement under the barter system. However, exchanging goods in the barter system required double coincidence of wants.
However, money eliminates the need for double coincidence of wants. Since money enables the exchange process, it is also called a medium of exchange. Early forms of money were things of daily use.
- Uses paper notes and coins made of relatively inexpensive metals
- Has no value of its own
- Has a value only because it is authorised by the government of a country
In India, the Reserve Bank of India is the only legal authority that can issue currency notes and coins on behalf of the central government. The Rupee is India’s currency and nobody can refuse to accept a payment made in rupees in India.