1. Which system prevailed before the advent of money system? 2. Write 2 disadvantages of Barter system
3. Write 2 forms of digital currency we use now
4. Write any 4 advantages of Money
5. Who were the early bankers?
Answers
Answer:
1) An international monetary system is a set of internationally agreed rules, conventions and supporting institutions that facilitate international trade, cross border investment and generally the reallocation of capital between states that have different currencies.[1] It should provide means of payment acceptable to buyers and sellers of different nationalities, including deferred payment. To operate successfully, it needs to inspire confidence, to provide sufficient liquidity for fluctuating levels of trade, and to provide means by which global imbalances can be corrected. The system can grow organically as the collective result of numerous individual agreements between international economic factors spread over several decades. Alternatively, it can arise from a single architectural vision, as happened at Bretton Woods in 1944.
2) Lack of double coincidence of wants.
Lack of a common measure of value.
Indivisibility of certain goods.
Difficulty in making deferred payments.
Difficulty in storing value.
3) Digital currency (digital money, electronic money or electronic currency) is any currency, money, or money-like asset that is primarily managed, stored or exchanged on digital computer systems, especially over the internet. Types of digital currencies include cryptocurrency, virtual currency and central bank digital currency. Digital currency may be recorded on a distributed database on the internet, a centralized electronic computer database owned by a company or bank, within digital files or even on a stored-value card .
4) (i) It renders double coincidence of wants unnecessary. It thus facilitates exchanges and the satisfaction of wants.
(ii) It provides a common measure of value. It thus gives a precise idea about the relative value of commodities.
(iii) It is capable of sub-division. As such it helps in the completion of even minute transactions which is great gain to society.
(iv) It serves as a convenient store of value.
Money and prices determine the total amount of material goods that a salaried man or a wage-earner can consume.
5) The history of banking began with the first prototype banks which were the merchants of the world, who gave grain loans to farmers and traders who carried goods between cities. This was around 2000 BC in Assyria, India and Sumeria.
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