How Monetary System Works?

How Monetary System Works? 

A monetary system is a system by which a government provides money in a country's economy. Modern monetary systems usually consist of the national treasury, the mint, the central banks and commercial banks.
To summarize, money has taken many forms through the ages, but money consistently has three functions: store of value, unit of account, and medium of exchange. Modern economies use fiat money-money that is neither a commodity nor represented or "backed" by a commodity.

Functions of Money

  • A medium of exchange.
  • A standard of deferred payment.
  • A store of wealth.
  • A measure of value.
This Youtube Video explains the whole system very summarized and shortly. Highly recommended to watch:


What are the four elements of international monetary system?

It consists of four elements: exchange arrangements and exchange rates; international payments and transfers relating to current international transactions; international capital movements; and international reserves.

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