History of money and currency

The emergence of money
Ancient origin of the money may have existed at least 100,000 years ago. Historical development of money begins with the evolution of human civilization itself is about 2000 years BC.

Before the existence of money, people used the barter system is inefficient. Because of human dissatisfaction or barter barter system, a system of using a 'thing' as the focal point was created. The ability of money to free mankind from the complexity of barter system led to the use of money as soon as there is of acceptable items.

Commodity Exchange
The revolution started with the money commodity money. Level, commodity funds started when people feel that too many weaknesses in the barter system. They find one another tool to replace these weaknesses by selecting a tool is difficult to be obtained and value in society. At first they select tools such as a piece of jewelry to be a medium of exchange. Among the items used are:

• Grains of beads (usually made from glass, clay, agate and onyx stone.)
• Animal skins
• Sword
• Kettle (copper material)
• Spear
• Jar (which is a symbol of wealth or status of that era)
• Brass cannon

The appearance of metal coins and money

Denarius, the money during the time of ancient Rome, is a small test rocks perak.Penemuan coins led to the creation of coins based on commodity metals. What soft metals can be tested for authenticity on the rocks to test which one calculates the total content of metal in a lump quickly. Gold is a soft metal that is hard to come by, compact and easily stored. Because of this, the use of gold as money spread very quickly from Asia Minor, the place where it is used widely throughout the world.

Coins were created to replace the money commodity that is not suitable role as money. Besides gold, the metal used as money metals are iron, tin, silver and copper. Among these metals, gold and silver is the metal most popular and widely used around the world.

Paper money

Paper money was introduced to overcome the weight of coins for transactions. First paper money in the form of receipts used as evidence of gold and silver with jeweler. Receipt indirectly told that it can be converted into gold and silver coins that way.

Gold Standard (1880-1914)

The financial system used approximately in 1880 until the outbreak of World War I known as the Gold Standard or the gold standard. The main feature is that it is a fixed exchange rate system based on the value of fixed paritinya emas.Melalui value of this system, gold is needed only as a reserve asset. Paper money convertible into gold at the issuing bank at a certain ratio.

Inter-war period (1918-1939)
When the outbreak of World War I, the financial requirements to be very large and can only be met by the production of more money. To avoid undesirable effects on the domestic market, most countries to cancel the gold standard rules. In 1933 only five known Gold Bloc countries (France, Belgium, the Netherlands, Italy and Switzerland) have adopted the gold standard. However, this system ended in 1936 when there is a currency of France and Switzerland.

The origins of "Bretton Woods System"

Bretton Woods system was the system used to control the money of the major industrial countries of the world in the middle of the 20th century. With this system, all countries need a system of international monetary policy to set a monetary value (plus and minus one percent) in the value of gold.

In preparing to build the international economic system during World War II is still in progress, 730 delegates from all 44 partner countries gathered at the Mount Washington Hotel in Bretton Woods, New Hampshire, United States, the Monetary and Financial Conference of the United Nations Organisation. The delegates signed the Bretton Woods Agreements during the first three weeks of July 1944.

In a complete system of rules, institutions and procedures to regulate the international financial system, the delegates at Bretton Woods established the International Monetary Fund (IMF) and International Bank for Reconstruction and Development (IBRD), which is now part of the World Bank Group. These organizations began operating in 1945 after having enough member states to ratify the agreement.

The main features of the Bretton Woods system is a must for every country to adopt a monetary policy that maintained the exchange rate in the fixed value-plus and minus one percent-in the value of gold and the ability of the IMF as a temporary settlement payment imbalances. In the face of increasing financial constraints, the system collapsed in 1971, after the United States alone end the dollar convertibility into gold. American action is creating a situation where the U.S. dollar became the only currency currency guarantees and collateral for the member states.

Fiat money

Fiat money refers to money that is not pegged to commodity reserves. The value of fiat money given by the government to enforce such order fiat money as legal tender in the law where the debtor can pay off their debts with fiat money without having to worry about is not accepted.

In 1971, the United States switch to fiat money. At this time, most economies in the developed countries to back up their currency U.S. dollar (Bretton Woods Conference). With this most western countries and the world economy as a whole changes to a system based on fiat money.

Credit money
Credit money appear with the emergence of fiat money and commodity money. Most of the money in the western economic system is credit money derived from fiat money.

The use of credit money to expand with the advent of credit cards that allow people to buy on credit without the need of money. In the modern economic system, the bank will lend money more than the reserves it has at any time. By doing this, the bank will increase the supply of fiat money exceeds the amount of money available. Although banks do not have enough fiat money if depositors want to withdraw all their money in the current account (credit money), most transactions are done by check or electronically.

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