Money is omnipresent. Modern society cannot run without it. We cannot think of a society today which can do away with money. Money has changed its form with timekeeping in tune with the different stages of development of the society. Money performs a number of functions and its importance lies in the fact that it acts as a medium of exchange, as a unit of account, as a standard of deferred payments and as a store of value.
Money provides innumerable benefits in our day-to-day lives. In the classical theory, money played an insignificant role as it had no causative influence on the economy. In the opinion of classical theorists, money was purely confined to medium of exchange and related itself to economic activity.
Money was used as a technical instrument to overcome the complexities involved in barter system. There was strong opinion that money was a passive element, which was used to help in the process of exchange. Contrary to this, in modern economics money plays a significant and an active role. Modern economists emphasize that the most important function of money is to regulate the general economic activity and to promote the wealth and welfare of a country's economy. It further explains how money influences production, consumption and distribution. Thus, the institution of money is considered to be an efficient instrument contributing to economic prosperity of a country.
Due to the advent of globalization, financial markets are getting integrated with ...