What money is

What You Can Do After This Chapter

Learning objective. Learner explains the four functions of money and why a payment can succeed on one function and fail on another. Learner distinguishes fiat money, central bank money, commercial bank money and e-money as a claim, reads a bank balance sheet, and explains how the form of money changes the speed, finality, data and risk of a payment.

Practical assessment. Learner receives a case where the same EUR 10,000 obligation is paid in cash, by bank transfer and by e-money, then explains what moves in each case, whose liability it is, and when settlement is final. Learner also reads a bank balance sheet and identifies where the money sits.

Expected deliverables.

• Comparison table: fiat, central bank, commercial bank and e-money
• Balance sheet reading note
• Finality note for three payment methods
• Glossary of money terms with examples

Completion criterion. Learner distinguishes the four forms of money correctly, explains finality and liability for each payment method, and reads the balance sheet accurately.