Nature of Money
There has been lot of controversy and confusion over the meaning and nature of money Scitovsky states that “Money is a difficult concept to define, partly because it fulfils not one but three functions, each of them providing a criterion of moneyness those of a unit of account, a medium of exchange, and a store of value”. Sir John Hicks, says that “Money is defined by its functions, anything is money which is used as money, “Money is what money does”.
These are the functional definitions of money because they define money in terms of the functions it performs.Some economists define money in legal terms saying that “anything which state declares as money is money”. Such money possesses general acceptability and has the legal power to discharge debts. But people may not accept legal money by refusing to sell goods and services against the payments of legal tender money.On the otherhand, they may accept some other things as money winch are not legally defined as money in discharge of debts. This may circulate freely.