MONEY AND BARTER SYSTEM Introduction This unit acquaints the student with the idea of cash, its development through bargain framework. It likewise examines the issue experienced by the deal framework which prompted the development of cash. Additionally, this unit will check out at the connection between bargain framework and counter exchange. Objectives Toward the finish of this unit, you ought to have the option to: i) Define cash and bargain framework; ii) Discuss the issues experienced in the bargain framework; and iii) Explain the relationship, if any, between bargain framework and counter exchange. Contents Theoretical Meaning of Money L.V. Chamdler in 'the financial matters of cash and banking' 1973, characterizes cash as what the law says it is. He said a thing is probably going to experience issues in accomplishing general worthiness in installments on the off chance that the law disallows its utilization for this reason. In any case, he contends, that lawful definitions are unacceptable for reasons for financial examination. This is on the grounds that individuals might decline to acknowledge what is lawfully characterized as cash for trade of labor and products. On this premise, he infers that lawful arrangements are vital however not adequate to decide things that do or don't act as cash. It is the useful or functional meaning of cash that includes in monetary examination. Subsequently, cash has been characterized as whatever is by and large satisfactory in installment and for the most part utilized as a mode of installment or trade regardless of its lawful status. All coins and paper cash are for the most part satisfactory and supported with full lawful status for the repayment of obligations. Likewise, cash is the advanced vehicle of trade and the standard unit where costs and obligations are communicated. The National bank of Nigeria (CBN) controls the way of behaving of cash and credit to impact the equilibrium between saving and venture consumption and consequently the pace of cost level. All in all cash, is characterized in financial matters, as whatever is promptly and broadly acknowledged as a mode for trade of labor and products or in repayment of obligations. Cash assumes an essential part in the monetary arrangement of any country. It is a method for advancing specialization and trade on which current monetary action is based. Self Evaluation Exercise I. Separate between the legitimate meaning of money and the functional definition of money The Barter System Before the creation of government issued currency in the types of cash notes and coins exchange had been directed by bargain, or at least, trade of products for wares. Nonetheless, the high level phases of deal saw trade using product monies, for example, cowries, shells, cow, manilas, iron bars, salt and pepper and so on. The issues related with the framework are: a. Double fortuitous event of needs: It involves finding an individual who has what you need and requires what you have. That is, somebody who doesn't just need what you have yet additionally have what you want. For instance, an individual who has rice and needs sweet potato should look for someone else who has sweet potato and necessities rice. This cycle is excessively bulky and prompts time wastage. b. No normal unit of measure: It was challenging to show up at a uniform or an effectively satisfactory conversion scale (for example what amount of a specific ware would be traded for specific amount of another item) between various products. c. The nonattendance of putting away abundance or worth: Under the deal framework it is challenging to store abundance on the grounds that most articles of exchange, particularly agrarian items are effectively transitory. d. Difficult in making conceded installment: because of conversion standard issue, the deal framework doesn't loan itself effectively to the credit framework for example to make a great or administration accessible to someone now for the installment to be made sometime not too far off. e. Problem of cumbersomeness and unification of certain merchandise: A few products are frequently excessively massive to be conveyed from one spot to the next, and are not equipped for being isolated into more modest units to work with exchanges. f. Indivisibility of some item: A few items are too healthy to be in any way isolated for trade to occur. For example a trade of tuber of sweet potatoes and meat from cow. g. Transport and weight issue: The distance to be covered before trade could occur was incomprehensible, combined with the heaviness of the item made the cycle excessively unwieldy h. No specialization: During the period individuals will generally participate underway of numerous items as a panacea to different issues experience during exchange. Self Evaluation Exercise i. List and make sense of the issues related with barter system. 3.2 Barter Vs Counter Trade Bargain is type of counter exchange, others incorporate switch exchange and offset exchange. Counter exchange is a framework wherein at least two nations include in return of items for wares or products for administrations as well as the other way around. For the most part bargain exist among nearby individuals who have normal practice, conviction and social foundation (not in all cases) but rather not with different nations doesn't different nations, in which case, it doesn't include products and import then it turns out to be counter exchange. Both deal counter exchange actually exist up till date yet in a negligible quantum. An illustration of counter exchange is the situation of Congo and China wherein the previous depend on the later for infrastructural advancement in return for metals. Counter exchange could take any structure however it includes a reminder of understanding between the nations consenting to the arrangement. Self Appraisal Exercise I. Examine the connection among counter and deal exchange. 4.0 Conclusion The presentation of cash has empowered man to conquer the issues related with the deal framework or rather has placed bargain framework into "annihilation". Anyway bargain framework is a sort of counter exchange since the two include trade of wares for products or administrations. 5.0 Summary This unit investigated the bargain framework and it chaperon issues. It additionally inspected the advancement of government issued currency and made sense of the connection between counter exchange and deal exchange.