Module 2: Properties of Good Money

Introduction

Throughout history, many items have been used as money - from shells and beads to precious metals and paper notes. But what makes some forms of money succeed while others fail? In this module, we'll explore the key properties that determine the effectiveness of money.

Key Properties of Money

Money serves three primary functions: as a medium of exchange, a store of value, and a unit of account. To fulfill these functions effectively, money should possess several important properties:

• Durability: Money must withstand physical deterioration and remain usable over time.
• Portability: Money should be easy to transport and transfer between parties.
• Divisibility: Money must be divisible into smaller units for various transaction sizes.
• Recognizability: Money should be easily identifiable and difficult to counterfeit.
• Scarcity: Money must have limited supply to maintain value over time.
• Fungibility: Each unit should be interchangeable with any other unit of the same value.

Use the interactive dashboard below to compare different forms of money based on these properties. Adjust the sliders to see how each form of money scores and which one might be most effective overall.