Money and Market

Abstract

Origins and functions of money, its formative role for emergence and performance of market economy are considered. Money is interpreted as a socially accepted form of wealth which role is to neutralize the impact of differences in liquidity and maintenance costs among traded goods on pricing. This approach is compared to those of classical, neoclassical and institutional economics. Rival theories of money origins are used as a background to assess controversies over contemporary fractional reserve banking. The author discusses measures aimed at preserving value of money deposits, while keeping bank credits at a moderate level.