Evolution of Money
History
Old Philippine-US Coin
Money went through a long evolution before moving to a modern banking system with the convenience of paper money we use today. Let us see the important stages in the evolution of money.
Barter System
Before the birth of money, people relied on a system of barter. This means that people change goods with other goods. A producer of palay who wanted meat would therefore have to find a meat producer who wanted palay in return. Without the existence of money, situations like this become very difficult.
Commodity Money
People usually search for ways to make transactions easier. They found out later that using certain items as a medium of exchange made it easier to transact business. People used salt, leather, tobacco, palay and other commodities as accepted payment for different items. These are referred to as commodity money.
Precious Metals
After commodity money came the use of precious metals such as gold, silver, copper. Money was valued according to weight and caliber of the metal. Whenever people made transactions, the metal coins used as payments were examined and weighed. The use of these precious metals gave rise to coins as a mode of payment. Engraved in each coin were its weight and the caliber of the metal used. Precious metals are also considered a form of commodity money.
Paper Money
As commerce or trade expanded and as people made more transactions, the use of precious metals became very inconvenient. Their weight made it difficult to use them during transactions, especially when long journeys were involved. During transactions, paper was used when there were not enough coins to make payments. This marked the beginning of using paper money as a medium of exchange.
Evolution of Money in the Philippines
Money also evolved in the Philippines. Before the Spaniards came, Filipinos made use of the barter ring as a form of payment during transactions. We can see samples of this at the BSP museum. The Spanish barilla was the first coin used, while the pesos fuertes were the first paper money used in the Philippines.
Different Forms of Money Used in the Philippines:
- Commodity money
- Token money
- Paper money
- Fiat money
- Deposit currency