What are the forms/types/kinds of money?

There are lots of types of money. Following are the key types of money.

1. metallic money
2. paper money
3. bank money
4. legal money
5. plastic money
6. near money

Metallic money:

The money made of a typical metal such as gold, silver etc is called metallic money. It is operational available as coins. In this country the coins of Rs. 1, 2 and 5 include the current samples of

metallic money. Because of weight, it is not easy to work with this money in large quantity. Therefore coins are widely-used in small amounts merely the metallic money has the following 2 types:

  • · Full bodied coins
  • · Token money

Full bodied coins:

When the head value of the coin comes to the value of metal inside the coin, the coin is known as full bodied coin. The silver and gold coins of old times are samples of full bodied coins.

Token money:

When the head value of any coin is above the value of the metal it contains, it is called token money. In this country, all of the coins are token money.

Paper money:

Paper money refers to notes of countless value crafted from paper which from the central bank or government of the country. The paper money can be classified into following types:

  • · Representative money.
  • · Convertible money
  • · Inconvertible money/fiat money.

Representative money:

Representative budgets are that cash that’s fully backed by equal metallic reserve. The holder of any bank note can certainly understand changed into metallic (gold & silver) form on demand

Convertible money:

It really is the form of money which can be changed into gold, silver i.e. metallic reserves. But all of these notes from the government are usually not fully backed by gold. The number of gold kept by the government is an individual proportion of the notes issued.

Inconvertible/Fiat money:

Inconvertible or fiat budgets are one which we’ve got within our pocket and employ in daily business. The public presence value of these budgets are over the value of the paper. e.g. the value of the paper of 100 rupee note is virtually nil nonetheless it is purchasing power comes to Rs.100. it’s got this value because it is declared as legal money by the government, so it is generally accepted as a medium of exchange.

Bank money

This is the most contemporary form of money this budgets are often known as credit. It only includes cheques, bill of exchange and drafts.


A cheque can be an unconditional order by your customer on his bank to pay the specific cost to him or holiday to a party.

Bills of exchange:

A bill of exchange is a purchase because of the drawer on the drawee to pay a sum of money on the drawer or holiday to a party.


Draft is often a cheque drawn with a bank alone branch or even the branches of some other bank requesting it to pay on call for a fair bit to someone named on it.

Legal tender money

The cash that the person accepts as a means of payment plus in discharge of debt is called legal tender notice. Every one of the notes and coins from the govt. plus the central bank are legal tender money. Legal tender funds are of 2 kinds:

Limited legal tender money:

The cash that may be used a technique of payment as much as a certain limit is referred to as limited tender money e.g. coins.

Un-limited legal tender money:

The cash which can be used a mean of payment about any limit or amount e.g many of the notes from SBP.

Non legal tender money

Bank funds are are cheques, bills of exchange, a promissory notes just isn’t legal tender money. Robertson says it “optional money&rdquo ;.So non legal tender funds are money that your person may or may not accept being a mean of payment.

Plastic money:

Plastic money means the credit cards, smart cards. Plastic cards that contain specially printed set of characters. Recently using these funds has increase.

Near money:

A kind of money which could be converted into money. It included deposits, government bonds, printed bonds etc.

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