Concept and Functions of Money

Exchange, which entails the process of give-and-take in the transfer of goods and services with others, has played a vital role in the history of mankind. It is in fact, as old as man himself. The reason for its importance is rather simple: self-sufficiency as a way of life is not really practical. Accordingly, the most important functions of money are to serve as a unit of account and a medium of exchange. However, depending on what is being used as money, it could also serve as a store of value and a standard of deferred payment. For further details see: ISRA, Islamic Financial System; Principles and Operations.


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