Introduction to Money and CreditMoney is in use in human society since long. As a medium of exchange in transactions, various objects or coins were used since the early ages. Goods can be bought or sold with the use of money. Different people manufacture different commodities which are sold in the market in exchange of money. The buyers can purchase goods or services with money as per their requirements. Therefore, money acts as an intermediate in this exchange process, hence it is known as a medium of exchange.
In earlier times, coins made of gold, silver or copper were used in exchange of commodities. At present paper currency notes and coins are in use. These coins or paper currency notes are not made of any valuable material. Their value as a medium of exchange arises from the fact that currency is authorised by the government of the country for its use. In India, the currency notes and coins are issued by the Reserve Bank of India, on behalf of the Indian Government. The rupee is the medium of exchange in India, and no individual can refuse to value any transaction in rupees in India. Moreover, no individual or organisation other than the Reserve Bank of India can issue currency notes or coins in India.