Money as a store of value

Money has the property that the value that is being associated with it is retained, even over longer periods of time. This makes money a useful medium to store this value for a short or long time. In order to make this possible, a number of conditions have to be fulfilled:

• Money must be durable and long lasting. Even when saved for a long time, it must not decay or perish. When paper money or coins do wear off, it must be simple to exchange them at the bankfor new banknote and coins of the same value.
• Money must have a stable value. This means that an amount of money you have today must still have the same value in a year or perhaps even ten year. Ideally, a certain amount of money must buy the same amount of bread now and in the future. In reality this is often not the case, the process of money slowly losing it's value over time is called inflation.
• It must be very hard, preferably even impossible, to counterfeit money, and it must be simple to recognize genuine money.

The value of money is mainly a matter of trust. A monetary system will only work when everyone using the money can trust that the money they receive from others has the value it indicates and that others will accept their money too.

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