Money, Banking and Financial Services
Money is anything generally accepted as a means of payment. Candidates must know its functions - medium of exchange, measure of value (unit of account), store of value and standard of deferred payment - and its qualities - acceptability, divisibility, portability, durability, scarcity and homogeneity. Learn the difference between legal tender (money that must be accepted in settlement of a debt) and other means of payment such as cheques, debit cards and mobile payments.
The central bank (in The Bahamas, the Central Bank of The Bahamas) issues currency, acts as banker to government and to commercial banks, controls the money supply, manages foreign reserves and supervises the financial system. Commercial banks accept deposits, lend, provide current and savings accounts, facilitate payments and offer foreign exchange. Other financial institutions include credit unions, insurance companies, building societies and development banks.
Traps: students confuse the central bank with a commercial bank (the central bank does not serve the general public as a retail bank). Another trap is stating that money must have intrinsic value - modern money is fiduciary (trust-based). Also distinguish 'store of value' (money holds purchasing power over time) from 'standard of deferred payment' (settling debts later).
Worked example. A shop advertises a price of $12 (measure of value); the buyer pays by card (medium of exchange); the buyer could instead have saved the money for next month (store of value); and a loan repaid next year uses money as a standard of deferred payment. One item, four functions.