2020 How is Money Created? – Everything We Need to Know - Fusion > .
Europe - Medieval Banking & Money Creation ➼
1) Money serves three main purposes:
- Medium of exchange. It is generally accepted for payment for goods and services.
- Store of value. Money can be stored.
- Unit of account. Money is standardized metric that helps us measure value of things.
2) Financial system.
a. Lenders
b. Borrowers
c. Governments
d. Capital - the machinery, tools and factories owned by a business and used in production.
e. Financial system is a network of institutions, markets and contracts that brings lenders and borrowers together.
f. Debt - if you get a loan from the bank, you are obligated to pay back the amount you borrowed plus the amount of interest.
g. Equity - the difference between the value of the assets/ interest and the cost of liabilities of something owned.
h. Financial instrument - a tradeable asset of any kind.
i. Financial institution - an establishment that conducts financial transactions such as investments, loans and deposits.
j. Financial markets with instruments like stocks and bonds, allow borrowers to crowdsource the money they need to borrow. They raise their capital from lots of investors, and spread the risk around.
- Medium of exchange. It is generally accepted for payment for goods and services.
- Store of value. Money can be stored.
- Unit of account. Money is standardized metric that helps us measure value of things.
2) Financial system.
a. Lenders
b. Borrowers
c. Governments
d. Capital - the machinery, tools and factories owned by a business and used in production.
e. Financial system is a network of institutions, markets and contracts that brings lenders and borrowers together.
f. Debt - if you get a loan from the bank, you are obligated to pay back the amount you borrowed plus the amount of interest.
g. Equity - the difference between the value of the assets/ interest and the cost of liabilities of something owned.
h. Financial instrument - a tradeable asset of any kind.
i. Financial institution - an establishment that conducts financial transactions such as investments, loans and deposits.
j. Financial markets with instruments like stocks and bonds, allow borrowers to crowdsource the money they need to borrow. They raise their capital from lots of investors, and spread the risk around.
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