kind of money circulating in the community can be grouped into two, namely currency and demand deposits.
Currency
Consists of currency banknotes and coins. Currency is a means to pay a legitimate and must be accepted by the community in conducting transactions daily.
According to Central Bank Law No. 13 of 1968 article 26 paragraph 1, Bank Indonesia has the sole right to issue coins and paper. Sole right to issue money held by the Bank Indonesia is called oktroi rights.
Types of Money According to Institution that issued
According to the Basic Law of Bank Indonesia. 11/1953, there are two types of currency, namely the state money and bank money.
State money is money spent by the government, made of paper that has the characteristics:
• Issued by the government
• Guaranteed by the laws
• bearing the name of the issuing country
• signed by the finance minister
However, since the enactment of Law no. 13/1968, the money the state stopped its circulation and replaced by the Money Bank.
Bank money is money issued by the Central Bank in the form of coins and banknotes, as follows Characteristics.
• Issued by the Central Bank
• Secured by gold or foreign currencies are recorded at the central bank
• The central bank bearing the name of the country concerned (in Indonesia: Bank Indonesia)
• Signed by the governor of the central bank.
Types of Currency Composition According to author
A. Coin
The coins are usually made of gold or silver because gold and silver meets the requirements of an efficient money. Because the price of gold and silver which tends to be high and stable, gold and silver are easily recognized and accepted people. In addition, gold and silver is not easily destroyed. Gold and silver are also easily be divided into smaller units. In the current era, the coin is not judged by the weight of the gold, but of their nominal value. Face value is the statement that a certain number of gold by weight contained in it.
The coin has three kinds of values.
Intrinsic value is the value of materials to make the currency, for example how the value of gold and silver used for coinage. Historically, gold and silver money once used as money. There are several reasons why gold and silver used as money among other ingredients:
• Durable and not easily broken (U.S. $ 100.00), or five hundred dollars (U.S. $ 500.00).
Exchange Rate, exchange rate is the ability of money to be exchanged with a good (the purchasing power of money). For example money USD. 500.00 can only be exchanged for a candy bar, while the Rp. 10000.00 may be exchanged with a bowl of meatballs).
B. Paper Money
Paper money is money made of paper with pictures and a certain stamp and is the legal tender. According to the Law no. 23 of 1999 concerning Bank Indonesia, which is the paper money is money in the form of sheets made of paper or other materials (like paper).
Paper money has value because of nominal. Therefore, the bill has only two kinds of value, the nominal value and exchange value. There are 2 (two) kinds of paper money:
• State Banknotes (already circulated no more), ie paper money issued by governments and legal tender with a limited amount of finance ministers and signed.
• Banknotes Bank, the money spent by the central bank,
Some advantages of using a medium of exchange (money) from the paper include:
• Saving on the use of precious metals
• The cost of manufacturing is relatively inexpensive compared with the cost of coinage.
• circulation of paper money is elastic (because it is easily printed and copied) so easily diseusaikan with the need for money
• Facilitates delivery of large amounts of
Money Giral
Demand deposits created by the increasingly urgent needs of the community that there is a medium of exchange that is easier, practical and safe. In Indonesia, the bank is entitled to create demand deposits of commercial banks other than Bank Indonesia. According to Law no. 7 on Banking in 1992, the definition of demand deposits is a bill that is in commercial banks, which can be used at any time as a means of payment. Form of demand deposits may be checks, demand deposits, or transfer telegrafic.
Demand deposits is not a legal tender. That is, people may refuse paid by demand deposits.
The occurrence of demand deposits
Demand deposits can occur in the following way.
• Deposit cash to the bank and recorded in a checking account on behalf of the depositor, depositor receives a check book and giro books bilyet. That money can be taken at any time or depositor receives payment from the debtor through bank debt. Acceptance by the bank's receivables were recorded in newspaper accounts of people concerned. How the above is called a primary deposit.
• Due to securities transactions. Demand deposits can be created by selling securities to banks, then booked the sale of bank securities such as the deposit of the selling. This method is called the derivative deposit
• Getting credit from banks that are recorded in newspaper accounts and can be retrieved at any time. This method is called with the loan deposit.
Payment by demand deposits can be made by check, giro bilyet, and telegraphic transfer [telegraphic transfer]. The advantage of using demand deposits
The advantage of using demand deposits as follows.
• Facilitate the payment because they do not need to count money
• Tools of payment are acceptable for an unlimited number, its value as required (written by the owner of the check / giro)
• It's safer because the risk of money lost is smaller and if lost can be transparently reported to the bank issuing checks / giro blocking manner.
Quasi money
Quasi money are securities that can be used as a means of payment. Usually this consists of quasi money deposits and savings and foreign currency accounts owned by domestic private.
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