COMMODITY MONEY
• Commodity money is money whose value comes from a commodity of which it is made.
• Commodity money consists of objects having value or use in themselves (intrinsic value) as well as their value in buying goods – for example, gold not only use as medium of exchange but also for making jewellery as well.
• IndiaàCowries were used to make exchanges during earlier times.
PROBLEMS OF COMMODITY MONEY-
✓ Face Value was not same throughout region.
✓ Generally commodities used were perishable in nature.
✓ Generally commodities are bulky to carry
✓ No fungibility (replaceable by another identical item; mutually interchangeable) and divisibility.
