What are the 4 types of money?

The 4 different types of money as classified by the economists are commercial money, fiduciary money, fiat money, commodity money. Money whose value comes from a commodity of which it is made is known as commodity money. You can read about the Money Supply in Economy – Types of Money, Monetary Aggregates, Money Supply Control in the given link.

A government-issued currency that is not backed by a commodity such as gold is known as Fiat Money. Payment on the basis of trust but not on the basis of any order of the government is known as fiduciary money; examples are cheques. The portion of a currency which is made of book money – debt generated by commercial banks is known as commercial bank money.

Further readings:

  1. Monetary Policy Committee (MPC) – Structure, Objectives UPSC Notes
  2. Monetary Policy – Objectives, Role, Instruments

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