Bank notes which represent a claim on gold or silver might be called "representative money."

The term Representative money usually refers to a claim on a commodity, for example gold certificates or silver certificates.^[1][2][3] In 1875 economist William Stanley Jevons wrote that representative money arose because metal coins often were "variously clipped or depreciated" during use, but using representations for the amount stored in banks ensured its worth. He noted that paper and other substances have been used as representative money.^[4]

Others have used the phrase to refer to either credit money or fiat money. In 1895 economist Joseph Shield Nicholson wrote that credit expansion and contraction was in fact the expansion and contractions of "representative money." ^[5] Writing in the 1920s and 1930s, John Maynard Keynes' divided representative money into “fiat money” and “managed money.” Economist Robert A. Mundell contests the division stating it fails to recognize there is a continuum between commodity money and token money.^[1] In 2009 an academic paper on "cashless transactions" stated that "The system of commodity money in many instances evolved into a system of representative (fiat) money."^[6]

[edit] See also

Numismatics portal

• History of money

[edit] References