Money vs. Currency

People are taught to believe there is money, but the value only exists in human minds. We go through life believing we are working for money, when in reality we are not.

Since money is unreal, it would be convenient to have something real to represent it. We need something we can get our hands on to use in our daily lives. So, human mind invented currency to represent money.

Most people confuse money and currency as the same thing. Although the two terms are often used interchangeably, there is a difference between them.

Money is often viewed as a tool of economic calculation that enables the communication of value, whereas currency is the medium that facilitates an exchange between participants in a market.

Put another way, money is conceptual, whereas currency is physical – money allows the mental calculation of relative value, whereas currency is the thing that actually changes hands.

Some analogies from our everyday life will help to explain the concepts of “money” and “currency”. Let’s compare art with photographs. A picture painted by an artist is that artist’s unreal conception. It may be of a real subject, but it is nonetheless the artist’s conception, or unreal idea, of what it looks like. Most photographs, on the other hand, are a true representation of the subject. A straight photo tends to be real. So, understanding the idea that money as an imaginary concept should not be too difficult.

Thus, the two concepts can be understood in the following way:

1. Money is unreal, meaning imaginary, intangible. You can not hold money in your hand, not you, not any one else.

2. Currency is NOT money, but merely represents money. Currency is physical. We can not hold unreal money in our hands, but we can grasp and trade real currency that represents our unreal money.

Money exists as an unreal concept to enable us to run our economy easier. Money must only represent the value of human labour (including services) and the natural resources labour touches.

Nonetheless, the importance of money cannot be overestimated. Without money, we would be forced to trade eggs for shoes in the terribly awkward and slow process of barter. Our economy would come to a screeching halt. The imaginary concept of money is very useful in representing values (which are also unreal).

In a modern economy most of the money is made up of deposits at banks and other financial institutions. These institu­tions can actually create money – by making loans.

Thus, money is created, not printed. It is created by the activities of commercial banks and other financial institutions – by all those institutions whose deposits circulate as a medium of exchange.

Of course, it is much too easy to start calling currency money. People get to thinking that printing currency is printing money, but that is far from the truth. Printing currency is just printing ink on paper. Currency is printed on paper or minted from cheap metal.

Basically, currency is the units in which prices are quoted. Examples of such units of currency are U.S. dollars or Ukrainian hryvnia.

Currency is money in any form used as a medium of exchange. The real paper bills and metal coins that we hold in our hands is currency. Checks, money orders, credit cards, and cigarettes if you are in prison, are all accepted mediums of exchange, but they aren’t money either.

Currency was introduced as a standardised money to facilitate a wider exchange of goods and services. It speeds up the process, making it faster and easier. The amount of currency we have depends on the amount of money in the economy. If we are short on money, we run short on currency.

Three criteria must be met in order for something to be money. It must be an accepted medium of exchange, it must be a store of value, and it must be the unit of account. If there were any real money it would meet all three of these criteria.

At the same time, only one criterion need be met for something to be currency. It only needs to be accepted as a medium of exchange. In most cases it is also a temporary store of value, but not a permanent store of value.

Vocabulary Notes:

1. to go through life [θru:] – йти по життю;

2. to gethandson – взяти(ся); схопити(ся); вхопити(ся);

3. economiccalculation [ֽi:kə`nOmık ֽkælkju`leı∫^ən] – економічний розрахунок / підрахунок;

4. toenable [ın`eıb^əl] – давати змогу (право) (щось зробити); робити можливим, полегшувати;

5. tofacilitate [fə`sıləteıt] – полегшувати; допомагати; просувати; сприяти;

6. toallow [ə`lau] – дозволяти; надавати, робити можливим; допускати, припускати, визнавати;

7. relativevalue [`relətıv `vælju:] – відносна вартість; відносна цінність (одних цінних паперів щодо інших у даний момент);

8. conception [kən`sept∫^ən] – розуміння; поняття; концепція; задум;

9. totend – мати тенденцію; схилятися (до чогось); мати нахил (до чогось);

10. intangible [ın`tæn d ჳəb^əl] – невідчутний (на дотик); невловимий; незбагненний, незрозумілий;

11. merely [`mıəli] / [`mırli] – тільки, лише; просто;

12. tograsp [grα:sp] / [græsp] – хапати; схоплювати; затискати (в руці);

13. value of human labour – вартість людської праці;

14. tooverestimate [ֽəuvə r `estımeıt] – переоцінювати; оцінювати занадто високо;

15. to be forced to do something – бути змушений щось зробити;

16. awkward [`O:kwəd] / [`O:kw^ərd] – незграбний; незручний; скрутний; ніяковий;

17. tocometoascreechinghalt [skri:t∫ıŋ hO:lt] – загальмувати зі скрипом; (різко) зупинитися зі скрипом гальм;

18. deposits at banks [dı`pOzıts] – вклади у банки;

19. to make a loan – надавати позику;

20. tocirculate [`sə:kjuleıt] – обертатися, циркулювати; бути в обігу;

21. togettothinking – стати думати; прийти до висновку;

22. tomint [mınt] – чеканити, карбувати (монети);

23. toquoteprice [kwəut] / [kwout] – публікувати ціну товару;

24. moneyorder – платіжне доручення; грошовий переказ (поштовий);

25. creditcard – платіжна пластикова картка, кредитна картка;

26. tobeshortonmoney – відчувати нестачу, брак (чогось); потребувати (щось); не вистачати;

27. torunshort – закінчуватися;

28. tomeetcriteria [kraı`tıəria] – відповідати критеріям; задовольняти критерії;

29. store of value – засіб заощадження;

30. unitofaccount – одиниця обліку; розрахункова одиниця;

31. temporary – тимчасовий;

32. permanent [`pə:m ə nənt] – постійний, незмінний; довгочасний; перманентний.

Task 10. Tick the correct sentence.

1.People believe there is money, but the value only exists in human minds. People believe that the value only exists in human minds.	____ ____
2.Most people are not working for money, when in reality they are. Most people think they are working for money, when in reality they are not.	____   ____
3.Human mind invented money to represent currency. Human mind invented currency to represent money.	____ ____
4.Money and currency is the same thing. Money and currency are interchangeable.	____ ____
5.Money is physical, whereas currency is conceptual. Money is conceptual, whereas currency is physical.	____ ____
6.You can not hold money in your hand, not you, not any one else. You can not hold currency in your hand, not you, not any one else.	____ ____
7.Money is NOT currency, but merely represents currency. Currency is NOT money, but merely represents money.	____ ____
8.In a modern economy most of the money is made up of deposits at banks and other financial institutions. In a modern economy most of the money is made up of currency in piggybanks.	____   ____
9.Financial institu­tions can create money – by issuing it. Financial institu­tions can create money – by making loans.	____ ____
10.Money is created, not printed or minted. Currency is created, not printed or minted.	____ ____
11.Money is the units in which prices are quoted. Currency is the units in which prices are quoted.	____ ____

12.The real paper bills and metal coins that we hold in our hands is currency. The real paper bills and metal coins that we hold in our hands is money.	____ ____
13.Checks, money orders, credit cards aren’t money. Checks, money orders, credit cards are money.	____ ____
14.If we are short on money, we run short on currency. If we are short on money, we gain more currency.	____ ____
15.Only one criterion need be met for something to be money. Three criteria must be met in order for something to be money.	____ ____
16.In most cases currency is a temporary store of value. In most cases currency is a permanent store of value.	____ ____

Task 11. Identify the features of money and currency.

FEATURE	MONEY	CURRENCY
1.	Real
2.	Unreal
3.	Physical
4.	Intangible
5.	Imaginary
6.	Conceptual
7.	can be created
8.	must be a store of value
9.	people can grasp and trade
10.	represents imaginary value
11.	must be the unit of account
12.	only exists in human minds
13.	a tool of economic calculation
14.	people cannot hold in their hands
15.	medium that facilitates an exchange
16.	is the units in which prices are quoted
17.	is mostly made up of deposits at banks
18.	enables people to run the economy easier
19.	must be an accepted medium of exchange
20.	only represents the value of human labour
21.	a temporary (not permanent) store of value
22.	allows the mental calculation of relative value
23.	is printed on paper or minted from cheap metal

Task 12. a) Find synonyms among the following words from the text (Task 9).

1. To allow; 2. conceptual; 3. to enable; 4. imaginary; 5. to facilitate; 6. medium; 7. to get hands on; 8. mental; 9. to grasp; 10. tool; 11. to make faster; 12. to speed up; 13. unreal; 14. intangible.

b) Use the above words in the sentences of your own.

Task 13. a) In the text “Money vs. Currency” (Task 9) find the sentences which contain the following word combinations. Translate the sentences.

1. To get hands on;

2. to change hands;

3. on the other hand;

4. hold money in your hand.

b) Translate the following sentences into Ukrainian. Use your dictionary if necessary.

1. A weakened currency and poverty go hand in hand.

2. Devalued domestic currency plays into the hands of exporters.

3. The Central bank took a hand in the domestic currency revaluation.

4. Depreciating currency made many families live from hand to mouth.

5. The government set its hands to strengthening of the national currency.

6. The Central Bank did not lend a hand to defend a depreciating currency.

7. By a floating currency the exchange rate gets out of hand of the Central Bank.

Task 14. Fill in the blanks with the most appropriate terms from the box.

check	to borrow	facilitating
worth	Purchases	store of value
income	Exchanges	checkable deposits
balance	to transfer	financial institutions
to accept	Repayment	medium of exchange

Our ability to use money in market transactions depends on sellers’ willing­ness (1) _____ money as a (2) _____. Accordingly, money plays an essential role in (3) _____ the continuous series of (4) _____ that characterize a market economy. Money is also a useful (5) _____, that is, a mechanism for transforming current (6) _____ into future (7) _____. Finally, common use of money serves as a standard of value for comparing the market (8) _____ of different goods.

The most important component of money today is (9) _____ at banks and other (10) _____. Neither checks nor credit cards are money.

A (11) _____ is an instruction to a bank (12) _____ money from one account to another. Money is the (13) _____ in the account itself.

A credit card is an ID card that enables a person (14) _____ at the instant a purchase is made on the promise of repaying later. When (15) _____ is made, money (currency or a checkable deposit) is used for the payment.

Task 15. Answer the questions.

1. The value only exists in human minds, doesn’t it?

2. Why did human mind invent currency? What does currency represent?

3. Why do most people confuse money and currency as the same thing?

4. Are the terms “money” and “currency” often used interchangeably?

5. What is often viewed as a tool of economic calculation that enables the communication of value?

6. What facilitates an exchange between participants in a market?

7. Does money allow the mental calculation of relative value?

8. Currency is the thing that actually changes hands, isn’t it?

9. What analogies from our everyday life can help to explain the concepts of “money” and “currency”?

10. Is money tangible or intangible?

11. What unreal concept enables people to run the economy easier?

12. Why can’t the importance of money be overestimated?

13. What is most of the money in a modern economy made up of?

14. How is money created?

15. What is printed on paper or minted from cheap metal?

16. What is currency?

17. Are checks, money orders, credit cards money?

18. What does currency facilitate? What does it speed up?

19. How does the amount of currency depend on the amount of money in the economy?

20. What criteria must be met in order for something to be money? What about currency?

Task 16. Translate into English.

1. Ми звикли вважати, що гроші існують, у той час як вартість існує лише в нашій свідомості. 2. Людський розум винайшов валюту, щоб представляти гроші. 3. Більшість людей ототожнюють гроші й валюту. 4. Хоча терміни “гроші” і “валюта” взаємопов’язані, між ними існує різниця. 5. Гроші часто розглядаються як інструмент економічного розрахунку. 6. Гроші роблять можливою передачу (представлення; повідомлення) вартості. 7. Валюта – це засіб, який полегшує обмін між учасниками ринку. 8. Гроші є уявними, в той час як валюта – фізична. 9. Валюта – не гроші, а лише те, що їх репрезентує. 10. Не можна недооцінювати важливість грошей. 11. Без грошей наша економіка одразу ж зупинилася б. 12. У сучасній економіці більшість грошей складається з депозитів у фінансових установах. 13. Гроші створюються за рахунок надання кредитів. 14. Валюта – це гроші у будь-якій формі, що застосовуються як засіб обміну. 15. Чеки, поштові грошові перекази, кредитні картки є засобами обміну, але не грішми. 16. Валюта друкується на папері або карбується з дешевого металу. 17. Валюта – це одиниці, в яких заявляються ціни. 18. Сума валюти, яка у нас є, залежить від кількості грошей в економіці. 19. Гроші повинні задовольняти три критерії. 20. Валюта є в більшості тимчасовим засобом заощадження.

Task 17. Say what you know about:

1. The confusion which exists in public mind as to the essence of money and currency.

2. The reasons for inventing currency.

3. The importance of money for a modern economy.

4. Ways of printing currency / creating money.

5. Different forms of currency.

6. Criteria needed for distinguishing currency / money.

Task 18. Comment on the following statements.

1. Money only exists in human mind.

2. “We haven’t the money, so we’ve got to think.” (Lord Rutherford)

3. In reality people are not working for money.

4. “If you had your life to live over again – you’d need more money.” (Construction Digest)

5. Devaluation and poverty go hand in hand.

6. It is much too easy to start calling currency money.

7. The importance of money cannot be overestimated.

8. “If money is your hope for independence you will never have it. The only real security that a man will have in this world is a reserve of knowledge, experience, and ability.” (Henry Ford)

9. English is the key to the international currencies of technology and commerce.

10. “I am not interested in money but in the things of which money is symbol” (Henry Ford)

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