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1. According to recent publications from the Bank of England, money is not what most people...

1. According to recent publications from the Bank of England, money is not what most people think it is. What is money according the Central Bank of England? How does it relate to other assets in the economy such as houses, stocks and bonds? What are its functions and what role does it play in the economy?

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Answer #1

The Central bank of England classifies money as notes and coins, reserves, and bank deposits. It is considered safest option with highest liquidity and accessibility as compared to stocks and bonds and involves minimal compliance.

The function of money in the economy is differentiated as medium lf exchange, unit of account and store of value. Sometimes fiat money is used by economies which is backed by a commodity.

Rhe role of money in economy is to keep the economy ticking through infusion of liquidity and lead to inflation control and exchanges rate stabilisation.

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