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For barter to occur between two parties, both parties need to have what the other wants. There is no common measure of value/ No Standard Unit of Account In a monetary economy, money plays the role of a measure of the value of all goods, so their values can be assessed against each other; this role may be absent in a barter economy.
The difference between the two functions becomes obvious when one considers the fact that coins were very often 'shaved.' Precious metal was removed from them, leaving them still useful as an identifiable coin in the marketplace, for a certain number of units in trade, but which no longer had the quantity of metal supplied by the coin's minter.
The city-states of Sumer developed a trade and market economy based originally on the commodity money of the Shekel, which was a certain weight measure of barley, while the Babylonians and their city-state neighbors later developed the earliest system of economics using a metric of various commodities, that was fixed in a legal code.
The unit of account in economics suffers from the pitfall of not being stable in real value over time because money is generally not perfectly stable in real value during inflation and deflation. Inflation destroys the assumption that the real value of the unit of account is stable which is the basis of classic accountancy .
Countertrade also occurs when countries lack sufficient hard currency, or when other types of market trade are impossible.. In 2000, India and Iraq agreed on an "oil for wheat and rice" barter deal, subject to United Nations approval under Article 50 of the UN Persian Gulf War sanctions, that would facilitate 300,000 barrels of oil delivered daily to India at a price of $6.85 a barrel while ...
Polish National Government bond, 1863 Commodities such as gold and other precious metals have historically been good stores of value. The term cash is often used to indicate both currency, which is usually represented by paper money or coins in industrialized countries, [11] and sums deposited and payable almost immediately on order.
Italian Economics Minister Giulio Tremonti said that Italy would use its 2009 G7 chairmanship to push for a "New Bretton Woods". He had been critical of the U.S. response to the 2007–2008 financial crisis, and had suggested that the dollar may be superseded as the base currency of the Bretton Woods system. [31] [32] [33]
A moneyless economy or nonmonetary economy is a system for allocation of goods and services without payment of money. The simplest example is the family household. Other examples include barter economies, gift economies and primitive communism. Even in a monetary economy, there are a significant number of nonmonetary transactions.