Read the text about the origin and history of money.

UNIT 5 MONEY

I THINK AND SAY

1 Can you imagine your life without money? What do people need money for?

2 Have you got any experience in money making? When and where did you work? What did you buy with the money you had made?

3 Can you budget your money? Do you belong to money wasters? Are you saving money for something?

4 In what bank(s) do you keep your account(s)?

5 Give some important and interesting facts you know about Ukrainian money.

II READ AND TALK

Read the words and their translation, memorize them.

temple -- храм

commodity -- товар

cattle -- худоба

durable -- стійкий, довготривалий

divisable -- подільний

portable -- переносний

precious -- цінний, коштовний

goldsmith -- золотих справ майстер

coin _ монета

deposit _ вклад, депозит

currency -- валюта

to converge -- наближатися, зливатися

 

Read and translate word combinations.

human imagination, classic economic theory, buying power, two-way trade, barter-like methods, to adopt gold standard, commercial bank money, electronic money, bank deposits, to make transactions, to track payments.

 

Read the text about the origin and history of money.

WHAT IS MONEY?

Money is so much a part of our daily lives that we do not often consider what it is. It is a product of the human imagination, and as a human invention it totally depends on trust. In classic economic theory, money has three basic functions: it is a means of payment, a unit for measuring buying power, and a record of wealth for future spending.

The word ‘money’ is believed to originate from a temple of Hera, located on Capitoline, one of Rome’s seven hills. Hera was often associated with money. Before money, people could not buy and sell. There was trade; but it had to be two-way trade: people exchanged goods. The use of barter-like methods may date back to at least 100,000 years ago. At different periods of time and in different parts of the world many different commodities have served as money. They were: cattle, sheep, furs, leather, fish, tobacco, tea, salt, alcohol, shells, stones, etc. To serve effectively as money, a commodity should be fairly durable, easily divisible, and portable. None of the above-mentioned commodities had all these qualities, and with time they were replaced by precious metals. When a payment was made, the metal was first weighed out, then cut into pieces of definite weight and so coins came into use. According to Herodotus, the Lydians were the first people to introduce the use of gold and silver coins. The Greeks made their drachma of silver. They even put drachma into the mouth of dead people because they believed that money would pay for the journey to the next world.

The system of commodity money eventually evolved into a system of representative money. Paper money first came into use in the form of receipts given by goldsmiths in exchange for deposits of silver and gold coins. After goldsmiths became bankers theirs receipts became banknotes. They are said to be used first in China.

In Europe banknotes were first issued by Stockholm Bank in1661. By the beginning of the 20^th century almost all countries had adopted the gold standard. After World War II, at the Bretton Woods Conference, most countries adopted currencies fixed to the US dollar. Commercial bank money or demand deposits are claims against financial institutions that can be used for the purchase of goods and services.

In 1950, the first credit card was made. It was the Diners Club card, and it could only be used in 200 restaurants in New York. Today, most shops, hotels and restaurants in the world take credit cards, so people do not have to carry money with them when they travel. They also use electronic money, that is money exchanged electronically. This involves the use of computer networks, the internet and digital stored value systems. Bank deposits, electronic funds transfer, payment processors, digital currencies such as bitcoin are all examples of electronic money.

What will happen in future? A current trend is the disappearance of different currencies. This development can be illustrated by the introduction of the euro in 2002, when 12 currencies converged into one. The currencies of most countries disappear as they join the Eurozone. Another trend sees coins and banknotes becoming unnecessary; we increasingly carry and transfer our wealth with credit cards, smart cards or mobile phones. These tools allow us to make transactions without the use of cash, but the disadvantage is that sellers and governments can track these payments.