Forms of Money

Token Money

• It is subsidiary money. Its face value is higher than its intrinsic value. Its generally limited legal tender money.
• Issuance of token money depends upon the needs of the people.

Subsidiary ،تابع Money

• Subsidiary money is to assist the token money. All coins of the denominations from 5 Paise to 25 paise. Such coins are limited legal Tender.

Legal Tender Money

• Any means of payment which has state’s sanction (Approved) behind it and a debtor can legally compel his creditor to accept in settlement of dues, is called legal tender money. It is of two kinds:
• Unlimited Legal Tender
• Limited Legal Tender.

Unlimited Legal Tender

• Unlimited legal tender money is one in terms of which debts can be legally paid up to any amount.
• In Afghanistan the currency notes of Afn. 10, Afs. 20, Afn. 50, Afs. 100Afn etc.

Limited Legal Tender

• Limited legal tender money is that which a creditor can accept in settlement of claims up to a certain limit only.
• For example Mr. A owes Mr. B Afn. 1321 only to be paid, so Mr. B may pay in following denominations:
• Afn. 1000 x 1, Afn. 100 x3, Afn. 20 x 1 and coin of Afn. 1 x 1
• Afn. 500 x 2, Afn. 50 x 6, Afn. 10 x 2 and coin of Afn. 1 x 1.
• But A may Refuse to accept Coins Afn 5 x 264 and Afn 1 x1.

Paper Money

• Paper money refers to note of different denominations made of paper and issued by the central bank or Government of the Country.

Kinds of Paper Money

• There are three kinds of Paper money:
• Representative paper money
• Convertible paper money
• Fiat paper money

Representative paper money

• It is that money which is fully backed by equivalent metallic reserves.
• The holder of the bank note can easily get it converted in standard metal money on demand.