Existing Literature: A Brief Tour

The chapter discusses the existing literature on money, specifically the commodity and credit theories of money are analysed as they encompass all existing theories. The commodity theory postulates that money originated as a medium of exchange to overcome the inconvenience of barter. This theory is lacking in historical evidence; however, it well explains many modern money including cryptocurrencies. The credit theory, instead, finds the origin of money in the debtors–creditors relationship. This theory is increasingly gaining the acceptance of modern monetary theorists, and well explains the money creation by commercial banks. The chapter points to the need to develop a new scholarship as these theories are inadequate in explaining money. The literature on inflation is not addressed in this chapter.