Edited by Jan Toporowski and Jo Michell
Chapter 33: Money in finance
This entry will begin by defining, and distinguishing between, money and finance. It will also address alternative ways of financing spending. We next examine the role played by financial institutions, such as banks, in provision of finance. The role government plays both as regulator of private institutions and as provider of finance will be discussed. Related topics such as liquidity and saving will also be explored. We conclude with a look at some of the new innovations in finance, and at the global financial crisis that could be blamed on excessive financialization of the economy. The term ‘money’ is often used in two different ways, first to designate the money of account and second in reference to specific money-denominated assets that fulfill several important functions associated with money (medium of exchange, means of payment, and store of value). For example, in the United States the money of account is the dollar, the measure of nominal value designated by the state.
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