Money of Account

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Money of Account


(accounting money), the denomination of a country’s monetary units—for example, dollars, pounds, marks, and rubles—which serves as the form society accepts for expressing ideally such phenomena as the prices of goods and services, the values of debts, and securities prices. The ideal existence of money of account rests on its inner link with the mass of real money and with commodity circulation. Money of account is directly related to money’s function as a measure of value and yardstick of prices.

Originally, a country’s monetary unit was the name given to a certain amount (by weight) of a precious metal; in England, for example, the pound sterling was a pound of silver. With the transition to developed coinage circulation, the denominations of the monetary units and the monetary units’ metal content came to diverge—the result of wear and debasement of coins. Certain quantities of gold and silver were “clothed” in “national uniforms”—credit money (banknotes) and paper money. Thus, money of account acquired a functional autonomy and a relative independence.

With developed commodity production, the value of commodities does not find its monetary expression directly in the use value of the universal equivalent (gold) but in ideal monetary units, that is, in money of account, behind which stands a specific quantity of specie. “Money as the measure of value,” wrote Marx, “is not expressed in amounts of bullion, but rather in accounting money, arbitrary names for fractional parts of a specific quantity of the money substance” (K. Marx and F. Engels, Soch., 2nd ed., vol. 46, part 2, pp. 304–305). Marx criticized the treatment of money of account by the bourgeois economists, who denied any internal connection between money of account and the real money material, instead identifying money of account with the physical dimensions of weight and length (ibid., vol. 13, pp. 63–67).

As credit relations have developed (seeCREDIT) and as the volume of noncash payments through the financial and banking system has increased, the importance of money of account has grown. The rise and development of computer-based elements in the payment-clearing mechanism and the emergence and rapid growth of “electronic money” in the form of entries in bank accounts or electrical impulses fixed in computer “memories”—in the USA in the early 1970’s—attest to the growing use of money of account. Nevertheless, such new phenomena in the system of money circulation change neither the nature of money nor the role that money plays in commodity production.


Marx, K. K kritike politicheskoi ekonomii, ch. 2. In K. Marx and F. Engels, Soch., 2nd ed., vol. 13.
Marx, K. Ekonomicheskie rukopisi 1857–59 gg. In ibid., vol. 46, part 2. Pages 304–21.
Eidel’nant, A. “‘Bumazhnoe zoloto’ i zoloto.” Mirovaia ekonomika i mezhdunarodnye otnosheniia, 1971, no. 8.
Usoskin, V. M. “Kapitalisticheskii platezhnyi mekhanizm v usloviiakh nauchno-tekhnicheskoi revoliutsii.” In ibid., 1974, no. 12; 1975, no. 1.


References in periodicals archive ?
As noted above, proponents of the expanded use of SDRs correctly note that the SDR can serve as a unit of account, a means of payment, and even a store of value, but the definition and value is determined by a group of international bureaucrats and is--usually for good reason--periodically revised.
A highly regarded private institution like Dow Jones (now owned by NewsCorp) could provide an index for a global monetary constant, which will be referred to in the rest of this article as the Constant Unit of Account or CUA.
The existence of such an index could easily serve as a unit of account for trade and investment contracts and for those who develop measures of relative international performance.
International commodity producers, such as oil producers, would almost certainly be trying to find a new unit of account.
Businesses, governments, and individuals engaged in long-term contractual international relationships need a reasonably stable unit of account or a way and formula to make frequent adjustments between whatever are the relevant currencies.
International organizations, such as the IMF, World Bank, and OECD, are unlikely to be able to create an acceptable unit of account as they always become politicized because neither their funding nor management is ever really totally independent of the interests of their major members.
The proposal for a new unit of account does not solve the reserve problem, but it can give guidance to countries as to how to diversify their reserves to minimize the effects of both exchange rate swings and the depreciation of reserves due to high rates of inflation in one or more of the countries providing the reserves.
The value of a unit of silver was set equal to a month's barley ration and equivalent land-unit crop yield; the silver unit then functioned as a unit of account within the command economy administered and coordinated by the central authority; temples and palaces were redistributive mechanisms.
The exchange rate between the indexed unit of account and the currency might be defined so that the unit has desirable properties in terms of its real value.
if an employee spends at least 80% of his or her time performing qualified services, 100% of his or her taxable wages qualify), in which case, up to 20% of qualified wages may not be claimed; and (4) if another unit of account is used (instead of, or in addition to, projects), even if a particular project fails to meet the MLTN test, some subunit of the project (e.
Step two--determine which units of account meet the MLTN test: In making this determination, the technical merits of each unit of account must be determined presuming that the credits claimed will all be examined by an appropriate tax authority with full knowledge of all relevant information.