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 ?
My view is that governments are big enough actors in the economy and in declaring focal points in multiple equilibrium situations (as the government does for Daylight Savings Time) that governments generally have control over what the unit of account is within their jurisdictions, except when there is an extremely high inflation rate or a history still burned into people's memory of an extremely high inflation rate in that unit of account.
The principal argument put forward by White (1984) and O'Driscoll (1985, 1986) against monetary separation proposals is that having the unit of account be a unit of a general medium of exchange is a part of the natural evolution of monetary arrangements and brings advantages to trade which monetary separation could not achieve.
Another unit of account will gradually take over in international financial transactions, crowding out the U.S.
The accounting result under the facts and circumstances discussed in paragraphs A2 through All of the proposed Interpretation would generally be the same under current accounting principles, but there is no need to determine the proper "unit of account," or engage in a complicated two-step analytical process to first document the technical merits of the position (validity) and then separately document the best estimate of the likely settlement of the position (valuation).
Money appeared first as a unit of account for a debt, not as a medium of exchange.
This approach views the asset, from the time the liability for decommissioning is initially incurred until the end of the asset's useful life, as the unit of account to which the decommissioning costs relate.
In ordinary language, inflation is an increase of prices measured in the unit of account. In the case of England, the pound has been a unit of account since the Middle Ages.
Reserve Bank of New Zealand senior economic analyst, Amber Wadsworth, said, 'money is a token that can be used as a unit of account, medium of exchange and store of value.
DNotes said its objective is to meet full functions of fiat currency as a unit of account, store of value and medium of exchange.
In this article, my goal is far less ambitious, and that is to lay out a very practical and politically doable, and even simple, way to define a global monetary unit of account that is closer to a monetary constant than other alternatives now available, such as gold or commodity baskets.