Why is currency a medium of exchange?

The standardization of currency as the medium of exchange has enabled quick trade settlements. A medium of exchange eases the trade of goods and services. The most common and generally accepted medium of exchange in the modern economy is money – represented as currency.

What is a medium of exchange?

A medium of exchange is an intermediary instrument or system used to facilitate the purchase and sale of goods and services between parties. For a system to function as a medium of exchange, it must represent a standard of value. Further, all parties to the transaction must accept that standard.

Why is the medium of exchange a problem?

Of all functions of money, the medium of exchange function has historically been the most problematic due to counterfeiting, the systematic and deliberate creation of bad money with no authorization to do so, leading to the driving out of the good money entirely.