Money refers to a medium of exchange for goods and services. Therefore, money is an accepted item for the exchange of goods and services within a given region. Through money, there are standardized means on which people accept in exchange for a given service or goods and products. Some of the primary functions of money are; they are mediums of exchange, they act as the store of value as well as functioning as units of account, among other roles. Globally, various countries have different values for money bearing unique names. However, this money is standardized from one country to another to ease foreign trade.
How much money is there in the world?
Determining the total amount of money in the world may be challenging due to different factors. The definition itself of the term “money” varies since the parameters used to define it may vary. One may identify money by focusing on such metrics as gold and other assets whereas some may describe money according to bitcoins and notes. Besides, central banks of various countries create abstractions which may be hard to determine their values.
Therefore, the total amount of money in the world depends on how it is classified. When money is considered as the physical coins, bank notes, and the ones deposited in both checking and savings accounts; the total amount globally is approximately $36.8 trillion. However, when this physical money includes the ones held in the accessible accounts, the amount rises to roughly $90.4 trillion. This amount also increases when bitcoins and other cryptocurrencies are included. The total amount of money under such classification is as high as one quadrillion US dollars.
Money in the form of investments raises the above figure even higher. Derivatives hold large amounts of funds invested in them with the money exceeding $544 trillion; and estimation of $1.2 quadrillion on high-end. This amount is much more significant than the total amount of money in the stock markets which is mere $73 trillion. Among the leading companies in the US in the global market are Apple Inc., Alphabet Inc., and Microsoft Corp. These companies contribute a lot in the stock market hence have a lot of money.
Besides, commercial real estates have large amounts of funds consequently increasing the total amount of money globally. World commercial real estate money is about $215 trillion. There is a rise in real estate investment, and it has been estimated that 33% of the funds have been borrowed over the last decade. The increased investment in real estate thus increases the total amount of money which is in the world by an unimaginable figure. The figure is projected to rise in the future as more investments are made and different countries striving to stabilize their economies.
Recent technological advancement has been the use of bitcoins. Approximately $160 billion bitcoins are in circulation all over the world. However, as compared to other forms of asset class, bitcoins and other types of cryptocurrencies may take longer to be adopted. But the figure is slowly rising as businesses and other commercial practices adopt digital forms of payments.
Future of money
Today, transactions are becoming more digital, consequently reducing the use of physical money. The use of mobile phones, as well as computers in transferring money, has also reduced physical money in circulation. Therefore, it remains to be seen whether central banks of the various countries in the world would adopt a means of controlling the digital money. Besides, bitcoins and cryptocurrencies are giving central banks second thoughts about going digital.