Money refers to a medium of exchange for goods and services. Therefore, money is an accepted element for the exchange of goods and services within a given region. Through money, there are standardized means upon which people accept in exchange for a certain service or goods and products. Some of the main functions of money are; they are mediums of exchange, act as a store of value, and function as a unit of account, among other roles. Globally, various countries have different values for money with unique names. However, this money is standardized from one country to another to facilitate foreign trade.
How much money is there in the world?
Determining the total amount of money in the world could be a challenge due to several factors. The very definition of the term “money” varies as the parameters used to define it can vary. Money can be identified by focusing on parameters such as gold and other assets, while some can describe money based on bitcoin and notes. Furthermore, the central banks of various countries create abstractions that can be difficult to determine their values.
Therefore, the total amount of money in the world depends on how it is classified. When money is considered as physical coins, banknotes and those deposited in checking and savings accounts; the total worldwide amount is approximately $ 36.8 trillion. However, when this physical money includes those held in accessible accounts, the amount rises to approximately $ 90.4 trillion. This amount also increases when bitcoin and other cryptocurrencies are included. The total amount of money in this classification is as high as one quadrillion US dollars.
Money in the form of investments raises the above figure even more. Derivatives hold large sums of funds invested in them with money exceeding $ 544 trillion; and an estimate of $ 1.2 quadrillion on the high end. This amount is much more significant than the total amount of money in the stock markets which is only $ 73 trillion. Among the leading US companies in the global market are Apple Inc., Alphabet Inc., and Microsoft Corp. These companies contribute a lot in the stock market and therefore have a lot of money.
Furthermore, commercial real estate has large amounts of funds, thereby increasing the total amount of money globally. The money in the commercial real estate world is around $ 215 trillion. There is an increase in real estate investments, and it has been estimated that 33% of the funds have been borrowed in the last decade. The increase in investments in real estate therefore increases the total amount of money that is in the world by an unimaginable amount. The figure is expected to increase in the future as investment increases and countries diversify in their countries.
Recent technological advancement has been the use of bitcoin. About $ 160 billion worth of bitcoins are in circulation around the world. However, compared to other forms of asset classes, bitcoin and other types of cryptocurrencies may take longer to adopt. But the figure is slowly rising as companies and other business practices embrace digital forms of payment.
Future of money
Today, transactions are becoming more digital, thereby reducing the use of physical money. The use of cell phones, as well as computers in transferring money, has also reduced physical cash in circulation. Therefore, it remains to be seen whether central banks in the various countries of the world would adopt a means of controlling digital money. Additionally, bitcoin and cryptocurrencies are making central banks think about going digital.
