Money

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DEFINITION of 'Money'

An officially-issued legal tender generally consisting of currency and coin. Money is the circulating medium of exchange as defined by a government. Money is often synonymous with cash, including negotiable instruments such as checks. Each country has its own money, or currency, that is used as a medium of exchange within that country (some countries share a type of currency, such as the euro used by the European Union). The currency of one country can be exchanged for the currency of another via a currency exchange. The current exchange rate determines how much of one currency must be used to purchase a specified amount of the other currency. For example, the exchange rate between the euro and the US dollar may be 1.2596, where 1 euro can buy 1.2596 US dollars.

BREAKING DOWN 'Money'

Legal tender is a type of payment that can lawfully be used to meet financial obligations. Money, as legal tender, is a commodity or asset, or an officially-issued currency or coin that can be legally exchanged for something of equal value, such as a good or service, or that can be used in payment of a debt. Currency may include notice of the legal tender status. In the United States, for example, the paper money includes the statement, "This note is legal tender for all debts, public and private;" in Australia, the notes include, "This Australian note is legal tender throughout Australia and its territories."

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