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Decem: Financial Alternatives for Development Aid (9)

Written on December 11, 2007 by Max Oliva in Development

J.Pozuelo-Monfort, MPA candidate at Columbia University
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The history of money dates back from the old days when barter preceded the buy and sell of goods in exchange of coins that were worth the monetary value they represented. Money is an abstract concept that we handle on a daily basis in a variety of transactions, without being aware of what it would be of our existence without it. Money allows to save and as a result to transfer monetary flows over time. Money transforms effort into coins and notes and allows to work today for the joy of tomorrow, turning our dedication into a monetary flow we can accumulate, transfer and spend anywhere anytime. As a second-generation payment vehicle, money enjoys structural features that barter lacked, faltering in many other aspects that we explain hereafter.
Many speak of the end of coins and notes as a means of payment, and predict a medium term future in which we will pay with electronic money in all of its varieties, an outcome perhaps feasible in the more advanced societies in which a majority of the population can access a current account. Access to basic financial services is an almost universal right that not everyone is granted, particularly in developing countries. Not being able to access basic financial services withdraws us from the possibility of transforming our effort into money, exempts us from the opportunity of moving forward on our own, and expropriates us the ability to become economically self-reliant. The third generation of payment vehicles is related not only to electronic money, but also to a currency immune to speculation, arbitrage, depreciation and hyperinflation, accessible to whomever is willing to save, and available to the poor in a majority of developing countries.
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