Topic summary
Representative money
Representative money or receipt money is any medium of exchange, physical or digital, that represents something of value, but has little or no value of its own (intrinsic value).
More specifically, the term representative money has been used variously to mean:
- A claim on a commodity, for example gold and silver certificates. In this sense, it may be called "commodity-backed money".
- Any type of money that has face value greater than its value as material substance. In this sense, most types of fiat money are a type of representative money.
Decidedly, commodity money is not a form of representative money, because the former has significant value of its own by being a commodity. Unlike fiat money (which may have no commodity backing), commodity-backed money (a form of representative money) must have its face value supported by something of intrinsic value.