In economics, we use the term currency to refer a particular currency, for example the US Dollar, or we may also use this term for the coins and banknotes of a particular currency, which comprise the physical aspects of a nation’s money supply. The money deposited in banks (sometimes called deposit money) forms the other part of a nation’s money supply and its ownership can be transferred by means of checks which are referred to as cheques in the United Kingdom and Australia or they may be transferred by means of other forms of money transfer such as credit and debit cards. Deposit money and currency are both referred to as ‘money’ in the sense that both are acceptable as a means of exchange, but it is not necessary that money must be ‘currency’.
Historically, money that is in the form of currency has predominated. Usually those gold or silver coins that posses intrinsic value commensurate with the monetary unit (commodity money), have been the norm. By difference, modern currency, as fiat money, is intrinsically worthless. Usually when through decrees a government designates, that only particular monetary units shall be accepted in payment for taxes then the prevalence of one type of currency over another in commodity money systems has arisen.
