Legal money and bank money, do you know the difference?
Money is the main means of exchange that exists, essential to carry out any type of exchange in the national and international market; it is used as a reference when setting prices and acts as a store of value. But are there different types of money? Yes, and we must know how to differentiate them if we want to enter the world of macroeconomics and improve our finances.
On the one hand, we are talking about legal money, that is, that issued by the Central Bank (in the case of Spain, the European Central Bank ) in the form of coins and legal tender bills. And on the other, bank money: that which individuals deposit with a bank and which is divided into demand deposits (immediately available), savings deposits and time deposits. The sum of both is the Money Supply, which is equivalent to the amount of money that circulates in a given economy.
To legal money and bank deposits we should add the famous cryptocurrencies or virtual currencies, which we already talked about in a previous post entitled " The bitcoin phenomenon ", a payment system in which central banks and governments cannot intervene and that it is becoming increasingly popular.
Traditional channels vs Fintech
Daily purchases, determined by charges and the interest rate, and speculation are the main reasons that drive the demand for money; demand that, unlike in the past, is no longer channeled exclusively through traditional banking entities.
The appearance of the so-called “Fintech” has marked a turning point in this trend, since a good part of the demand for credit (especially microcredit and mini-credit to face those daily purchases and unexpected expenses) is being channeled by new and solvent entities that operate exclusively on the internet, a breath of fresh air for consumers and entrepreneurs who saw their spending and investment capacity limited due to the strict requirements and the vast bureaucracy that traditional banking entities imposed with their strict rules of the game.
Now that you know the main differences between legal money and bank money, as well as the new opportunities that open up before us thanks to virtual currencies and Fintech, take a few minutes to think about your financial needs and the different alternatives that exist already on the market in addition to traditional banking. That is the case of mini-credit companies such as CréditoSí , where you can also request up to € 1000 totally FREE.