Means of saving
The function of the means of accumulation, also known as the thesaurus, is the second function of money. The development of exchange and the transition from episodic and disparate exchange acts to regular trade, as a more developed and progressive form of exchange of economic activity, has given rise to this property of money.
Acting as a means of accumulation, money becomes a special asset (property), which gives its owner the opportunity to acquire various benefits, including goods, in the future. Of course, any other type of asset (property) can also act as a means of accumulation. Such assets as jewelry, real estate, antiques, etc. have long been known. The advantage of money as a means of accumulation is its absolute liquidity, i.e. its ability to be used as a means of payment (or become a means of payment) at any time without losing its nominal value. Any other asset, in order to be used to purchase goods and services, must first be sold (turned into money). For example, government securities are considered to be highly liquid assets in the world practice, as they can be easily sold in the market and the market prices for them do not change significantly. Jewels, antiques, real estate have much less liquidity, as their prices are volatile and the costs associated with turning these assets into money are high.
In the era of real money gold was suitable for the function of a means of accumulation as best as possible, because, in addition to its own price, it acted as money and as a representative of all other goods. As a treasure, gold was necessary to ensure the smooth functioning of collateral-based monetary systems. As such, it served as a reserve fund for circulation, means of payment and world money. These treasure functions were a prerequisite for the stability of the metal monetary system. The intrinsic value of gold as a commodity and its ability to retain it for a long time came to the fore. Since the 70s of the XX century gold has ceased to be money and does not perform any monetary functions. However, gold has not lost its own value as a commodity, and there is demand for it on the world market. The state can use the gold stock for dosed sale to purchase foreign currency and replenish its centralized currency reserves. In short, gold is still a good investment, especially in countries with unstable economies. In such countries, the national currency is not used either as a means of accumulation or as a measure of value.
In an era of credit money, its use as a savings medium has significant disadvantages, despite its absolute liquidity. By accumulating money, the owner loses the ability to generate income from less liquid assets. Even if the money is held in a bank and the owner receives annual interest on the deposit, this interest is always lower than the income generated by its alternative use (e.g. investments in production). In terms of the evolution of credit money, money has been transformed, as a means of accumulation, into bank deposits, shares, and other quasi-money. In general, the 20th century, with its upsurge in economic activity, scientific and technological progress and a jump in the evolution of money, among other things, gave rise to such popular expressions as "time is money", "money should make money", etc. The economic community has inevitably come to the conclusion that money should not be a dead weight and should bring (maximum possible) profit.
Means of circulation
Money as a means of circulation plays the role of an intermediary in the flow of goods from sellers to buyers and serves to purchase goods and services. This function appears in money when society moves from physical exchange to regular trade. As a means of circulation, money becomes a permanent intermediary in the movement of goods. Money as a function of the means of circulation helps to avoid barter, a form of trade in which goods are exchanged directly for goods. Using money allows you to separate the act of purchase from the act of sale. One of the types of credit money - banknotes - is specifically designed only to perform the function of a means of circulation. Let me remind you: to ensure the stability of banknotes in circulation for a very long time the principle of exchange of banknotes for gold at face value or a certain rate was in force. Through this principle, the connection and interaction of metal and credit monetary systems were provided that provided stability of monetary sphere. If the condition of free exchange was observed, the banknotes acted as equivalent substitutes for gold coins in internal circulation.
For the first time banknotes were issued at the end of the XVII century. They were issued in the order of bills of exchange. In modern conditions, banknotes continue to act as cash and act as a means of circulation, but without any connection with gold. At present in Russia paper rubles and metal coins act as a means of circulation. In other countries, check deposits are also used in this function.
It is obvious that money, being a "generation" of trade, as a means of circulation itself stimulates the development of trade. The appearance of credit money in circulation made it possible to significantly increase the volume of transactions and simplified the process of making a deal. In addition, the circle of agents involved in economic relations has grown from individuals and enterprises to industries and states. Evolution of credit money as a means of circulation per person. People have moved from natural money to banknotes, individuals can use a cheque book for larger settlements (in developed countries), and large economic agents use cashless transfers of funds through bank deposits.
Although, for example, in May 1942, about 5.5 tons of gold was loaded on the British ship "Edinburgh" by order of I.V. Stalin as payment for the delivery of military equipment from the USSR's ally England. It was the gold, rather than the notes of the Soviet Union, that was preferable as a means of circulation in the conclusion of this transaction. However, this is rather an exception, as the events took place during the Second World War. And wars are characterized by unstable economic systems, in which the usual economic laws do not apply.