Analyzing The Origins of Money In Credit Theory of Money

Two theories have prevailed in the economic literature about the origins of money. According to the commodity theory of money, money has spontaneously emerged from the barter economy. In credit theory of money, since money is defined as an abstract unit of measurement, the origin of money coincides with the origin of writing. Credit money theory shows that the first standardized money of account emerged from ancient Egypt, Mesopotamia, and Greece due to the need for accounting records of payments and receipts of the central institution (government-temple). Once the general unit of account is established, credits and liabilities can be called in monetary units, thus we can reach the historical origins of money. This paper uses analytical-descriptive and documentary research methods to explain the incorrect reasons of the commodity theory of money. Eventually, the origin of money is expressed from the point of view of the credit theory of money.