To what extent do cheques perform the functions of money?

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pohnpei397 | College Teacher | (Level 3) Distinguished Educator

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There are three main functions of money, and checks perform all of them pretty well.  This is why checkable deposits are part of M1, the measure of the most liquid money.  Of course, the check itself (the piece of paper) is not money, but when properly filled out it performs most of the functions of money.

Money is a medium of exchange.  For the most part, checks can be used to buy anything just like money can.  Money is a unit of account. Checks are drawn on specific currencies and therefore can be seen as units of account as well.  Something like an apple is not a good unit of account because it's hard to know how many apples every other thing is worth.  You don't have that problem with checks.  Money is a store of value.  Checks can be as well.  Many commercial checks lose their value after 90 days or some other period like that, but checks do generally continue to be valuable for a relatively long time.  

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