MEANING OF MONEY

Money has been defined in various ways.Some say,'Money is that money does.'(Walker).In other words,anything that performs the functions of money is money.In the widest sense, the term 'money' includes all media of exchange - gold, silver,copper, paper, cheques, commercial bills of exchange, etc.But this definition is too wide Cheque, bills, etc., have been called representatives money as they are only convenient representatives of the standard of value.Some writers narrow down the definition to include only the commodity (e.g., gold) that may serve the purpose of money.This excludes bank notes or government currency notes from the category money.These instruments cannot , logically speaking, be excluded, because they possess all the attributes of money, as we shall see presently.
The most commonly agreed view is that, "any-thing which is widely accepted in payment for goods, or in discharge of other kinds of obligations" is money (Robertson).
In Crowther's words."The only essential requirement is general acceptability.Money ....need not itself be valuable.It must, indeed , be relatively scarce, since it would hardly do if money could be plucked off every tree.But, provided precautions are taken to keep it relatively scarce and, it may be added, comparatively invariable in amount- money can consist of things as worthless as a scrap of paper or the scratch of a clerk's pen in the books of a bank."

Money Stock Measure in India
In recent years, there has been a great deal of debate as to what constitutes money supply with the public.While all are agreed on money supply with the public in the sense in which it has been explained above (i.e., currency plus demand deposits with banks), many monetary theorists have expressed the opinion that in a country like India where the branches of banks are confined to cities, towns and only to a proportion of villages and where the people maintain substantial deposits with post office saving banks , it would be a true measure of total money supply with the public , if peoples' deposits with postal savings banks are also included.Accordingly, while money supply with the public in the sense of currency and demand deposits with banks (and other deposits with RBI) may be designated as M1.Another measure of money stock in the country, called M2, would be if post office saving bank deposits are also added to M1.In this case, apart from currency which is most liquid form of money, demand deposits with banks and savings deposits with post office saving banks are also taken into account.
Some economists would like to go further and include time deposits with the banks also in the country's money stock.When that is done, the aggregate of money supply is designated M3 in India.This is equal to the sum of M1 and time deposits with banks.The justification advanced for this is that the holders of time deposits regard their such deposits as near money assets and in time of need can use their time deposits by obtaining bank loans against them or by getting them converted into cash by receiving payment of such amounts before their maturity by foregoing interest which would have accrued had those deposits been retained till their maturity.