In today’s modern times, certainly most people already know about the bank and use his services, either as a place to save money or as a place to borrow funds. In the modern economic order, economic traffic activities require the services of many banks, particularly the distribution of funds that are productive and related storage and withdrawal of funds from the community desperately needed for development in the economic field. Because the role of banks in the economy is very important, then every state passed a law on banking. In Indonesia, the problems associated with banks regulated in the Act No.7 of 1992, namely that banks are business entities that raise funds from the public in the form of deposits and deliver to the community in order to improve the living standard of the people.

The main function of banks
In general, there are five main functions of banks is as follows:
a. As a place to collect funds from the community. Bank in charge of securing the money savings and time deposits and deposits in a checking account or current account.
b. As a distributor of funds or credit. Bank’s duty to give credit to people in need, particularly for productive ventures.
c. As providers. The bank provides payment services, exchange, finance, foreign trade, and others.
d. As an agency that regulates the circulation of money. Bank as an institution that has the authority to print and circulate the money necessary to balance the circulation of money in order to avoid inflation or deflation.
e. As institutions that maintain a stable value of money. Bank responsible for managing the circulation of money, provide guarantees gold for each new currency printed and circulated.

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Value for money can be divided into two parts, as follows:
a. Nominal value and intrinsic value
Face value is the value written in each currency or the value written on the money itself.
Intrinsic value is the value or price of materials used to make currency.

b. The value of internal and external value
Internal value is the value of money or resources to purchase some goods or services. Internal value is a real value, that value can be measured by the number of objects that indicate the purchasing power of money.
External value is the value of a currency as measured in foreign currency (foreign currencies), which is called exchange of money or exchange value of money.

Currently most of the money made from paper. The current paper money is virtually has no intrinsic value, but the public would accept the money because public confidence in money itself. Since the enactment of the bill on the basis of trust, then paper money called a trust or fiduciary money.

Value of the currency of a country different from the value of the other country’s currency, hence currency of a country can not be exchanged for currencies of other countries with the same amount. To perform the exchange of foreign currency needed foreign exchange. Foreign exchange rate is the price of its own currency or the price of foreign currency expressed in dollars.

Some theories about the value of money
a. Inflation. If the circulation of money is too much then it will result in inflation, the falling value of money is not proportional to the flow of goods and services. If inflation can not be controlled by the government, there will be hyperinflation.
b. Deflation. If the ratio of the amount of money circulating in the community is smaller than the flow of goods and services will result in deflation, the rising value of money and prices will be low or low-cost goods.
c. Devaluation. Devaluation is government policy to reduce the currency’s value against foreign currencies. In the state that issued the policy of devaluation, the price of goods exports (in foreign markets) to be cheap, so the demand for overseas goods more or increases, and domestic purchasing power was growing stronger.

Incoming Terms:

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Word first about the value itself. Indeed the sense or meaning of the word than the value of is varied, there is value in an objective sense, in a sense subjective and in the sense of exchange rates. It has been argued also that the money is a kind of object. Does this mean that when we say the value of something Samalah content contained objects in our minds when we say value for money? Of course according to the number of meaning values of the above, it is not always the case. So what is contained in our minds when we say value for money. Also should be noted, that in our daily lives, according to thefunction of money as a gauge of value,people uanglah used to determine how the value of something good . However, because the meaning of the latter is the exchange rate, then the equation never mind there is clearly contained in our minds when we say value for money and said the value of a thing. So Samalah what is contained in our minds when we say the exchange rate of an egg, with something unitary currency exchange rates. So with the above description, it is clear that when we say value for money, then the exchange rate uanglah intended.

What is the exchange value of money or money’s worth? Because money is a kind of thing, then what is meant by the exchange rate of something like Samalah objects with something unitary currency exchange rates. The exchange value of objects is the number of goods or services are generally provided by others to us as a substitute for one unit of goods that we gave to them. Thus it is possible we give the definition of value for money as follows:
The value of money is the amount of goods or services provided by others to us as a substitute for one unit of money that we gave to them.

Incoming Terms:

• Definition of the exchange value of money
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Money is a vital tool in our lives today. Without money, we will not be able to meet the needs and desires in life. Money is one object among many objects in the economic sense. Each object has a value, although the value of a single object with other objects is not the same. Society gives value to a thing, because it provides benefits to the community concerned. Only objects that have value to her request. So as for why people give value to something that matter, is because it was requested by the communities concerned, in other words because it gives benefits or to meet the specific needs of the communities concerned. The greater the benefits or needs can be met by something object, the higher the value of the object in question. Conversely the less the benefits provided by some things, the lower the value assigned by society to him.

Why does money have value? This question is not difficult to answer if it was accepted that the money that too is an object. Money as an object can not be separated from the description mentioned above. Clearly the money has value, because the public making a request to it. Furthermore, that money has value because it can meet the needs of the community in many ways. Indeed it is only as an intermediary tool alone, but because the money was to benefit as an intermediary tool then that money has value. Thus did the changes the value of money is closely linked to demand changes to it.

Whenever such a rising demand for money, then the value of money rises, the opposite if the demand for money is a little money and even then the value will decline. Rise and fall of demand for money we can see from the speed of the velocity of money. The faster the velocity of money means less demand for money, meaning money fled to the goods. Conversely, the slower velocity of money, the greater the demand for money, in other words the more people want to save some of his wealth in the form of money. In the circumstances the velocity of money very fast which means lower demand for money, value for money will fall. Furthermore, in a state of very slow turnover, which means rising demand for money, value for money will rise.

Incoming Terms:

• velocity exchange rate

Capital is anything used in the production process. Capital not only in the form of money, but also in the form of goods that can be used to produce goods and services.

Capital goods are all the resources needed in production activities or goods produced are used as means or tools to produce other goods. To get this item as an investment the company needs funds. The results of this investment is a capital interest or the return on capital. The amount of interest expressed in percentage per year or interest rates. Thus, capital interest is remuneration received by capital owners of capital investment in production activities.

The theory of capital interest can be explained as follows.

a. Productivity theory. According to Jean Baptiste Say, capital loans can be used for productive business. With additional capital, the company can increase its production capacity. Excess of capital investment are granted to owners of capital in the form of capital interest.

b. The theory of sacrifice. According to Nassau Senior and Marshall Willen, interest of capital is given as remuneration for the capital owners of capital investment that is not used by a person or company.

c. Agio theory. According to von Bohm Bawerk, remuneration should be paid to shareholders for losses caused by the difference in value. The reason the loss is due to the following.

1. economic reasons, namely the value of money is now higher than in years to come.

2. psychological reasons, the man thought that the needs and means of satisfying the need for time to come lower.

3. technical reasons, namely the existing capital goods can be used for subsequent production processes.

d. Liquidity Preference Theory. According to John Maynard Keynes, the interest of capital is given as compensation for the sacrifice to not use the liquid because of the money borrowed by others. This is because people prefer to use cash. The reason people love the cash is as follows.

1. the transactions motive for their daily needs.

2. guard motives against unexpected needs.

3. speculation motive.

e. The theory of dynamic interest. According to Schumpeter, capital goods used in the production process will produce a profit. Part of the profit is given as interest capital to shareholders.

Wholesale price index is an index number that indicates a change in the price of goods purchased by wholesalers from the consumer. Wholesale price index do not like the consumer price index specified by the smallest unit of quantity, but quantity determined in bulk sizes.

Price index is very useful for wholesaler to know the extent of the changes that occur in the purchase prices of merchandise. Also, the price index can be used as a basis for estimating price conditions that may occur in the future.

In addition, by knowing the wholesale price index, wholesalers can know the factors that caused the changes in these prices, so the knowledge about that price indexes can be used to set a floor price for consumers.

Large or small the wholesale price index is strongly influenced by the following factors:
1. production cost increases
2. trade policy
3. in the field of monetary policy
4. changes in the value of money.

The index number is a statistical measure to express the relative changes that occur from time to time one or more characteristics or other variables that are expressed as a percentage.
In economics known there are 3 kinds of index numbers as follows.

1. Price index number
Price index number is a measure that shows the price change from a period to another.

2. Quantity index numbers
Quantity index numbers are index numbers that indicate the changes that occurred in the number of commodities that are consumed from time to time.

3. Value index numbers
The value index number is the index numbers that indicate changes in the value of money from one period to another. The value can be obtained by the multiplication between price and quantity.

International gold standard is possible only works if two conditions are met by the countries that joined in the international gold standard. Both requirements are as follows:
1. Each country that is in the international gold standard, must be in the gold standard, meaning that the country is always concerned will maintain the unity value of money with gold weighing a certain value.
2. Each country within the international gold standard was free entry gold into the domestic and gold shipments abroad. So there must be freedom to import and export of gold.

International gold standard will not run properly if either of these two conditions above are not met. Thus, each country belonging to it must be subject to rules conceived by the international gold standard.