when a certain type of money is widely accepted throughout an economy government bodies may begin regulating it as a currency they may issue standardized coins or notes to further reduce transaction costs 
a government may also recognize some money as a legal tender meaning that courts and government bodies must accept that form of money as a final means of payment issuing money allows the government to benefit from seigniorage the difference between the face value of a currency and the cost to produce it for example if the cost of printing a 100 bill is only 10 the government will earn a 90 profit for each bill it prints however governments that rely too heavily on seigniorage may inadvertently debase their currency the total value of the m1 money supply in the united states as of august 2023 this is more than a 10 reduction in m1 compared to may 2022 where it stood at 20 6 trillion this illustrates the variable nature of the money supply 3many countries issue fiat currency which is currency that does not represent any type of commodity instead fiat money is backed by the economic strength of the issuing government it derives its value from supply and demand and the stability of the government fiat money allows the issuing government to conduct economic policy by increasing or reducing the money supply in the u s the federal reserve and the treasury department monitor several types of money supplies for the purpose of regulating and mitigating monetary issues 4since fiat money does not represent a real commodity it falls to the issuing government to ensure that it meets the five properties of money outlined above the international monetary fund imf and world bank serve as global watchdogs for the exchange of international currencies 56 governments may enact capital controls or establish pegs in order to stabilize their currency on the international market to reduce the burden of carrying large quantities of currency merchants and traders sometimes exchange money substitutes such as written statements of debt that can be redeemed later these statements can themselves adopt some of the properties of money particularly if traders use them in lieu of actual currency for example ancient banks issued bills of exchange to their depositors stating the amount that had been deposited and the terms for redemption rather than withdraw money from the bank to make payments depositors would simply trade their bills allowing the recipient to redeem or trade them at will 7this use of money substitutes can increase the portability and durability of money as well as reduce the cost of storage however there are risks involved with money substitutes banks may print more bills than they have money to redeem a practice known as fractional reserve banking if too many people try to make withdrawals at the same time the bank may suffer from a bank run fiduciary media are types of money substitutes introduced into circulation that aren t fully backed by the base money held to back money substitutes 8 for example paper checks token coins and electronic credit represent contemporary examples of fiduciary media in recent years digital currencies that do not exist in physical form such as bitcoin have been introduced unlike electronic bank records or payment systems these virtual currencies are not issued by a government or other central body cryptocurrencies have some of the properties of money and are sometimes used in online transactions although cryptocurrencies are rarely used in everyday transactions they have achieved some utility as a speculative investment or a store of value some jurisdictions have recognized cryptocurrencies as a payment medium including the government of el salvador 