Barter System and its Problems
A transaction system in which participants directly exchange goods or services for other goods or services without using a medium of exchange, such as money, is called a barter system. Barter systems generally exist parallel to monetary systems in most developed countries to a very limited extent. Market experts use the barter system as a replacement for currency as a method of exchange in times of monetary crisis.
It is a traditional way of mutually satisfying consumer needs. Even in the present times, many people follow this system informally to get the products they want. There are many defects in the barter system, which are mentioned below:
- Division of certain goods is not possible
- Lack of double coincidence of wants
- Lack of a common measure unit
- Difficulty in storing wealth
- Difficulty in making future payments
- Lack of specialization
Related Questions:
Comments
write a comment