Fiduciary money is conventionally possessed in trust. This form of money is normally invested by a person for his beneficiary.
The fiduciary normally retains the assets for a certain beneficiary, who could even be an executor of the will.
Payments of fiduciary money could also be made in commodity money like gold or fiat money. The conventional forms of fiduciary money are as follows:
Bank Notes
Checking Accounts
The bank notes are provided by banks. In the nineteenth century they were a common form of currency and are still in use in some countries at present. The checks are now held as having monetary value, ones that could be used as a medium of exchange.
The fiduciary plays an important role in the transactions involving fiduciary money. This person is very powerful with regard to the assets of his beneficiary. The fiduciaries are empowered by the laws to act as representatives of that individual. The conventional examples of fiduciaries are as follows:
- Agents
- Executors or Administrators
- Trustees
- Guardians
- Officers of Corporation
Fiduciary money can be obtained from banks in the form of credible promises. These promises are eligible to be transferred and do perform the functions of conventional money. Bank money is also termed as fiduciary money since the entire business transaction is premised on the factor of trust.
The present day world attaches more importance to the token money whose variations are fiduciary money and fiat money, which are significantly different from commodity money.