(a) Standard of Deferred Payments Money serves as a standard of deferred payment. Deferred payments refer to those payments which are to be made in future. In a modern economy, a large number of transactions involve future payments which can easily be stated in terms of money.
Example: Kamala wants to buy a car but cannot raise the full amount for purchase. She takes a loan from a lender and is then able to buy the car. The payments of the loan are deferred into the future while she keeps using the car.
(b) Basis of Credit In the modern economic system, credit plays a key role and money constitutes the basis of credit. For example, credit instruments like cheques, drafts, bills of exchange, etc., cannot be used without the existence of money.