Syllabus: Cambridge - IGCSE Economics
Module: 3.1 Money and Banking
Lesson: 3.1.1 Money

Introduction

The Cambridge IGCSE Economics (0455) syllabus introduces students to fundamental economic principles, with Topic 3.1.1 focusing on the nature and functions of money. This section forms part of the broader “Money and Banking” unit, preparing students to understand both traditional economic theory and its real-world applications.

Understanding money as a concept isn’t just academic — it is foundational to financial literacy, organisational awareness, and commercial confidence. For teachers, this topic also provides an excellent opportunity to link core economic content with Gatsby Benchmarks 4 and 5, developing workplace relevance through contextualised learning.

Key Concepts

As outlined by the Cambridge IGCSE Economics syllabus, students are expected to:

• Define money and understand its characteristics (durability, portability, divisibility, etc.)

• Explain the functions of money, including:

  • A medium of exchange

  • A store of value

  • A unit of account

  • A standard of deferred payment

• Distinguish between money and barter, explaining the limitations of barter systems

• Understand the evolution of money — from commodity-based systems to digital forms

These foundational ideas are essential for building students’ comprehension of wider economic systems and enable them to analyse how modern banking and financial institutions operate.

Real-World Relevance

Teaching this section provides an opportunity to explore real-world events such as:

• The rise of digital currencies and contactless payments: Students can evaluate whether cryptocurrencies like Bitcoin fulfil the traditional functions of money.

• Cost of living and inflation: As inflation erodes the store of value function, students can assess how money behaves differently under varying economic conditions.

• Global reliance on mobile banking in developing economies, such as M-PESA in Kenya, showing how technological innovation redefines what counts as ‘money’.

This relevance brings theory to life and supports cross-curricular links with business, ICT, and citizenship education.

How It’s Assessed

In the Cambridge IGCSE exam, assessment of Topic 3.1.1 typically appears in:

• Paper 1 (Multiple Choice): Students may be asked to identify the correct function of money in a given scenario.

• Paper 2 (Structured Questions): Often includes short explanation questions (e.g., “Explain why money is a better medium of exchange than barter”) or evaluation-style responses requiring real-world application.

Command words such as define, explain, analyse, and discuss are common. Teachers should focus on helping students recognise what depth of response each word requires. Encouraging the use of real-world examples can earn higher marks in longer answers.

Enterprise Skills Integration

This topic offers strong integration with Enterprise Skills themes — especially commercial awareness, decision-making, and financial literacy.

Students begin to:

• Understand how value is created and exchanged, underpinning all organisational transactions

• Analyse risk and uncertainty, especially in comparing traditional vs digital currencies

• Develop decision-making skills, such as determining the best method of payment in different contexts

Tools from Skills Hub Futures can support this, including activities like “Understanding Business Models” and “Financial Literacy: Personal Meets Business Finance”.

Careers Links

This topic aligns directly with Gatsby Benchmark 4 (linking curriculum to careers) by offering insight into careers that rely on understanding money and financial systems, including:

• Banking and finance

• Retail and digital payments

• FinTech innovation

• Economic consultancy

• Government and policy analysis

By discussing how money functions in these careers, teachers make abstract concepts tangible. This is also an ideal moment to integrate Benchmark 5 through employer case studies (e.g., guest speakers from banks or digital payment startups).

Teaching Notes

Teaching Tips:

• Use case studies like M-PESA, contactless payments, or hyperinflation in Zimbabwe to show money’s evolving role.

• Bring in physical examples: coins, notes, and even images of cryptocurrency to visualise different forms of money.

• Pose problem-solving activities — e.g., group work comparing barter and money-based economies.

Common Pitfalls:

• Students often confuse functions of money — especially unit of account vs standard of deferred payment. Provide clear, separate examples.

• Misconceptions about cryptocurrency can arise — clarify that not all digital currencies meet all functions of traditional money.

Extension Opportunities:

• Explore FinTech case studies as an ICT or business crossover

• Simulate barter systems in class to demonstrate their limitations

• Set a debate on “Should cryptocurrencies replace traditional money?”

These strategies not only support deeper learning but also foster the commercial awareness and career readiness that Ofsted and Gatsby Benchmarks demand.