ABSTRACT
Two monies may be less efficient than one. No problem ariseji in the short run from the existence of more than one money as medium of exchange, nor if two or more monies are related to one another in value at a fixed price. Sir John Hicks has produced a theorem that states that when two goods have a fixed price they can be regarded as one. This applies especially to money, although changing from one currency to another at the fixed price may involve some transaction cost. When the relative value of the two monies changes from time to time, however, difficulties arise. A household, firm, government, or other entity seeking to maintain the value of its money holding has to choose among monies, may want to switch back and forth from one to another as the relative values change. The function of money as unit of account becomes especially difficult when the relative values of two or more monies alter. How should distance be measured if the yard and the meter keep altering in relation to each other?
