Paul Einzig has classified functions of money into two broad categories, namely static and dynamic functions of money.

Static Functions:

Static functions of money are those which are related to the operation of economy and do not generate any momentum or force. On this basis the functions of money like medium of exchange, store of value, standard of deferred payments, transfer of value etc. can be termed as primary and static functions for these functions do not generate any force or momentum.

Static functions of manes arc also known as passive functions, traditional functions, fixed functions and technical func­tions for these functions have to be performed by money mechanically in all conditions and in all econo­mics, These functions are known as Static Functions because their form and nature is the same at all places in all countries and in all types of economies. The nature of these functions is traditional.


Dynamic Functions:

Dynamic functions are those which bring about changes in the economic conditions such as price level, level of production and employment etc. Affecting liquidity of capital and providing a basis for credit, come under the category of dynamic functions, for these bring about changes in the level and nature of economic activities. Monetary measures are formulated only with a view to perform dynamic functions of money.