What is a unit of account?

In the same way we use Fahrenheit or Celsius to measure temperature, anything of value from the price of your house to the total value of the economy is measured using a unit of account. Today, fiat currency is the dominant unit of account.

Monetary goods that are not yet a unit of account are categorised as being ‘partly monetised’. Turning to history, gold has earned that title and is now classified as a store of value where in the past it had ascended to become a unit of account but as a result of government intervention was brought back down the ranks.

A unit of account has three characteristics. It must be divisible or easy to break down, countable or easy to apply basic maths to such as subtracting or dividing to allow people to account for profits and loss and fungible or easily exchangeable.