Major Limitations of Bartering
1. Absence of Double Coincidence of Wants:
The deal framework can work just when both purchaser and merchant are prepared to trade each other’s products. For instance, A can trade products with B just when A has what B needs and B have what A needs. Be that as it may, such twofold fortuitous event is extremely uncommon.
2. Absence of Common Measure of Value:
In the trading system, all items are not of equivalent worth and there is no regular measure (unit) of estimation of merchandise and enterprises, in which trade proportions can be communicated. For instance, on the off chance that A has wheat and B has rice, at that point, it is hard to choose, how much wheat is expected to trade with one kilogram of rice. Without normal measure, the trade proportion is fixed arbitrarily, in which one of the gatherings for the most part endures.
3. Absence of Standard of Deferred Payment:
Under the deal framework, contracts including future instalments or credit exchanges can’t happen effortlessly as a result of the following reasons:
(a) The borrower will most likely be unable to orchestrate merchandise of precisely the same quality at the hour of reimbursement.
(b) There might be clashes in regards to which explicit ware is to be utilized for reimbursement.
(c) The item to be reimbursed may lose or pick up its incentive at the hour of reimbursement.
Along these lines, it is hard to make conceded instalments as products.
4. Absence of Store of Value:
Under the trade framework, it is hard for individuals to store riches for sometime later on the grounds that:
(a) Most of the merchandise (like wheat, rice, vegetables, and so forth.) don’t have solidness, for example, their quality break down with a section of time.
(b) Storage of merchandise requires time and endeavours.
Accordingly, merchandise can’t be utilized to store the profit for a significant stretch.
With such a large number of challenges, trade couldn’t proceed for quite a while. Therefore, it was supplanted by money related trade, for example purchasing and selling of products with the assistance of ‘Cash’. Cash has been characterized diversely by various financial experts.