Commodity theory of money refers to the theory of money where a commodity can play the role of a common medium of exchange as well as fulfill other functions of money which includes a measure of value, a store of value and a standard of payments. Commodity money is also know as standard money because it is the monetary unit which is approved by the government to act as the legal tender in the currency system and in which other types of money in the economy like bank draft, promissory not etc. is convertible.