Question

Currency and deposits are closely linked to the working of the modern banking system . Justify
5 mark answer ( 5 points at least )

Answer 1

• The facility of cheques against demand deposits makes it possible to directly settle payments without the use of cash.
• Demand deposits are accepted widely as a means of payment along with currency.
• For the banks, there would be no payments by cheques against these deposits.

Answer 2

Explanation:

• Currency for each country is different. For example one US dollar is equal to 162 Pakistani rupees.
• Therefore when you deposit in the bank, you need to know what currency you want to deposit the cash or cheque.
• In international accounts, the money you have in your bank account can be the basis of currency trade.
• In modern banking, you can deposit cash and turn it into some other currency, for which certain dual currency or international account option is given.