Question

The modern form of money are closely linked to the modern banking system. Explain

Answer 1

The modern forms of money include currency and deposits in bank.Currency which are paper notes and coins in form has been authorised by the govt. of India. Though they are not made from precious metal or of everyday use but being legalised by the RBI these act like medium of exchange in settling transactions smoothly. Also,these have provided a safe and secure way for the people to handle their transactions. Now,with the gradual changes people have now started opening their account in bank to keep the money as demand deposits where their money is safe, they get interest on their deposit and also can avail cheque facility where they can settle payments without the use of cash.Here, this signifies the role of bank and hence it as been claimed that the modern form of money are closely linked to the modern baking system. 

Answer 2

The modern forms of money include paper notes and metal coins. These are exchanged and are a mode of payment. The modern banking system works on the principle of taking the money from the depositors and provide loans to the borrowers. These exchange takes place with the help of the modern currency.

Hope this helps:)