Question

the modern form of money are closely linked to the working of the modern banking system. explain it in points​

Answer 1

NANBA...

• 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

Answer:

Bank plays a very vital role as there would be no demand deposits and no payment by cheques against the demand deposit in absence of banking system. Thus, it is clear that currency and deposits are closely linked to the working of the modern banking system.