Question

what is the role of demand deposits in the working of the modern bank system​

Answer 1

Answer:

Explanation: The facility of cheque against demand deposits makes it possible to directly settle payments without the use of cash. 11. Since demand deposits are accepted widely as a means of payment, along with currency, they constitute money in the modern economy.

Answer 2

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what is the role of demand deposits in the working of the modern bank system

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People with surplus money or extra amount deposit it in banks. The banks keep the money safe and give an interest on it. The deposits can be drawn at any time on demand by the depositors. That is why they are called 'demand deposits'.

The three features of it are:-

(i) The demand deposits encashable by issuing cheques have the essential features of money.

(ii) They make it possible to directly settle payments without the use of cash.

(iii) Since demand drafts/cheques are widely accepted as a means of payment along with currency, they constitute money in the modern economy.