why demand deposits are considered essential features for money?
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Demand deposits are unlocked deposits which can be withdrawn at any period of time. Demand deposits possess liquidity ( ability to be converted into cash ) which is an essential feature of money. Cheques, demand drafts etc give an opportunity to exchange them for buying goods and services. Money can be stored just like bank balance in demand deposits.
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- Demand deposits offer another interesting facility. ... The facility of cheques against demand deposits makes settlement of payments possible without using cash. Since demand deposits are accepted widely as a means of payment, along with currency, they constitute money in the modern economy.
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