Modern forms of Money

Since the very early ages, grains and cattle were used as money. Then came the metallic coins - gold, silver and copper coins - a phase that continued well into the last century.

Currency

  • Modern-day currency includes paper notes and coins , they are not made of precious metals such as gold, silver and copper and unlike cattle and grains, they are of no use in everyday life .
  • In fact, they don’t have any value on their own. The only reason it is accepted as a medium of exchange is that it is authorised by the government of the country.
  • In India, only the RBI issues currency notes on behalf of the central government. Therefore, no other organisation or individual is allowed to issue currency.
  • The law legalises the use of “rupee” as a medium of payment that cannot be refused by any individual.

Deposits with Banks

  • Another form in which people hold money is as deposits with banks
  • Banks accept the deposits and also pay an amount as interest on the deposits.
  • In this way, people’s money is safe with the banks and it earns an amount as interest .
  • People can withdraw their money whenever they want. Since the deposits in the bank accounts can be withdrawn on demand , these deposits are called demand deposits .

Cheques

  • A cheque is a paper instructing the bank to pay a specific amount from the person’s account to the person in whose name the cheque has been issued .
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Davneet Singh

Davneet Singh has done his B.Tech from Indian Institute of Technology, Kanpur. He has been teaching from the past 14 years. He provides courses for Maths, Science, Social Science, Physics, Chemistry, Computer Science at Teachoo.