Modern forms of money - Concepts - Chapter 3 Class 10 Economics - Money and Credit - Economics

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 Since the deposits in the bank accounts can be withdrawn on demand , these deposits are called demand deposits .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 .