The document discusses the evolution of money from early commodity forms like cattle and grains used as a medium of exchange, to the development of metallic coins, paper money, and modern forms like credit/bank money, plastic money, and digital currencies. It provides definitions of money and outlines the key functions of money as a medium of exchange, store of value, and unit of account. The document also examines the advantages and disadvantages of different forms of money throughout history as the concept has developed and modernized over time.
The document provides information on banking in India. It defines banking as accepting deposits that are repayable on demand for the purpose of lending and investment. It discusses the key functions of commercial banks like accepting deposits and lending. It also outlines the banking system in India, including the roles of the Reserve Bank of India and State Bank of India. Major trends in the banking sector include the rise of electronic payments and digital banking services like internet banking, mobile banking, and real-time fund transfers.
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
For Order Online:
Whatsapp: +923452502478
Portfolio Link: https://blueprismacademia.wordpress.com/
Email: arguni.hasnain@gmail.com
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The document discusses various definitions and concepts related to money:
1. It outlines traditional, Friedman's, and Gurley-Shaw definitions of money which increasingly broaden the scope of money to include near-money assets.
2. It describes the three main functions of money as a medium of exchange, unit of account, and store of value.
3. Theories of neutrality and non-neutrality of money are discussed in relation to prices, interest rates, and economic output in the short and long run.
4. Quantity theories of money like Fisher's equation and the Cambridge cash balance approach link the money supply to the price level and value of money through demand for real cash balances
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
For Order Online:
Whatsapp: +923452502478
Portfolio Link: https://blueprismacademia.wordpress.com/
Email: arguni.hasnain@gmail.com
Follow Me:
Linkedin: arguni_hasnain
Instagram : arguni.hasnain
Facebook: arguni.hasnain
This document outlines key concepts related to money, including its definition, evolution, functions, and motives for demand. It discusses how money evolved from bartering systems and commodity money to today's forms, serving important functions as a medium of exchange, store of value, and unit of account. Money offers benefits like making transactions more efficient and allowing specialization. It also outlines the transaction, precautionary, and speculative motives for holding cash.
Money serves several essential economic functions according to the document. It acts as a medium of exchange, replacing bartering, allowing goods and services to be traded. Money also serves as a unit of account, allowing prices of goods and services to be denominated in a standard unit. Additionally, money acts as a store of value, allowing purchasing power to be saved and transferred over time. The document discusses different definitions and classifications of money, including definitions based on what constitutes money, whether it is currency in circulation or includes other assets, and classifications based on the nature and legality of various forms of money.
This document provides an overview of money and banking concepts. It begins with a discussion of barter economies and how money emerged to overcome shortcomings of barter. It then covers qualities and types of money, as well as the functions of money. The document also discusses demand and supply of money, the structure and functions of commercial banks, types of financial instruments, and provides an overview of Sri Lanka's financial system.
The document provides information on banking in India. It defines banking as accepting deposits that are repayable on demand for the purpose of lending and investment. It discusses the key functions of commercial banks like accepting deposits and lending. It also outlines the banking system in India, including the roles of the Reserve Bank of India and State Bank of India. Major trends in the banking sector include the rise of electronic payments and digital banking services like internet banking, mobile banking, and real-time fund transfers.
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
For Order Online:
Whatsapp: +923452502478
Portfolio Link: https://blueprismacademia.wordpress.com/
Email: arguni.hasnain@gmail.com
Follow Me:
Linkedin: arguni_hasnain
Instagram : arguni.hasnain
Facebook: arguni.hasnain
The document discusses various definitions and concepts related to money:
1. It outlines traditional, Friedman's, and Gurley-Shaw definitions of money which increasingly broaden the scope of money to include near-money assets.
2. It describes the three main functions of money as a medium of exchange, unit of account, and store of value.
3. Theories of neutrality and non-neutrality of money are discussed in relation to prices, interest rates, and economic output in the short and long run.
4. Quantity theories of money like Fisher's equation and the Cambridge cash balance approach link the money supply to the price level and value of money through demand for real cash balances
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
For Order Online:
Whatsapp: +923452502478
Portfolio Link: https://blueprismacademia.wordpress.com/
Email: arguni.hasnain@gmail.com
Follow Me:
Linkedin: arguni_hasnain
Instagram : arguni.hasnain
Facebook: arguni.hasnain
This document outlines key concepts related to money, including its definition, evolution, functions, and motives for demand. It discusses how money evolved from bartering systems and commodity money to today's forms, serving important functions as a medium of exchange, store of value, and unit of account. Money offers benefits like making transactions more efficient and allowing specialization. It also outlines the transaction, precautionary, and speculative motives for holding cash.
Money serves several essential economic functions according to the document. It acts as a medium of exchange, replacing bartering, allowing goods and services to be traded. Money also serves as a unit of account, allowing prices of goods and services to be denominated in a standard unit. Additionally, money acts as a store of value, allowing purchasing power to be saved and transferred over time. The document discusses different definitions and classifications of money, including definitions based on what constitutes money, whether it is currency in circulation or includes other assets, and classifications based on the nature and legality of various forms of money.
This document provides an overview of money and banking concepts. It begins with a discussion of barter economies and how money emerged to overcome shortcomings of barter. It then covers qualities and types of money, as well as the functions of money. The document also discusses demand and supply of money, the structure and functions of commercial banks, types of financial instruments, and provides an overview of Sri Lanka's financial system.
This document defines money and discusses its functions and evolution. It notes that money acts as a medium of exchange, store of value, and unit of account. Originally barter and commodities were used, but money developed to solve difficulties with barter. Coins and paper money later replaced commodities as money. Modern money includes coins, paper notes, and checkable deposits. Central banks control money supply and commercial banks create credit and accept deposits.
Paper money and Quality of Paper Money faisal azam
Paper money refers to documents that represent money such as banknotes, bills of exchange, and postal orders. There are three types of paper money: representative paper money which is fully backed by metal reserves, convertible paper money which can be converted to coins on demand, and fiat paper money which is not redeemable for gold or silver but is accepted as legal tender.
The merits of paper money include low production costs, convenience, difficulty to counterfeit, uniform quality, ability to adjust the money supply elastically, saving of precious metals, ease of counting, and portability. Demerits are the risk of demonetization by the government, instability due to exchange rate fluctuations, potential for excessive issuance
The document provides an overview of the evolution of money and the monetary system in India. It discusses the development from barter systems to various forms of money like commodity money, metallic money, paper money, and digital money. It describes the functions of money as a medium of exchange, store of value, and standard of deferred payments. It also discusses key concepts like the money supply and its components, sources of money supply, the role of the central bank (Reserve Bank of India) and commercial banks in money creation through credit. It provides definitions of legal tender money and different measures of money supply used in India.
This document provides a history of the development of money. It begins with bartering and the use of shells as early forms of currency. It then discusses the introduction of coinage in Lydia in 600 BC and the later development of paper money in China in the 9th century. It also briefly outlines the gold standard, development of credit cards, and different types and functions of modern currencies like commodity, fiat, fractional, and fiduciary money.
The document appears to be a scanned copy of a legal contract for the sale of a residential property located in California. The contract details the purchase price of the property, the down payment, terms for the remaining balance, contingencies for inspections and appraisal, and closing date. The contract is signed by both the buyer and seller agreeing to the terms of the sale.
The document discusses the foreign exchange market. It provides background on the history of currency exchange beginning in ancient times. It then summarizes key aspects of the modern foreign exchange market, including that it consists of both wholesale and retail tiers, involves spot and forward transactions between various participants, and uses quotations structured as bids and asks with spreads. The market is unique due to its massive daily trading volume, global nature, and around the clock operations.
Money refers to anything that is generally accepted as payment. It functions as a medium of exchange, unit of account, and store of value. Money includes currency, deposits, and other liquid assets. The money supply has evolved from commodity money to various forms like paper currency, checks, and electronic payments. Measuring the money supply includes aggregates like M1, M2, and M3 that capture currencies and increasingly liquid assets.
Virtual money / virtual currency / digital coinSAMBIT SWAIN
This document presents on virtual currency exchange. It defines virtual currency as money that exists electronically without a physical form. There are four main types of virtual money systems: centralized systems like PayPal that sell currency directly; decentralized systems like Bitcoin that operate through peer-to-peer networks; mobile sub-systems and digital wallets like Apple Pay; and offline anonymous systems where merchants can collect currency from users and deposit it later. While digital currency reduces costs compared to physical money, security and stability concerns remain that need to be addressed through legal guidelines and cooperation between financial institutions and technology companies.
Money originated from the Latin word 'MONETO' and can be defined as any commodity that is generally accepted for exchange and as a measure of value. The primary functions of money are as a medium of exchange to purchase goods and services, and as a measure of value to compare the worth of different commodities. Secondary functions include acting as a standard for deferred payments, a store of value for present and future needs, and allowing the transfer of purchasing power across locations.
Economics project for class 12 on money and banking. it explains all the functions about RBI and includes everything needed to achieve good marks in project work.
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
For Order Online:
Whatsapp: +923452502478
Portfolio Link: https://blueprismacademia.wordpress.com/
Email: arguni.hasnain@gmail.com
Follow Me:
Linkedin: arguni_hasnain
Instagram : arguni.hasnain
Facebook: arguni.hasnain
1) Money was introduced to solve problems with barter systems like the "double coincidence of wants". Money acts as a medium of exchange, store of value, and standard for deferred payments.
2) Money supply refers to the total quantity of money in circulation and includes components like currency, demand deposits, and other deposits. It is classified into narrow (M1) and broad money (M2, M3, M4).
3) Commercial banks create money through the process of credit creation, lending out a multiple of the initial deposits based on required reserve ratios. They accept deposits and extend loans to earn profits.
The document discusses India's demonetization of 500 and 1000 rupee banknotes in November 2016. It provides background on the meaning of demonetization, India's history with it in 1946 and 1978. It then outlines the key aspects of the 2016 policy including exchanging old notes for new ones, deposit procedures, tax implications for deposited cash, initial reactions from support and criticism, effects like cash shortages and increased e-payments, and evasion attempts through gold, salaries, and donations. In conclusion, it argues the long-term benefits of reducing corruption and black money outweigh short-term costs, and the government must ensure a smooth transition to the new currency.
The document traces the historical development of money from bartering of goods to modern currencies. It begins with bartering where goods were directly exchanged for other goods. Shells then emerged as the first medium of exchange. Later, coins made of metals like silver and imprinted with images became widely used as standardized money. Paper money was developed later, and most currency today is in the form of paper notes and coins, though future money may be digital. The key advantages of money over bartering are its portability, durability, divisibility and limited availability.
Solved Cbse Class 12 Accountancy Full Project(Comprehensive Project, Ratio An...Dan John
I assure you that this project of mine will fetch you a very good score.
Good Luck!!
Go to the links below for the following...
Solved Comprehensive Project Cbse Class 12 Accountancy Project
http://www.slideshare.net/dankjohn/solved-comprehensive-project-cbse-class-12-accountancy-project
Solved Accounting Ratios with Balance Sheet(vertical) and Statement of Profit and Loss - Cbse Class 12 Accountancy Project
http://www.slideshare.net/dankjohn/solved-accounting-ratios-with-balance-sheetvertical-and-statement-of-profit-and-loss-cbse-class-12-accountancy-project
Solved Cash Flow Statements with Balance Sheet (vertical) and Notes to Accounts - Cbse Class 12 Accountancy Project
http://www.slideshare.net/dankjohn/solved-cash-flow-statements-with-balance-sheet-vertical-and-notes-to-accounts-cbse-class-12-accountancy-project
The document discusses the history of money and how bartering was used before modern currencies. Under bartering, people would directly exchange goods and services without a standard medium of exchange. Bartering was inconvenient as the items being traded had to be immediately exchangeable and transporting bulky or heavy goods was difficult. The document then defines money as anything widely accepted as payment for goods and services, which serves as a medium of exchange, store of value, and standard for deferred payments.
UNIT 4 MEANING AND EVOLUTION OF BANKING
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Meaning of a Bank, Banking and Banker
3.2 Evolution of Banking
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Readings
1.0 INTRODUCTION
Various attempts have been made to define the term bank or banker.
In this unit, we shall define the term bank or banker. We shall also trace
the origin of banking.
2.0 OBJECTIVES
At the end of the unit, you should be able to:
• Explain the meaning of a Bank, Banking or Banker
• Trace the evolution of Banking in Nigeria.
3.0 MAIN CONTENT
3.1 Meaning of Bank
As a result of different kinds of banks in existence nowadays, it would
be difficult, or at least cumbersome, to formulate a definition of banking
which connotes the diverse activities of all kinds of banks. We shall
therefore consider the definition under three view points:
a) Definitions of bank or banker by Text-Book Writers
b) Definitions of bank or banker by Status
c) Definitions of bank or banker as expressed by the Courts
a) Definitions of bank or banker by Text-Book Writers: A bank
has been defined by Dr. Hart as " a person or company carrying
on the business of receiving moneys, and collecting drafts, for
customers subject to the obligation of honouring cheques drawn
upon them from time to time by the customers Lo the extent of the
amounts available on the current accounts".
MBF833 MONEY AND
BANKING
In his 8th edition, published in 1972 Paget defined "a bank or
banker as a corporation or person (or group of persons)
who accept moneys on current accounts, pay cheques drawn upon
such account on demand and collect cheques for customers, that
if such minimum services are afforded to al and sundry without
restriction of any kind, the business is a banking business,
whether or not other business is undertaken at the same time; that
providing the banking business as so understood is not a mere for
other business, the person or corporation is a banker or bank for
the purposes of statutes relating to banking, other than those
where the sole criterion is the satisfaction of some government
department".
Chamber's Twentieth Century Dictionary defines a bank as an
"institution for the keeping, lending and exchanging, etc of
money. Economists have also defined a bank highlighting
its various functions. According to Crowther, "The banker's business
is to take the debts of other people to offer his own in exchange,
and thereby create money." A similar definition has been given
by Kent who defines a bank as "an organisation whose principal
operations are concerned with the accumulation of the
temporarily idle money of the general public for the purpose of
advan
Money has evolved over time from bartering of goods, to commodity money, metallic coins, paper money, checks/debit cards, and now largely plastic/digital currency. It began as a way to overcome the inefficiencies of bartering by using commonly accepted goods as currency. Metals like gold and silver were then used to create durable and divisible coins. As trade grew, paper money and checks emerged to allow easier carrying of funds. Today, digital payment methods via credit/debit cards and apps predominate as plastic and digital currencies are portable, durable and support fast global transactions. Money serves key economic functions as a medium of exchange, unit of account, store of value, and standard for deferred payments.
This document defines money and discusses its functions and evolution. It notes that money acts as a medium of exchange, store of value, and unit of account. Originally barter and commodities were used, but money developed to solve difficulties with barter. Coins and paper money later replaced commodities as money. Modern money includes coins, paper notes, and checkable deposits. Central banks control money supply and commercial banks create credit and accept deposits.
Paper money and Quality of Paper Money faisal azam
Paper money refers to documents that represent money such as banknotes, bills of exchange, and postal orders. There are three types of paper money: representative paper money which is fully backed by metal reserves, convertible paper money which can be converted to coins on demand, and fiat paper money which is not redeemable for gold or silver but is accepted as legal tender.
The merits of paper money include low production costs, convenience, difficulty to counterfeit, uniform quality, ability to adjust the money supply elastically, saving of precious metals, ease of counting, and portability. Demerits are the risk of demonetization by the government, instability due to exchange rate fluctuations, potential for excessive issuance
The document provides an overview of the evolution of money and the monetary system in India. It discusses the development from barter systems to various forms of money like commodity money, metallic money, paper money, and digital money. It describes the functions of money as a medium of exchange, store of value, and standard of deferred payments. It also discusses key concepts like the money supply and its components, sources of money supply, the role of the central bank (Reserve Bank of India) and commercial banks in money creation through credit. It provides definitions of legal tender money and different measures of money supply used in India.
This document provides a history of the development of money. It begins with bartering and the use of shells as early forms of currency. It then discusses the introduction of coinage in Lydia in 600 BC and the later development of paper money in China in the 9th century. It also briefly outlines the gold standard, development of credit cards, and different types and functions of modern currencies like commodity, fiat, fractional, and fiduciary money.
The document appears to be a scanned copy of a legal contract for the sale of a residential property located in California. The contract details the purchase price of the property, the down payment, terms for the remaining balance, contingencies for inspections and appraisal, and closing date. The contract is signed by both the buyer and seller agreeing to the terms of the sale.
The document discusses the foreign exchange market. It provides background on the history of currency exchange beginning in ancient times. It then summarizes key aspects of the modern foreign exchange market, including that it consists of both wholesale and retail tiers, involves spot and forward transactions between various participants, and uses quotations structured as bids and asks with spreads. The market is unique due to its massive daily trading volume, global nature, and around the clock operations.
Money refers to anything that is generally accepted as payment. It functions as a medium of exchange, unit of account, and store of value. Money includes currency, deposits, and other liquid assets. The money supply has evolved from commodity money to various forms like paper currency, checks, and electronic payments. Measuring the money supply includes aggregates like M1, M2, and M3 that capture currencies and increasingly liquid assets.
Virtual money / virtual currency / digital coinSAMBIT SWAIN
This document presents on virtual currency exchange. It defines virtual currency as money that exists electronically without a physical form. There are four main types of virtual money systems: centralized systems like PayPal that sell currency directly; decentralized systems like Bitcoin that operate through peer-to-peer networks; mobile sub-systems and digital wallets like Apple Pay; and offline anonymous systems where merchants can collect currency from users and deposit it later. While digital currency reduces costs compared to physical money, security and stability concerns remain that need to be addressed through legal guidelines and cooperation between financial institutions and technology companies.
Money originated from the Latin word 'MONETO' and can be defined as any commodity that is generally accepted for exchange and as a measure of value. The primary functions of money are as a medium of exchange to purchase goods and services, and as a measure of value to compare the worth of different commodities. Secondary functions include acting as a standard for deferred payments, a store of value for present and future needs, and allowing the transfer of purchasing power across locations.
Economics project for class 12 on money and banking. it explains all the functions about RBI and includes everything needed to achieve good marks in project work.
I’m a young Pakistani Blogger, Academic Writer, Freelancer, Quaidian & MPhil Scholar, Quote Lover, Co-Founder at Essar Student Fund & Blueprism Academia, belonging from Mehdiabad, Skardu, Gilgit Baltistan, Pakistan.
I am an academic writer & freelancer! I can work on Research Paper, Thesis Writing, Academic Research, Research Project, Proposals, Assignments, Business Plans, and Case study research.
Expertise:
Management Sciences, Business Management, Marketing, HRM, Banking, Business Marketing, Corporate Finance, International Business Management
For Order Online:
Whatsapp: +923452502478
Portfolio Link: https://blueprismacademia.wordpress.com/
Email: arguni.hasnain@gmail.com
Follow Me:
Linkedin: arguni_hasnain
Instagram : arguni.hasnain
Facebook: arguni.hasnain
1) Money was introduced to solve problems with barter systems like the "double coincidence of wants". Money acts as a medium of exchange, store of value, and standard for deferred payments.
2) Money supply refers to the total quantity of money in circulation and includes components like currency, demand deposits, and other deposits. It is classified into narrow (M1) and broad money (M2, M3, M4).
3) Commercial banks create money through the process of credit creation, lending out a multiple of the initial deposits based on required reserve ratios. They accept deposits and extend loans to earn profits.
The document discusses India's demonetization of 500 and 1000 rupee banknotes in November 2016. It provides background on the meaning of demonetization, India's history with it in 1946 and 1978. It then outlines the key aspects of the 2016 policy including exchanging old notes for new ones, deposit procedures, tax implications for deposited cash, initial reactions from support and criticism, effects like cash shortages and increased e-payments, and evasion attempts through gold, salaries, and donations. In conclusion, it argues the long-term benefits of reducing corruption and black money outweigh short-term costs, and the government must ensure a smooth transition to the new currency.
The document traces the historical development of money from bartering of goods to modern currencies. It begins with bartering where goods were directly exchanged for other goods. Shells then emerged as the first medium of exchange. Later, coins made of metals like silver and imprinted with images became widely used as standardized money. Paper money was developed later, and most currency today is in the form of paper notes and coins, though future money may be digital. The key advantages of money over bartering are its portability, durability, divisibility and limited availability.
Solved Cbse Class 12 Accountancy Full Project(Comprehensive Project, Ratio An...Dan John
I assure you that this project of mine will fetch you a very good score.
Good Luck!!
Go to the links below for the following...
Solved Comprehensive Project Cbse Class 12 Accountancy Project
http://www.slideshare.net/dankjohn/solved-comprehensive-project-cbse-class-12-accountancy-project
Solved Accounting Ratios with Balance Sheet(vertical) and Statement of Profit and Loss - Cbse Class 12 Accountancy Project
http://www.slideshare.net/dankjohn/solved-accounting-ratios-with-balance-sheetvertical-and-statement-of-profit-and-loss-cbse-class-12-accountancy-project
Solved Cash Flow Statements with Balance Sheet (vertical) and Notes to Accounts - Cbse Class 12 Accountancy Project
http://www.slideshare.net/dankjohn/solved-cash-flow-statements-with-balance-sheet-vertical-and-notes-to-accounts-cbse-class-12-accountancy-project
The document discusses the history of money and how bartering was used before modern currencies. Under bartering, people would directly exchange goods and services without a standard medium of exchange. Bartering was inconvenient as the items being traded had to be immediately exchangeable and transporting bulky or heavy goods was difficult. The document then defines money as anything widely accepted as payment for goods and services, which serves as a medium of exchange, store of value, and standard for deferred payments.
UNIT 4 MEANING AND EVOLUTION OF BANKING
CONTENTS
1.0 Introduction
2.0 Objectives
3.0 Main Content
3.1 Meaning of a Bank, Banking and Banker
3.2 Evolution of Banking
4.0 Conclusion
5.0 Summary
6.0 Tutor-Marked Assignment
7.0 References/Further Readings
1.0 INTRODUCTION
Various attempts have been made to define the term bank or banker.
In this unit, we shall define the term bank or banker. We shall also trace
the origin of banking.
2.0 OBJECTIVES
At the end of the unit, you should be able to:
• Explain the meaning of a Bank, Banking or Banker
• Trace the evolution of Banking in Nigeria.
3.0 MAIN CONTENT
3.1 Meaning of Bank
As a result of different kinds of banks in existence nowadays, it would
be difficult, or at least cumbersome, to formulate a definition of banking
which connotes the diverse activities of all kinds of banks. We shall
therefore consider the definition under three view points:
a) Definitions of bank or banker by Text-Book Writers
b) Definitions of bank or banker by Status
c) Definitions of bank or banker as expressed by the Courts
a) Definitions of bank or banker by Text-Book Writers: A bank
has been defined by Dr. Hart as " a person or company carrying
on the business of receiving moneys, and collecting drafts, for
customers subject to the obligation of honouring cheques drawn
upon them from time to time by the customers Lo the extent of the
amounts available on the current accounts".
MBF833 MONEY AND
BANKING
In his 8th edition, published in 1972 Paget defined "a bank or
banker as a corporation or person (or group of persons)
who accept moneys on current accounts, pay cheques drawn upon
such account on demand and collect cheques for customers, that
if such minimum services are afforded to al and sundry without
restriction of any kind, the business is a banking business,
whether or not other business is undertaken at the same time; that
providing the banking business as so understood is not a mere for
other business, the person or corporation is a banker or bank for
the purposes of statutes relating to banking, other than those
where the sole criterion is the satisfaction of some government
department".
Chamber's Twentieth Century Dictionary defines a bank as an
"institution for the keeping, lending and exchanging, etc of
money. Economists have also defined a bank highlighting
its various functions. According to Crowther, "The banker's business
is to take the debts of other people to offer his own in exchange,
and thereby create money." A similar definition has been given
by Kent who defines a bank as "an organisation whose principal
operations are concerned with the accumulation of the
temporarily idle money of the general public for the purpose of
advan
Money has evolved over time from bartering of goods, to commodity money, metallic coins, paper money, checks/debit cards, and now largely plastic/digital currency. It began as a way to overcome the inefficiencies of bartering by using commonly accepted goods as currency. Metals like gold and silver were then used to create durable and divisible coins. As trade grew, paper money and checks emerged to allow easier carrying of funds. Today, digital payment methods via credit/debit cards and apps predominate as plastic and digital currencies are portable, durable and support fast global transactions. Money serves key economic functions as a medium of exchange, unit of account, store of value, and standard for deferred payments.
Money has evolved over time from commodity money, to metallic money, to paper money, credit money, and now plastic money. Commodity money like shells and salt were used initially but had problems like being perishable and indivisible. Metallic coins solved some of these issues but were heavy. Paper money emerged as a lighter alternative that was also portable. Credit money in the form of checks and debit transfers further improved portability. Today, plastic credit and debit cards allow for digital money transfers, providing modern convenience. Money serves important economic functions as a medium of exchange, unit of account, store of value, and standard for deferred payments. It plays a key role in facilitating trade and economic development.
Money has evolved over time from a barter system to increasingly abstract forms. Early currencies included commodities like grains, metals, and animals before standardized coins were developed in China and Lydia. Paper money and checks later emerged, allowing transactions to occur without physical exchange. Today, digital forms of money including credit, debit, and digital currencies perform the core functions of serving as a medium of exchange, store of value, and unit of account. Banks have facilitated transactions through checks, credit, and more recently plastic forms of money like credit cards since the development of formal banking institutions in ancient Rome.
This document discusses the evolution of money through six stages: 1) Barter, where goods and services were directly exchanged; 2) Commodity money, where goods like livestock were used as a medium of exchange; 3) Metallic money, using coins made of precious metals; 4) Paper money, with the introduction of paper receipts and banknotes; 5) Credit money, using demand deposits and checking accounts; and 6) Electronic money, with the rise of electronic transactions between accounts. It traces how money evolved from direct exchange to increasingly abstract forms in response to the changing needs of growing economies over human history.
Chapter no 1 Nature and functions of money heena ayaz
This document provides an overview of money and its functions. It defines money and outlines its main functions, which include being a medium of exchange, measure of value, store of wealth, and enabling future payments and economic activities. The document also discusses the evolution of money from commodity to metallic to paper to electronic forms. It lists the key qualities of good money, such as acceptability, transferability, stability, and divisibility. Finally, it describes the barriers of the barter system and highlights the important role money plays in daily life and the economy.
Money, their origin functions. Modern money Part1Advaldo CM
This document provides an outline for a paper on the history and functions of money. It begins with an introduction discussing why the history of money is important and how money relates to quality of life. It then covers definitions of money, the origins of money through barter systems, different types of currencies throughout history, how money has evolved, and key functions of money such as being a medium of exchange, store of value, and unit of account. The document concludes with a section on references.
This document defines money and discusses its origins and functions. It begins by defining money according to economists as anything that serves as a medium of exchange, unit of account, and store of value. Money originated as commodity money, then metallic money like gold and silver coins, followed by paper currency and checks as credit/bank money, and now electronic banking. The primary functions of money are as a medium of exchange, unit of account, standard for deferred payments, and store of value. It also has secondary functions like aiding specialization and trade and being used for loans, and contingent functions related to incomes, credit systems, and liquidity. The document outlines the evolution and roles of money.
The document discusses the evolution of money from early commodity forms like animal skins to modern electronic money. It outlines 5 stages: 1) Commodity money using goods for barter had problems with storage, durability, transport, and divisibility. 2) Metallic coins solved some issues but introduced problems with weighing value. 3) Paper money originated as goldsmith receipts and evolved into various forms issued by governments and banks. 4) Credit money includes instruments like checks and drafts offered by banks. 5) Electronic money refers to digital exchanges using computer networks and stored value systems. Each new form aimed to overcome limitations of prior systems.
Money has evolved significantly throughout history from bartering of goods to modern currencies. It began as commodity money like grains and livestock used in direct exchange, then evolved to use of precious metals like gold and silver as currency due to their durability. Representative money later emerged, backed by gold or silver reserves held by banks. Today, most currencies are fiat money established by government regulation instead of being commodity-backed. The functions of money as a medium of exchange, store of value, and unit of account remain essential for modern economies and global trade. Emerging digital technologies continue to challenge and transform concepts of money and finance.
The document discusses the history and evolution of money and banking systems. It begins by describing the barter system where goods and services are directly exchanged. It then outlines some problems with bartering, leading to the development of monetary systems using coins made of precious metals. The document notes the transition to using paper money and the development of modern banking systems where goldsmiths began issuing paper receipts that could be exchanged for gold. It traces the origins of the term "bank" and highlights some key developments in banking in England and the US. Finally, it summarizes different modern banking functions and types of banks.
The document discusses the history and evolution of money and banking systems. It begins by describing the barter system where goods and services are directly exchanged. It then outlines some limitations of barters systems that led to the development of monetary systems using coins made of precious metals. The document notes the risks of carrying coins which contributed to the introduction of paper money. It traces the origins of modern banking from goldsmiths who issued paper receipts for gold deposits and discusses key developments in banking in England and the US. The roles and functions of banks have expanded over time from basic lending and deposits to various digital banking services.
This document discusses money and its supply in India. It defines money and traces its origins from bartering to coins to paper money. It describes the evolution of money through different historical stages and lists the current forms of money as fiat/fiduciary money and full-bodied/credit money. The document also discusses the measures used to determine money supply in India, including M1, M2 and M3, and defines demand deposits. It identifies the central bank (RBI), commercial banks, and the government as the main suppliers of money in India.
In this paper, a brief overview of the history of money will be given and principles of what make money useful in business commerce. Then, categories with electronic money will be described and bring a distinction with electronic payment systems. Next, the impact electronic money has had in general in our globalized economy will be discussed. Then, opportunities that computer science has involved in the field of electronic money will be discussed such as in data security, privacy, and traceability. In addition, drawbacks and risks involved in the use of electronic money will be discussed. Finally, a summary will be made about the future expectations for electronic money in the global market place.
One of the issues with implementing the gold dinar and dirham is that it may negatively impact existing banking business models that are based on interest-bearing loans. The introduction of these currencies will make money multiplier activities like loaning out depositor funds difficult, as each dinar and dirham must be backed by a certain weight of gold or silver. This is unlike fiat currencies, where money supply can be more easily increased through lending practices. While Western countries may oppose it, Malaysia has reasons for adopting the gold dinar for international trade, such as reducing dependence on the U.S. dollar and fostering stronger economic cooperation among Muslim nations.
A brief history of money from barter to bitcoin. This presentation covers the essential characteristics of money and how it has evolved from barter to commodities to cash and finally to digitized currency, also known as "cryptocurrencies"--the most popular of which is bitcoin.
This document discusses global monetary policy and the trading of currencies. It provides background on the history of currency exchange, including the gold standard and Bretton Woods systems. It describes the current system of managed floating exchange rates, where currencies float against each other but central banks sometimes intervene. The International Monetary Fund and World Bank continue to play roles in global monetary affairs by providing loans and imposing rules on recipient countries.
This document provides an overview of the history and evolution of money, beginning with primitive forms of money like cowrie shells, manillas, and whales' teeth that were used for ornamentation, payments, and ceremonies. It describes how coinage originated in Lydia around 650 BC and the advantages it provided over bartering goods like cows and wheat. These included being portable, durable, and having a standard value. Paper money later developed from promissory notes and became more common in the 17th century. The functions and causes for the development of money are also summarized.
[To download this presentation, visit:
https://www.oeconsulting.com.sg/training-presentations]
This presentation is a curated compilation of PowerPoint diagrams and templates designed to illustrate 20 different digital transformation frameworks and models. These frameworks are based on recent industry trends and best practices, ensuring that the content remains relevant and up-to-date.
Key highlights include Microsoft's Digital Transformation Framework, which focuses on driving innovation and efficiency, and McKinsey's Ten Guiding Principles, which provide strategic insights for successful digital transformation. Additionally, Forrester's framework emphasizes enhancing customer experiences and modernizing IT infrastructure, while IDC's MaturityScape helps assess and develop organizational digital maturity. MIT's framework explores cutting-edge strategies for achieving digital success.
These materials are perfect for enhancing your business or classroom presentations, offering visual aids to supplement your insights. Please note that while comprehensive, these slides are intended as supplementary resources and may not be complete for standalone instructional purposes.
Frameworks/Models included:
Microsoft’s Digital Transformation Framework
McKinsey’s Ten Guiding Principles of Digital Transformation
Forrester’s Digital Transformation Framework
IDC’s Digital Transformation MaturityScape
MIT’s Digital Transformation Framework
Gartner’s Digital Transformation Framework
Accenture’s Digital Strategy & Enterprise Frameworks
Deloitte’s Digital Industrial Transformation Framework
Capgemini’s Digital Transformation Framework
PwC’s Digital Transformation Framework
Cisco’s Digital Transformation Framework
Cognizant’s Digital Transformation Framework
DXC Technology’s Digital Transformation Framework
The BCG Strategy Palette
McKinsey’s Digital Transformation Framework
Digital Transformation Compass
Four Levels of Digital Maturity
Design Thinking Framework
Business Model Canvas
Customer Journey Map
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3. The Concept of Money
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It is often said that money is not the most important thing in the world.
For many people, however, it is right up there next to air in importance.
Money is not necessarily Coins and Currencies.
Money is something which facilitates the transaction of goods and
services.
Money is any good that is widely used and accepted in transactions
involving the transfer of goods and services from one person to another.
Money is the most important invention of modern times. It has
undergone a long process of historical evolution. I
n the absence of money when goods were exchanged for goods it was
called barter exchange. The inconveniences of barter, led to the
invention of a medium of exchange i.e. money.
4. Nature of Money
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It facilitates exchange of goods and services and helps in carrying on trade
smoothly.
The present highly complicated economic system will not exist without
money.
Money helps in maximizing consumers’ satisfaction and producers’ profit. It
helps and promotes saving.
Money promotes specialization which increases productivity and efficiency.
It facilitates planning of both production and consumption.
Money can be utilized in reviving the economy from depression.
Money enables production to take place in advance of consumption.
It is the institution of money which has proved a valuable social instrument
of promoting economic welfare.
The whole economic science is based on money; economic motives and
activities are measured by money.
5. Definition of Money
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According to Prof. A. Walker “Money is What Money Does.”
According to Prof. D.H. Robertson “Anything which is widely accepted in
payment for goods or in discharge of other kinds of business obligation is
called money.”
According to Seligman “One thing that possesses general acceptability”
According to Prof. Ely “Money is anything that passes freely from hand to
hand as a medium of exchange and is generally received in final discharge of
debts.”
But these definitions are defective because they do not lay proper emphasis
on all the essential functions of money. Prof. Crowther’s definition of money
is considered better as it takes into account all the important functions of
money. He defines money as – According to Prof. Crowther’s “Anything that
is generally acceptable as a means of exchange (i.e., as a means of setting
debts) and at the same lime, acts as a measure and a store of value”
6. Evolution of Money
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The money as we see it today is the outcome of evolution. The following are
the stages of evolution:
Commodity money
Metallic money
Coins
Paper Money
Bank Money or Credit Money
Plastic Money
E-Money
7. Commodity Money
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Various types of commodities have been used as money from the
beginning of human civilization. Stones, spears, skins, bows and
arrows, and axes were used as money in the hunting society.
The pastoral society used cattle as money.
The agricultural society used grains as money.
The Romans used cattle and salt as money at different times.
The Mongolians used squirrel skins as money.
Precious stones, tobacco, tea shells, fishhooks and many other
commodities served as money depending upon time, place and
economic standard of the society.
8. Disadvantages of Commodity Money
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The use of commodities as money had the following defects.
All the commodities were not uniform in quality, such as cattle,
grains, etc. Thus lack of standardization made pricing difficult.
It is difficult to store and prevent loss of value in the case of
perishable commodities.
Supplies of such commodities were uncertain.
They lacked in portability and hence were difficult to transfer from
one place to another.
There was the problem of indivisibility in the case of such
commodities as cattle.
9. Metallic Money
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With the spread of civilization and trade relations by land and sea,
metallic money took the place of commodity money.
Many nations started using silver, gold, copper, tin, etc. as money. But
metal was an inconvenient thing to accept, weigh, divide and assess in
quality.
Accordingly, metal was made into coins of predetermined weight. This
innovation is attributed to King Midas of Lydia in the eighth century B
C. But gold coins were used in India many centuries earlier than in
Lydia.
Thus coins came to be accepted as convenient method of exchange. As
the price of gold began to rise, gold coins were melted in order to earn
more by selling them as metal.
This led governments to mix copper or silver in gold coins since their
intrinsic value might be more than their face value. As gold became
dearer and scarce, silver coins were used, first in their pure form and
later on mixed with alloy or some other metal.
10. Disadvantages of Metallic Money
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It was not possible to change its supply according to the
requirements of the nation both for internal and external use.
Being heavy, it was not possible to carry large sums of money in the
form of coins from one place to another by merchants
It was unsafe and inconvenient to carry precious metals for trade
purposes over long distances.
Metallic money was very expensive because the use of coins led to
their debasement and their minting and exchange at the mint cost a
lot to the government.
11. Coins
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Coinage was the first great invention in the evolution of money.
It is believed that first coins were struck in the 11th Century BC in China.
For a long period of time full bodied coins, particularly of gold and silver,
served as money.
Now all coins of different metals are only token coins. In India only
Government can issue coins.
12. Paper Money
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The development of paper money started with goldsmiths who kept strong safes to store their
gold. As goldsmiths were thought to be honest merchants, people started keeping their gold
with them for safe custody. In return, the goldsmiths gave the depositors a receipt promising to
return the gold on demand. These receipts of the goldsmiths were given to the sellers of
commodities by the buyers.
Thus receipts of the goldsmith were a substitute for money. Such paper money was backed by
gold and was convertible on demand into gold. This ultimately led to the development of bank
notes.
The bank notes are issued by the central bank of the country. As the demand for gold and silver
increased with the rise in their prices, the convertibility of bank notes into gold and silver was
gradually given up during the beginning and after the First World War in all the countries of
the world. Since then the bank money has ceased to be representative money and is simply
‘fiat money’ which is inconvertible and is accepted as money because it is backed by law.
The money made of paper is called paper money. It consists of currency notes issued by the
government or the central bank of a country. In India, one rupee notes and all coins in
circulation are issued by the Ministry of Finance of the Government of India, and all other
currency notes of higher denominations and commodity coins are issued by the Reserve Bank
of India.
Paper Currency is of four types:
Representative paper Currency or Money,
Convertible paper Currency or Money
Inconvertible paper Currency or Money, and
Fiat Currency or Fiat Money.
13. Representative paper Currency or Money
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Representative paper money is fully backed by gold and silver reserves.
Under the monetary system of representative money, gold and silver equal
to the value of paper currency issued are kept hi the reserves by the
monetary authority. Advantages of representative paper money
It economizes the use of precious metals. These metals are kept hi the
reserves,
There is no fear of over- issue of representative money since paper money
is fully backed by metallic reserves,
It inspires public confidence because the public can get the paper money
converted into gold as and when needed.
14. Disadvantages of representative paper money
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Since gold and silver reserves are to be maintained, these metals cannot
be put to other uses,
Representative paper money system lacks elasticity because under this
system money supply cannot be increased unless equivalent amount of
metallic reserves are kept,
It is not suitable for the poor nations which have deficiency of gold and
silver.
15. Convertible Paper Money
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The paper money which is convertible into standard coins is called
convertible paper money. The main characteristics of convertible paper
money are:
The individuals can get their paper money converted into cash,
The paper money is backed by gold and silver reserves. But, on the
assumption that all the currency notes are not simultaneously presented by
the public for encashment, the value of metallic reserves is less than the
value of the notes issued,
The reserves comprise of
metallic portion containing gold, silver and standard coins, and
fiduciary portion containing approved securities.
Generally, the public gets gold and silver in exchange for paper money for
making foreign payments.
16. Advantages & Disadvantage of the convertible paper money
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Advantages of Convertible Paper money
It economizes the use of valuable metals.
It is flexible because money supply can be increased without maintaining
cent per cent metallic reserves.
It inspires public confidence because paper money is convertible into
standard coins,
It facilitates foreign trade because paper money is converted into gold and
silver to make foreign payments.
Disadvantages of Convertible Paper money
Since the paper currency under this system is not cent per cent backed by
gold and silver, there is a fear of over-issue of money supply and the
resultant danger of inflation,
The convertible paper money does not inspire as much public confidence as
the representative paper money.
17. Inconvertible Paper Money
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Inconvertible Paper Money: The paper money which is not convertible into
standard coins or valuable metals is called inconvertible paper money. Under the
system of inconvertible paper money, the monetary authority maintains no
metallic reserves against paper currency. It also gives no guarantee to convert the
paper currency into gold and silver.
Merits of inconvertible paper money
Such a paper currency system economizes the use of valuable metals,
It is also elastic in the sense that the monetary authority can change money
supply according to the needs of the economy without keeping proportionate
metallic reserves.
Demerits of in-convertible paper money
The danger of paper currency, leading to inflation, always exists in this system,
It inspires less public confidence than a system of representative paper money.
18. Fiat money
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Fiat Money: Fiat money is only a variety of inconvertible paper money. Fiat
money is backed neither by the metallic nor the fiduciary reserves. In other
words, the monetary authority gives no guarantee to convert fiat money into
valuable metals.
According to Keynes, “Fiat money is Representative (or, Token) Money (i.e.,
something the intrinsic value of the material substance of which is divorced
from its monetary face value) now generally made of paper except in the case
of small denominations - which is created and issued by the State, but is not
convertible by law into anything other than itself and has no fixed value in
terms of an objective standard.”
19. Characteristics of the fiat money
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It has significantly less intrinsic value than its face value,
It is not convertible into any valuable asset,
It is accepted in transactions at face value because it is unlimited legal
tender.
Initially, fiat money was used during the period of war or emergency.
But, now, it has become a common phenomenon in most of the
countries of the world. Fiat money is particularly useful for
underdeveloped countries which generally lack financial resources for
economic development. Fiat money removes this deficiency and
promotes economic development by providing sufficient resources to
the government.
20. Demerits of fiat money
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The danger of over-issue of fiat money (or inflation) is always present
in a system of fiat money,
It lacks public confidence as it is not backed by metallic reserves,
Foreign exchange rates are liable to wide fluctuations under fiat money
system because fiat money is not linked with other country's money
through gold.
21. Advantages of Paper Money
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Cheap and economical: Normally paper money is much easier to issue.
Practically it costs nothing to government. Printing of paper currency
requires certain special type of paper, ink, and printing technology. These
things no doubt are costly but overall printing cost is quite low.
Convenience: Paper money is convenient to transfer and carry. It can be
easily kept in pocket. Further it can also he readily converted into cheques,
drafts, etc.
Copying: The design of paper money is very difficult to copy. Further
special type of paper and ink is used in paper money which makes it quite
impossible to copy it. Even if it is copied by some fake means then it can be
checked by electronic machines.
Elastic Supply: Paper money due to its elasticity is very useful for
government. Supply of money can he increased or decreased according to
the needs of the economy,
Legal Tender: Paper money is unlimited legal tender i.e. any amount of
payment or of debt can be paid in it. It can be used to discharge all kinds of
business obligations.
22. Continue…..
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Saving of Precious Metals: Use of paper money results the saving of
precious metals of the country. The metals can be used for other useful
purposes.
Ease of counting: Paper money is much easier to count than metallic
money. The counting of large amounts in metal form is very difficult.
On the other hand counting of paper money is easy, convenient and
requires little time.
Recognizable: The paper money is easily recognizable. There is no
inconvenience of testing the exactness of the money material.
Useful in emergency: The paper money can be used in emergency like
war and floods. The government can meet the expenses by printing
notes in shorter time.
Uniform quality: The paper money has another advantage that it has
uniform quality and the holder does not bother for possession of new or
old money
23. Disadvantages of Paper Money
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Demonetization – The demerit of paper money is that the holder may have to suffer
loss. The paper money is fiat money. It is issued by fiat (order) of the government.
In case the government cancels the currency notes the holder has to bear full loss.
Restricted acceptability Or Limited Acceptance – One of the demerits of paper
money is that it has limited acceptance. Its acceptance is limited within the
boundaries of a country. It cannot be used to make payments to other countries.
Monetary mismanagement – Purchasing power of paper money is an ever-
changing process. This means that its face value remains same but its purchasing
power may decline due to monetary mismanagement.
Exchange rate instability– The value of paper money is instable and is subject to
fluctuations in the exchange rates. The fluctuations in the exchange rate market also
produce serious effects on the price level in the economy.
Troubling balance of payments – Over issuance of money results in decrease of
value of money and causes inflation. Due to which price of imported goods
increases because they are to be paid by exchanging devalued currency for foreign
currency. It results in unfavourable balance of payment.
Short life – Although the paper currency is not affected by wear and tear but it can
be damaged due to fire or water. Due to this the life of the paper currency is much
less than the metallic money.
24. Bank Money or Credit Money
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Another type of money in the modern world is the use of the cheque as
money. The cheque is like a bank note in that it performs the same function. It
is a means of transferring money or obligations from one person to another.
But a cheque is different from a bank note. A cheque is made for a specific
sum, and it expires with a single transaction. A cheque is not money. It is
simply a written order to transfer money. However, large transactions are
made through cheques these days and bank notes are used only for small
transactions. Further credit and debit cards issued by banks are also falls
under credit money or bank money. In modem economies, with the
development of banking activity, credit money is being widely used. Demand
deposits of banks, which are withdraw able through cheques, serve as money
and the cheques are accepted as a means of payments. It is to be noted that a
cheque by itself is not money; it is only a credit instrument which performs
the functions of money. That is why credit money is regarded as near money.
In a modern economy, currency money (paper money and coins) and bank
money constitute the major portion of money supply. As the economy
becomes more and more advanced, the proportion of bank money in the total
money supply increases. The currency money is a legal tender and is
generally accepted. While bank deposits are conventional money and lack
general acceptability.
25. E – Money
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Electronic Money (E – Money) is the term used for new age Money
system.
E-Money is also called online banking and it is an outgrowth of PC
banking.
E-money uses the internet as the delivery channel by which to conduct
banking activity, for example, transferring funds, paying bills, viewing
checking and savings account balances, paying mortgages and
purchasing financial instruments and certificates of deposits.
Electronic Money (E-Money) is broadly defined as an electronic store
of monetary value
26. Internet Banking or online Banking
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Online Banking (OLB) is an electronic payment system that enables
customers of a financial institution to conduct financial transactions on a
website operated by the institution, such as a retail bank, virtual bank, credit
union or building society.
Online banking is also referred as Internet banking, e-banking, virtual
banking and by other terms. To access a financial institution's online
banking facility, a customer with Internet access would need to register with
the institution for the service, and set up some password (under various
names) for customer verification. The password for online banking is
normally not the same as for telephone banking.
To access online banking, a customer would go to the financial institution's
secured website, and enter the online banking facility using the customer
number and password previously setup. Some financial institutions have set
up additional security steps for access to online banking, but there is no
consistency to the approach adopted.
27. Features of Online Banking
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1. A bank customer can perform non-transactional tasks through online banking, including
Viewing account balances
Viewing recent transactions
Downloading bank statements, for example in PDF format
Viewing images of paid cheques
Ordering cheque books
Download periodic account statements
Downloading applications for M-banking, E-banking etc
2. Bank customers can transact banking tasks through online banking, including –
Funds transfers between the customer's linked accounts
Paying third parties, including bill payments and third party fund transfers
Investment purchase or sale
Loan applications and transactions, such as repayments of enrolments
Credit card applications
Register utility billers and make bill payments
Financial institution administration
Management of multiple users having varying levels of authority
Transaction approval process
Some financial institutions offer unique Internet banking services, for example: Personal
financial management support,
28. Advantages of E Money
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There are some advantages on using e-banking both for banks and
customers:
Permanent access to the bank
Lower transaction costs / general cost reductions
Access anywhere
29. Type of E-money
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In general, there are two distinct types of e-money: identified e-money and
anonymous e-money also known as digital cash.
Identified e-money: Identified e-money contains information revealing the
identity of the person who originally withdrew the money from the bank.
Also, in much the same manners as credit cards, identified e-money enables
the bank to track the money as it moves through the economy.
Anonymous e-money: anonymous e-money works just like real paper cash.
Once anonymous e-money is withdrawn from an account, it can be spent or
given away without leaving a transaction trail. You create anonymous e-
money by using blind signatures rather than non-blind signatures.
Varieties of e-money: There are two varieties of each type of e-money:
online e-money and offline e-money.
Online e Money means you need to interact with bank to do a transaction
with a third party.
Offline E Money means you can do a transaction without having to directly
involve a bank. Offline digital cash is the most complex form of e-money
because of the double-spending problem.
30. The application of e-money in Indian economy
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E-money is the newest payment instrument.
As a part of the new electronic payment system (possible future substitute of
traditional payment), e-money raises the professional interest about its
implications to further development of banking functions in the global and
networked economy.
Statistical evidence confirms the existence of e-money in the developed
countries, which is understandable because of their high technological level
and knowledge and the ability to absorb useful innovations of any kind.
Although electronic money has been present in their markets for more than
20 years, its use is still at a very low level.
Countries from the backward region are in the early beginning. They are in
the phase of accepting electronic banking, and putting into force the
legislation for e-money.
The reason could be found in the level of economic and technological
development. One of the leading factors opposing the existence of e-money
is the strong competition from the debit/ credit cards. The possible influence
of e-money on the monetary policy is also a topic of professional interest
overall. E -money has the potential to substitute currency in circulation,
which is part of the monetary aggregates from the balance sheet of central
banks.
31. Plastic Money
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Single or limited - purpose cards – These are cards that can be used only in a specific
store or group of stores, or for a specific purpose for e.g. Cards issued by Big Bazar,
Lifestyle etc.
Debit Cards: A debit card (also known as a bank card or check card) is a plastic payment
card that provides the cardholder electronic access to their bank account(s) at a financial
institution. Some cards may bear a stored value with which a payment is made, while
most relay a message to the cardholder's bank to withdraw funds from a payer's
designated bank account. The card, where accepted, can be used instead of cash when
making purchases. In some cases, the primary account number is assigned exclusively for
use on the Internet and there is no physical card. In many countries, the use of debit cards
has become so widespread that their volume has overtaken or entirely replaced cheques
and, in some instances, cash transactions.
Credit Cards – A credit card is a payment card issued to users as a system of payment. It
allows the cardholder to pay for goods and services based on the holder's promise to pay
for them. The issuer of the card creates a revolving account and grants a line of credit to
the cardholder, from which the user can borrow money for payment to a merchant or as a
cash advance. A credit card is different from a charge card: a charge card requires the
balance to be paid in full each month. In contrast, credit cards allow the consumers a
continuing balance of debt, subject to interest being charged. A credit card also differs
from a cash card, which can be used like currency by the owner of the card. A credit card
differs from a charge card also in that a credit card typically involves a third-party entity
that pays the seller and is reimbursed by the buyer, whereas a charge card simply defers
payment by the buyer until a later date.
32. Role of Money-Static Role
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Serving as a medium of exchange: Money removes the need for double coincidence of wants
and the inconveniences and difficulties associated with barter. The introduction of money as a
medium of exchange breaks up the single transactions of barter into separate transactions of
sales and purchases, thereby eliminating the double coincidence of wants. Instead of
exchanging commodities we directly exchange Money.
Acting as a unit of account: Money becomes a common measure of value. The use of money
as a standard of value eliminates the necessity of quoting the price of apples in terms of
oranges, the price of oranges in terms of nuts, and so on. Money is the standard of measuring
value and value expressed in money is price. The prices of different commodities are
expressed in terms of so many units of dollars, rupees, pounds, etc. depending on the nature of
monetary unit in a country. The measurement of the values of goods and services in the
monetary unit facilitates the problem of measuring the exchange values of goods in the market.
Money acts as a standard of deferred payments: Under barter, it was easy to take loans in
goats or grains but difficult to make repayments in such perishable articles in the future.
Money has simplified both taking and repayment of loans because the unit of account is
durable. It also overcomes the difficulty of indivisibility of commodities.
Acting as a store of value : Money removes the problem of storing of commodities under
barter. Money being the most liquid asset can be kept for long periods without deterioration or
wastage.
Removes difficulties of barter system: Under barter, it was difficult to transfer value in the
form of animals, grains, etc. from one place to another. Money removes this difficulty of barter
by facilitating the transfer of value from one place to another. A person can transfer his money
through draft, bill of exchange, etc. and his assets by selling them for cash at one place and
buying them at another place.
33. Role of Money-Dynamic Role
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To the Consumer: Money possesses much significance for the consumer.
The consumer receives his income in the form of money rather than in
goods and services. With money in hands, he can get any commodity and
service he likes, in whatever equalizer of marginal utilities for the consumer.
The main aim of a consumer is to maximise his satisfaction by spending his
limited income on different goods which he wants to purchase. Since prices
of goods indicate their marginal utilities and are expressed in money, money
helps in equalising the marginal utilities of goods. This is done by
substituting goods with higher utilities for others having lower utilities.
Thus money enables a consumer to make a rational distribution of his
income on various commodities of his choice.
To the Producer: Money is of equal importance to the producer. He keeps
his account of the values of inputs and outputs in money. The raw materials
purchased, the wages paid to workers, the capital borrowed, the rent paid,
the expenses on advertisements, etc. are all expenses of production which
are entered in his account books. The sale of products in money terms are
his sale proceeds. The difference between the two gives him profit. Thus a
producer easily calculates not only his costs of production and receipts but
also profit with the help of money. Further, money helps in the general flow
of goods and services from agricultural, industrial and tertiary sectors of the
economy because all these activities are performed in terms of money.
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Specialization and Divisions of Labour: Money plays an important role in
large scale specialization and division of labour in modern production.
Money helps the capitalist today wages to a large number of worker
engaged in specialised jobs on the basis of division of labour. Each worker
is paid money wages in accordance with the nature of work done by him.
Thus money facilitates specialization and division of labour in modern
production. These, in turn, help in the growth of industries. It is, in fact,
through money that production on a large scale is possible. All inputs like
raw materials, labour, machinery, etc. are purchased with money and all
output is sold in exchange for money. As rightly pointed out by Prof. Pigou,
“In the modern world industry is closely enfolded in a garment of money”.
As the Basis of Credit: The entire modern business is based on credit and
credit is based on money. All monetary transactions consist of cheques,
drafts, bills of exchange etc. These are credit instruments which are not
money. It is the bank deposits that are money. Banks issue such credit
instruments and create credit. Credit creation, in turn, plays a major role in
transferring funds from depositors to investors. Thus credit expands
investment on the basis of public saving lying in bank deposits and helps in
maintaining a circular flow of income within the economy.
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As a Means to capital Formation: By transforming savings into
investment, money acts as a means to capital formation. Money is a liquid
asset which can be stored and storing of money implies savings, and savings
are kept in bank deposits to earn interest on them. Banks, in turn, lend these
savings to businessmen for investment in capital equipment, buying of raw
materials, labour, etc. from different sources and places. This makes capital
mobile and leads to capital formation and economic growth.
As an Index of Economic Growth: Money is also an index of economic
growth. The various indicators of growth are national income, per capita
income and economic welfare. These are calculated and measured in money
terms. Changes in the value of money or prices also reflect the growth of an
economy. Fall in the value of money (or rise in prices) means that the
economy is not progressing in real terms. On the other hand, a continuous
rise in the value of money (or fall in prices) reflects retardation of the
economy. Somewhat stable prices imply a growing economy. Thus money is
an index of economic growth.
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In the Distribution and Calculation of Income: The rewards to the various factors
of production in a modern economy are paid in money. A worker gets his wages,
capitalist his interest, a landlord his rent, and an entrepreneur his profit. But all are
paid their rewards in money. An organizer is able to calculate the marginal
productivity of each factor in terms of money and pay it accordingly. For this, he
equalizes the marginal productivity of each factor with its price. Its price is, in fact,
its marginal productivity expressed in terms of money. As payments are made to
various factors of production in money, the calculation of national income becomes
easy.
In National and International Trade: Money facilitates both national and
international trade. The use of money as a medium of exchange, as a store of value
and as a transfer of value has made it possible to sell commodities not only within a
country but also internationally. To facilitate trade, money has helped in establishing
money and capital markets. There are banks, financial institutions, stock exchanges,
produce exchanges, international financial institutions, etc. which operate on the
basis of the money economy and they help in both national and international trade.
Further, trade relations among different countries have led to international
cooperation. As a result, the developed countries have been helping the growth of
underdeveloped countries by giving them loans and technical assistance. This has
been made possible because the value of foreign aid received and its repayment by
the developing countries is measured in money.
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In Solving the Central Problems of an Economy: Money helps in solving the
central problems of an economy; what to produce, for whom to produce, how to
produce and in what quantities. This is because on the basis of its functions money
facilitates the flow of goods and services among consumers, producers and the
government.
To the Government: Money is of immense importance to the government. Money
facilitates the buying and collection of taxes, fines, fees and prices of services
rendered by the government to the people. It simplifies the floating and management
of public debt and government expenditure on development and non-developmental
activities. It would be impossible for modern governments to carry on their
functions without the use of money. Not only this, modern governments are welfare
states which aim at improving the standard of living of the people by removing
poverty, inequalities and unemployment, and achieving growth with stability. Money
helps in achieving these goals of economic policy through its various instruments.
To the Society: Money confers many social advantages. It is on the basis of money
that the superstructure of credit is built in the society which simplifies consumption,
production, exchange and distribution. It promotes national unity when people use
the same currency in every nook and corner of the country. It acts as a lubricant for
the social life of the people, and oils the wheels of material progress. Money is at the
back of social prestige and political power.
38. Other Importance of Money in Modern Economy
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Basis of Market Mechanism
Basis of Investment system
Medium of wealth accumulation and collection
Motivation to economic activities
Helpful in transfer of wealth
Helpful in capital formation
Removal of defects of barter system
Helpful in international payments
Fulfillment of deficit budgeting
Financial assistance to international financial institutions
Index of Individual progress
Social Importance of money
Political Importance of Money
Indicator of Economic Welfare
39. Function of money
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Primary
Medium of exchange
Measure of value
Secondary
Standard of different payment
Store of value
Transfer of value
Contingent
Distribution of national income
Max satisfaction to consumer
Basic of credit
Max of producer
Liquidity
40. Primary Functions of Money
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Medium of exchange – Money serves as a medium for sale and purchase of
goods and services. When people sell things they exchange goods for
money. When buyers buy things they exchange money for goods. It has
separated the acts of purchase and sell. It is a means to an end.
Advantages
It solves the problem of double co-incidence of wants.
It facilitates trade and widens its area.
It is essential for conducting transactions in a market economy.
Represents generalized purchasing power, which gives greater freedom
of choice.
Production is now market oriented rather than subsistence oriented.
41. Continue
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Measure of value–It is also called unit of account function of money.
Money serves as a standard unit for quoting prices. Now each good is
valued in terms of money. Money is the basis of measuring, comparing
and expressing the value of all goods and services. For example - The
price of an airplane and the price of a safety pin are quoted in terms of
money. By serving as a measure of value money has made accounting
easy and simple.
Advantages:
It makes possible keeping of business accounts. It would be impossible
to keep
Business accounts unless all business transactions are in terms of
money.
It has established a pricing process, leading to organized market,
It has lead to economic planning and specialized production.
42. Secondary Functions of Money
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Store of value (asset function of money) –People save a part of their
earnings for use in future. Money fulfils this need for the people.
Money as a store of value means that money is an asset that can be
stored for use in future. One can hold ones earnings till the time one
wants to spend it. This is the store of value function of money.
Advantages
It comes in convenient denominations, which range from Re. 1 to 1000.
Such an advantage is not found in case of goods and services.
Money has easy portability and general acceptability.
Money has liquidity so is easily exchanged for goods at all time.
Money involves less storage costs compared to goods.
Money is more stable whereas goods may depreciate in value.
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Standard of deferred payment– Money serves as the basis of payments
contracted to be made in future. Suppose you lend Rs. 10,000 at 10%
interest per annum for one year, it means the borrower promises to pay Rs.
11,000 after one year. Money serves as a standard of such future payments.
It becomes a standard measure to return value.
Advantages:
It facilitates borrowing and lending.
It leads to creation of financial institutions which are the life line of
modern business.
Lead to formation of capital markets by being a link which connects
value of today with those of the future.
Transfer of value – Money also serves as a convenient mode of the transfer
of value. Goods are purchased from far off places for the satisfaction of
wants, because of its general acceptability & merits of liquidity, money can
be easily transferred from one place to another. It is because of the function
of money people give their surplus money as loan & earn interest on that.
This is important to quicker the process of growth across the entire region of
the country.
44. Contingent Functions of Money
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Distribution of National Income: It helps to distribute the NI among various factors of
production in the form money, wages, interest, rent, profit. Because of the measure of value
function of money it is possible to measure National Income therefore it is in terms of money
values that NI is distributed amongst factors of production.
Maximum satisfaction to consumer: Expenditure in terms of money facilitates the
measurement of maximum satisfaction to the consumer and consumer maximizes his
satisfaction when the MU derived from different goods & services are equal to each other. A
consumer who aims at maximum satisfaction buys goods & services in such a way that the
price of each commodity is equal to its marginal utility.
Maximum Profit to producer A producer can maximise his profit if he employees various
factor of production in such a way that the price of one unit of a factor is equal to the marginal
productivity of that factor per unit.
Basis of Credit: Creation of credit was not possible till money was introduced as credit is the
most important features of modern business & the main supporting pillar of credit is money.
The supply of credit is link with supply of money. Money serves as the basis of credit.
Liquidity: Money is the most liquid of all the assets. Money can easily be converted into
goods & services. It is because of liquidity the people demand for money. People prefer to hold
asset in the form of money because of three motives.
Transaction Motive
Precautionary Motive – to meet emergency requirements.
Speculative Motive.