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Question

Write Short Notes on Credit or Bank Money.

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Solution

Any future monetary claim against an individual that can be used to buy goods and services is known as Credit money or bank money. There are many forms of credit money, such as bonds, money market accounts etc. Any form of financial instrument that matures after a certain period of time or cannot be repaid immediately is considered as credit money. Cheques or Bank money are superior to other forms of money in that they are convenient for mailing, for paying exact sums, for providing receipts in the form of counterfoils and on account of being safe against being stolen or misplaced. Therefore, the bank money has become quantitatively the most important in all economic systems. In modern times, bank money has superseded all types of money.


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