"Bank are efficient medium of exchange”. Support the statement with arguments.
PEOPLE deposit their extra cash with banks by opening a bank account in their name.
- Banks accept the deposits and also pay an amount as interest on the deposits.
- People have the provision to withdraw the money as and when they require.
- Demand deposits offer another interesting facility. It is this facility which lends it the essential characteristics of money.
- Payments are being made by cheques instead of cash. For payment through cheque, the payer who has an account with the bank, makes out a cheque for a specific amount.