Money is first and foremost a medium of exchange. When all parties in an economy will accept money, it eliminates the need for a double coincidence of wants that goes with barter – that is, both parties have to want what the other is offering. Accordingly, money as a medium of exchange is much faster and more convenient in commerce. Money is not necessarily legal currency (notes and coins). Money is any asset (or assets) that the public in general accepts as capable of performing certain functions (the functions of money). The social agreement (or acceptance) is the most important requirement. Money is believed to improve economic efficiency and social welfare. Banking as a kind of business, is of recent origin. But traces of banking and banking institutions can be seen right from the ancient past. However, its form, scope and functions went on changing through time. Money serves multiple functions in an economy. Banking system plays a very significant role in the economy of a country. It is central to a nation’s economy as it caters to the needs of credit for all the sections of the society. Money-lending in one form or the other has evolved along with the history of mankind. The banking sector plays a crucial role in the economic development of a nation. A sound, efficient, effective vibrant and innovative banking system stimulates economic growth by mobilizing savings on a massive scale and efficiently allocating resources for productive purposes and also for consumption which too is a driver or growth. The present work provides a fairly exhaustive account of the evolution and present structure of monetary, banking and financial system.
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