paper currency

Unlimited Legal Tender:

Paper currency is unlimited legal teider i.e., any amount of debt can be paid in it.
It can be used to discharge all kinds of bu-insss obligations and liabilities. No one canrefuse to accept it in settlement of any debt.            ,

3.       Elasticity in Supply:

 The supply of paper currency is elastic. It can bt increased or decreased according to monetary situation. It gives an ease of control to central authority over monetary matters. In times of need the central bank can print more notes to stimulate the economy. -On the other hand during inflationary cycles the central bank can reduce the supply of currency and credit to check general price level.

4.       Convenience:

The paper currency is convenient to carry and transfer. It can be easily kept in pocket or wallets. Further it can also be readily converted into cheques, drafts, TC's etc. Further it can also be transferred over long distances in no time.

o.       Difficulty to Copy:

The design of paper currency is very intricate and special type of paper and ink is used hence it is impossible to copy it. Even if it is copied by some fake means then also it can be checked by some electronic machines.

6.       Uniformity:

The paper currency stays uniform. The apparent loss of colour or tearing of paper does not effect the face value. It can be used many times by different people without any loss of value or damage. The writings on it or any other marks also do not effect its validity.

7.         Growth & Development:

The present era of economic-prosperity and development owes great to the paper currency. Paper currency is at the base of world's vast economy. It has given new meanings to exchange and trade. The brisk trading of today's world is possible because of rapid means of payments and receipts. Paper currency has also helped the banks and financial houses to flourish rapidly. It is also the root for development of numerous other paper credit instruments such as drafts, cheques etc.

8.         Price Mechanism:

Our market forces of demand and supply works because of the price mechanism. Paper currency has greatly helped in making price mechanism workable and effective.

9.        International Trade:

The present state of international trade also owes great to paper currency. Different paper currencies can be conveniently interchanged and used in-different parts of world. This has increased the liquidity of world's economy. Moreover it has greatly contributed to increase foreign trading in all the regions of the world.