CHAPTER 5

Money and Banking

“If you owe the bank $100 that’s your problem. If you owe the bank $100 million, that’s the bank’s problem.”

—J. Paul Getty

Topics Covered

  • Money: Meaning, evolution, and functions
  • Central bank: meaning and functions
  • Commercial banks: meaning and functions

CHAPTER AT A GLANCE

  1. Barter system was used in ancient times to exchange goods. This system was used to exchange one commodity for another before the use of money. For example, if a person having cloth wanted rice, then he could exchange cloth with a person who had rice and needed cloth.
  2. Any economy having the barter system is called ‘C-C economy’, i.e., commodity is exchanged for commodity.
  3. Barter system was replaced by monetary exchange or buying and selling ...

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