Lucknow University BCOM SEM I Solved Question Paper Currency Banking and Exchange Q1. Discuss the Method of Note Issue What do You Understand by Money & Also explain the Quantity Theory of Money. Method of Issuing Paper Currency Paper money is being used in the monetary system of most of the countries since very early times. The term paper money included the paper currency issued by the government or the Central Bank of country as a legal tender money. Cheques, bills of exchange and other kinds of money issued by the commercial banks is not included in the paper money because such money is not legal tender. There are different methods of issuing paper money followed by different countries. Some of the important methods are discussed below: Fixed Fiduciary System. According to this system, the Central Bank of country is permitted to issue a fixed amount of currency notes without keeping any metallic reserve (gold, silver, etc) against the issue. But all notes i...
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