What Are The Kinds Of Paper Money?

Question

What Are The Kinds Of Paper Money?

3 Answers

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Answer 1

There are three kinds of paper money. One of them is representative paper money, second is convertible paper money and the third one is inconvertible paper money. The representative paper money is the natural human desire that the media of exchange of a country should possess the fundamental quality of general acceptability, it should have great value in small bulk and it should be of the uniform quality and should also be convenient and economical in the method of effecting payments. The representative paper money has all these qualities of good money material. Representative money us hat money which is fully backed by the metallic money. For instance the American gold and silver certificates had 100 % metallic reserves behind them in the treasury of the United States of America until 1933. the earliest goldsmiths certificates which served in a very limited fashion as media of exchange were representative paper money.

In the monetary evaluating convertible paper money has played a very important role. "Convertible paper money" is that money which carries a promise by the issuer that the paper can be converted into the standard money metal at some future date. The holder of paper money has the confidence that it can be redeemed for full bodied money on demand.

Answer 2

The law of the country makes paper money legal tender as metallic money is made. It represents metallic money and the public knows that they will get metallic money on demand. Paper money circulates easily and performs all he functions because of the confidence which the public has in issuing authority
The following are some of the kinds of paper money:
1 representative paper money:
It represents paper money. It is issued on the strength of an equivalent amount of metallic money deposited in the treasury. To save wear and tear of the metal the metallic money is kept in deposit and money of an equivalent value is issued for circulation. This type of money is called representative paper money.

2 fiduciary paper money:
Sometimes the total value of notes issued is not backed by the equivalent amount of metal but a part of it is backed by metallic reserve and the remaining is backed by securities. The portion of paper money backed by security is called fiduciary paper money.
3 fiat money: when paper money represents nothing it is backed neither by metallic coins nor by securities it is called fiat money. It is also called inconvertible paper money

Answer 3

Paper money it is the natural human desire that the media of exchange of a country should possess the fundamental quality of general acceptability, should have great value in small bulk, be of uniform quality and should also is convenient and economical in the method of affecting payments. The representative paper money has all these qualities of a good money material. Representative money is that which is fully backed by the metallic money. For instance, the American gold and silver certificates had 100% metallic reserves behind them in the treasury of the U.S.A. Until 1933.the earliest goldsmiths certificated which served in very limited fashion as media of exchange were representative paper money. People have confidence in the representative paper money because they can be redeemed in standard metal money. They are also convenient to handle and easy to store. Convertible paper money: In the monetary evolution convertible paper money has played a very important role. Convertible paper money is that money which barriers a promise by the issuer that the paper money can be converted in the standard money metal at some future date. The holder of the paper money has the confident that it can be redeemed for full bodied money on demand.