- BES171/Money#1: Functions of Money, Full Bodied coins vs Token Coins, Debasement
- BES171/Money#2: Limited & Unlimited Legal Tenders, Fiat & Fiduciary Money, Gold & Paper standard, Polity angle of Demonetization
- BES171/Money#3: Bitcoin Simplified, Blockchain technology how useful in Banking transactions?
- In the previous episode, we learned about the importance of economic survey in UPSC exam, and the gist of its 14 chapter. Now moving to the first pillar of economy i.e. “Money, Banking, Finance and Insurance.”
- While “money and its evolution upto bitcoin” has been covered in previous lectures (“L3”) and articles but take a look at them again in the light of new developments especially regarding the meaning of legal tender, challenges to digital payment and utility of block chain technology.
- Even before the invention of money, people used to trade with each other using barter system however this system, while it has some advantages, suffered from the problem of “double coincidence of wants”, problems related to the divisibility and fungibility of value, did not permit industrialisation or division of labour or redistribution of national income.
- Therefore money was invented, with two primary functions 1) measure of valu. And 2) medium of exchange And three derivative functions: store of value, transfer of value and deferred payment.
- Over the period of time, this money evolved in five stages : 1) Commodity Money 2) Metallic Money 3) Paper Money & legal tender 4)Bank Money 5) Crypto Currency.
- First we take a look at Commodity money: examples, advantages, limitations and How the problem of uniformity and purity of gold nuggets leads to invention of metallic coin money.
- Metallic Money: what is the difference between full bodied coin and token coin. What is Grisham’s law and debasement? How do they affect the value of coin?
BES171/Money#2: Limited & Unlimited Legal Tenders, Fiat & Fiduciary Money, Gold & Paper standard, Polity angle of Demonetization
- So far we learned about the first two stages of money’s evolution i.e. commodity money and metallic money. But metallic money was bulky to transport, so people started using bill of exchange and paper-currency as a substitutes for full bodied coins. This gave birth to two types of fiduciary money i.e. 1) legal tenders and 2) non-legal tenders.
- Legal tenders can’t be refused but there are caveats, accordingly they’re subdivided into two parts 1) limited legal tenders such as coins which can’t be used beyond a level for debt-settlement; and 2) unlimited legal tenders e.g. currency. While in theory Indian currency is unlimited legal tender but government can put reasonable restriction on it. e.g. in the latest budget 2017, the Finance Bill section 269ST prohibits cash transaction of rupee 3 lakh and above.
- When fiat money is backed by gold or silver standard, it’s called “representative money”, and when central bank promises “to pay bearer the sum of this many rupees”, currency becomes an “anonymous bearer bond with zero interest”.
- Over the years, India has followed three currency standards 1) fixed exchange rate 2) minimum foreign reserve system 3) managed paper currency standard.
- In India, two entities issue fiat money 1) Government of India under the coinage act 1909 they issued all coins and Rs.1 note; while 2) RBI Act 1934 empowers RBI to issue the remaining bank notes and RBI central board is empowered to make recommendation to government of India to withdraw any notes from circulation. This is called “Demonetization” and was done thrice in India after independence.
- After the demonetization of Rs.500 and Rs.1000 notes on 8/11/2016, Government of India issued Specified Bank Notes (Cessation of Liabilities) Ordinance, 2016 to curtail the liability of RBI regarding note exchange and at the same time make it punishable to hold old currency notes beyond a limit of 10-25. In the Budget 2017, same ordinance was put tabeled as a bill.
- The controversy regarding fake Rs.10 coins.
- What is bank money, how is it generated, what are its advantages?
- Bitcoin is in news again because of its Blockchain technology, which is now used by ICICI, Yes Banks and others for maintaining ledgers.
- What is Bitcoin? Why it was issued? How does it work? How is it used in illegal activities? What is bitcoin mining and hashrate?
- What are the applications of bitcoin’s blockchain technology for financial transactions?
- What is the stand of RBI and Ratan Watal committtee on the blockchain technology?
http://cinziamazzamakeup.com/?x=vardenafil-generico-italia Next lecture: Since demonetization the focus has been on promoting the usage of bank money and digital payments; therefore, next time we’ll dwell further into theory and current affairs on these issues, including recommendations of Ratan Watal and Chandrababu Naidu Committees, and Economic Survey for promotion of digital payment, and the recommendation have been implemented in Budget-2017 to reduce cash-transaction.
levitra generico spedizione veloce Powerpoint available Mediafire folder there you goto “1_Economy_Mrunal” -> “BES17 ” and you’ll find the powerpoints for this lecture series.