Different Type of Money Supply in India : There are different type of money in circulation to economy of India. Each and different type of money have their separate value. Find out the different type of money from Mo to M4 or broad money etc circulation in Indian Economy and banking sector. This is very important topic for economics , asked in various competitive exam like IBPS, SSC, UPSC etc.
Commodity Money – Commodity money value is derived from the commodity out of which it is made. The commodity itself represents money, and the money is the commodity.
Representative Money – is money that includes token coins,or any other physical tokens like certificates, that can be reliably exchanged for a fixed amount/quantity of a commodity like gold or silver.
Fiat Money – Fiat money, also known as fiat currency is the money whose value is not derived from any intrinsic value or any guarantee that it can be converted into valuable commodity (like gold).
Instead, it derives value only based On government order (fiat)
Commercial Bank Money – Commercial bank money or the demand deposits are claims against financial institutions which can be used for purchasing goods and services.
Reserve Money (M 0)
Currency in circulation + Bankers‘ ‘deposits with the RBI + ‘Other’
deposits with the RBI = Net RBI ‘credit to the Government + RBI
credit to the commercial sector + RBI’s claims on banks + RBI’s
net is foreign assets + Govemment’s currency liabilities to the
public – RBI’s net non-monetary liabilities.
M1=Currency with the public + Demand deposits with the banking system + ‘Other’ deposits with the RBI M2=M1 + Savings deposits of office savings banks.
M3=M1+ Time deposits with the banking system = Net bank credit to the Government + Bank credit to the Commercial sector + Net foreign assets of the banking sector + Goveinment’s currency liabilities to the public – Net nonmonetary liabilities of the banking sector.
M4=M3 +All deposits with post office savings banks (excluding
National Savings Certificates)
Bhartiya Reserve Bank Note Mudran Private Limited (BRBNMPL) The Reserve Bank established BRBNMPL in February 1995 as a wholly-owned subsidiary to augment the production of bank notes in India and to enable bridging of the gap between supply and demand for bank notes in the country.
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