What is the basis for issuing currency notes. How much RBI
can issue currency notes.
Answer Posted / ankit agarwal
The Reserve Bank estimates the demand for bank notes on the
basis of the growth rate of the economy, the replacement
demand and reserve requirements by using statistical models.
The Reserve Bank decides upon the volume and value of bank
notes to be printed. The quantum of bank notes that needs
to be printed broadly depends on the annual increase in
bank notes required for circulation purposes, replacement
of soiled notes and reserve requirements
A currency note (say a $10 bill) is technically a bearer
promissory note, where in the issuing authority promises to
pay the bearer (one how is holding the money) the value of
$10 whenever demanded. Technically, this means that the
holder of money can get equivalent value in gold.
Then the authorities issued money having full backing of
Gold. This was called the Gold parity or the Gold Reserve
System
| Is This Answer Correct ? | 44 Yes | 25 No |
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