Why is modern currency accepted as a medium of exchange without any use of its own

Why is modern currency accepted as a medium of exchange without any use of its own ? Find out the reason.

Answer

Modern currency is accepted as a medium of exchange without any use of its own because:

1. Modern currency is authorized by the government of a country.
2. In India, the Reserve Bank of India issues all currency notes on behalf of central Government.
3. No other individual or organization is allowed to issue currency.
4. The law legalises the use of rupee as a medium of payment that cannot be refused in settling transactions in India.
5. No individual in India can legally refuse a payment made in Rupees.

• Exam Year: 2015