Banks Are Efficient Medium of Exchange. Support the Statement With Arguments.

Yes, it is true to say that Banks are efficient medium of exchange.

People have extra cash with them. Those having extra cash open a bank account in their name and deposit the surplus money there.

Out of the total money deposited with the banks 15% of it is kept as minimum cash balance to pay to the depositors who might come to withdraw money from the bank on any given day. Rest of the amount is used to extend loan to the borrowers.

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