Money is not merely a piece of paper or a metal disc or an electronic digit but ‘in essence it is a social relationship’. Money is the promise to repay by one to another in a society. The promise is based upon trust. On a different note, Prof. Robertson said, “Money helps each member of the society to ensure that the means of enjoyment to which he has access, yield him the greatest amount of actual enjoyment which is within his reach.”

Money is used as medium of exchange. An individual also saves money setting aside a part of her earnings, deposits it in banks. The trust bestowed upon banks by its customers acts as stimulus to them to perform better. On the other hand, according to Prof. Friedman, “Saving in terms of money generates a sense of confidence among the consumers.” Money also generates freedom. It has a great psychological effect. Money acts as an important indicator and provides information about probable demand for commodities and supply of goods. It is the basis of the price mechanism, cost and revenue estimates and is the determinant of profit. Marshall commented: “Money is the pivot around which the whole economic science clusters.”

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Money flows like the life blood in the economic system. Research reveals that the bulk of today’s money supply is created and allocated by commercial banks in their role as providers of credit. Efficacy of the banking system depends much upon the credit landscape of banks. Estimates show that a large and increased share of present bank credit now goes to consumers for personal usage, e.g. purchase of flats, cars, shares or for higher education, etc. There is a paradigm shift in the bank credit scenario from manufacturing to personal loans implying policy changes of the banks on credit emphasis, from productive to speculative purposes.

This may result in higher incomes to banks but with associated risks. It is argued that this system is inherently unstable. Further, the use of money towards creation of national........

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