Magic of digital money.

How can increase investment money by destroyed paper money.

In many developing countries, there are still hugely used in paper money on financial transactions. Lack of bank services in remote area, people have been compelling to hold paper money at home. By that reason money is not enough in bank for investment. In city areas bank services are available, people have been depositing their money in bank, but bank should maintain their minimum liquidity cash balance to manage their customers short term obligation, by that reason bank cannot invest all money, which is in its system. This is the drawback of paper money regarding investment capacity. By that reason, bank of developing countries who have huge amount of paper money in practice they cannot invest more in business.

If any country applies all digital money by destroying paper money, then all circulate money is available in banking system. Every time this whole money is in banking system not need to maintain liquidity minimum balance that’s why investment capacity will be highly increased. For example, if bank dispatch business loan to Person A Rs 2000000, even this whole amount still in banking system, this businessman buys anything to do run business, even still this money in banking system, so that after applied digital money, bank should not necessary to maintain minimum liquidity, all money are available any time. Bank can dispatch a lot loan for investment until demand of foreign currency does not increase than its supply. If regular demand is higher than supply of foreign currency, our domestic money value would be decreased then inflation will be increased.

That’s why we can say that after applying digital money, bank investing capacity will increase tremendously high. After increased investment then increases all economy activities.