What Are The Advantages And Disadvantages Of Paper Money ?

It is light and easily carried. You can conceal it anywhere pretty much and it can be reproduced relatively inexpensively. On the other hand it is easily lost, destroyed and damaged. It can be stolen in great quantities because it is light. It has no value aside from the value assigned by the issuer of the currency.

Advantages of Paper Money:

The printing of paper money is easy to print with low cost and saving the time.
The transportation of paper money is easier, safe and cheaper than metallic money e.g. one thousand rupee note can easily be transferred from one place to another place.
Paper money saves gold and silver from useless lockup for other purposes.Paper money can be counted more easily than metallic money. The counting of big amount of coins is a tedious.

Paper money has elastic supply and it can be printed for any purpose at any time. It also helps to Govt. for emergency uses such as war or depression period.
Paper money is easy to recognize now-a –days, even a small child can recognize paper money.

Disadvantages of Paper Money:
The paper money have no stability of value in it, value of each paper money changes with time and with change in monetary conditions of countries. When the Govt. faces financial trouble, then, Govt. print more currency notes. As a result, the prices of the commodities go up and country faces inflation.

The gold and silver coins are accepted by every country, so no problem of international payments. In case of paper money for international payment, we have to convert our currency into foreign currency.Due to increase in money supply, the price and profit will increase. The rich people accumulate wealth and become richer.

It is easier to print paper money than metallic money. Danger is always there from the hidden enemies of the country to print unreal currency notes.Paper money has no durability because it can easily be destroyed or spoiled easily that it has no value at all.