In this view it is overlooked that bank notes, unlike inconvertible paper money, depend for their value on the credit of the bank, not on their legal-tender quality and on political power.[11] They must be redeemed on penalty of insolvency; government notes need not be, and yet will circulate at par if properly limited.

Adequate provision for the prompt return and redemption of bank notes makes them "elastic" in their adaptation to monetary needs, which fluctuate with changes in commerce and industry from season to season and even from day to day.
The predominant opinion to-day is that in their economic nature bank notes share to some extent the character both of private promissory notes and of political paper money.

They stand midway between the two.
Everywhere it has come to be held that the issue of paper money of any kind is in its nature a public monopoly, and yet everywhere the bank note policy has come to be that of permitting the issue only to certain institutions, under strict public legislation and regulation, and of requiring in return for this privilege some substantial services or payments to the government.
Sec.11.

#Banking credit as a medium of trade.# The credit which, in five ways, banks sell (see above, section 3) serves, in most cases, the purposes of money to their customers.

This is least true of time deposits, for the motive of the depositor in such cases is usually to _invest_ his funds for a time rather than to keep them available as money.