Q. Choose the option that best captures the essence of the text.Issue of money, in the form of banknotes and current accounts subject to cheque or payment at the customer's order. These claims on banks can act as money because they are negotiable and/or repayable on demand, and hence valued at par and effectively transferable by mere delivery in the case of banknotes, or by drawing a cheque that the payee may bank or cash. Banks act as both collection and paying agents for customers, participating in interbank clearing and settlement systems to collect, present, be presented with, and pay payment instruments. This enables banks to economize on reserves held for settlement of payments, since inward and outward payments offset each other. It also enables ____________.
A) The offsetting of payment flows between geographical areas, reducing the cost of settlement between them.
B) The offsetting of payment flows between geographical areas, increasing the cost of settlement between them.
C) The offsetting of payment flows only in rural areas, increasing the cost of settlement between them.
D) The offsetting of payment flows only in urban areas, reducing the cost of settlement between them.
✔ Correct Answer: The offsetting of payment flows between geographical areas, reducing the cost of settlement between them.
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