Advantages and Disadvantages of Demand Deposits – In general demand deposits refer to money issued in the form of securities by commercial banks, where these securities can be used as currency. But, apart from that, there are also advantages and disadvantages of demand deposits.

In another definition, these bank deposits are described as funds kept in checking accounts at various commercial banks.

This money can be used to perform payment transactions using an intermediary medium, such as a check, demand deposit, bill or payment order within a certain period of time.

Definition of Demand Deposits

Unlike a freely circulating currency, this type of money cannot be used freely to carry out daily transactions.

However, for some individuals, the use of this type of money is more practical and safer than currency.

Definition of Demand Deposits

Demand deposits are basically a form of money or means of payment issued in the form of securities by commercial banks.

Besides being more economical, the level of security is also more guaranteed than other currencies. Giral according to the Big Indonesian Dictionary (KBBI), can be interpreted as:

  1. Monetary instruments in the form of securities. Later, the bank will become the location for storing and distributing the money.
  2. Therefore demand deposits are a type of money that is kept in a bank or checking account and can be used at any time for transactions through predetermined intermediaries.
  3. Usually, this money is issued under certain conditions to certain individuals. This causes the use of demand deposits to be significantly less prevalent in society than cash.

Characteristics of Demand Deposits

Several previous points have explained the meaning of Giro in general. It should be noted that this type of money has characteristics that distinguish it from other types of money. The following are the characteristics of this type of money:

  1. This type of money can be issued by a commercial bank or financial institution.
  2. This type of money is issued by commercial banks in the form of securities, codes, or electronic devices.
  3. The public is not obligated to accept and use this type of money, even though it can actually be used for general and legal payment purposes.
  4. This type of money is only supported by financial institutions or commercial banks that issue it directly.
  5. This type of money will not be used for buying and selling or other transactions to meet the daily needs of the general public.

Example of Giral Money

Example of Giral Money

As previously explained, demand deposits are securities issued by banks or other forms of payment. This current account can be converted into currency and used for transactions at any time.

The following are examples of giro that we usually encounter in everyday life:

  1. Digital money
  2. Postal money order
  3. Bills
  4. giro
  5. Check
  6. Credit card.

To help you understand it better, we will provide additional information below:

1. Digital Money

Today, digital cash is one of the most common forms of current accounts. Examples include cryptocurrencies such as bitcoin and ethereum, as well as digital wallets such as GoPay and OVO.

This method of digitizing money has many advantages and makes it easier for Indonesians to use money.

You can convert your currency to this digital currency at a bank or exchange service. Then, you can pay for services or shop at businesses that accept this money.

Not all businesses accept digital money, which is a major drawback of this form of money.

However, more and more businesses, both large and small, are now accepting digital cash payments.

2. Giro

A checking account is a type of instruction to the bank to transfer a certain amount of money from one account to another.

Typically, these current accounts are used to transfer funds or pay for high-money transactions, making it difficult to use currency.

Due to the nature of demand deposits, they are the opposite of securities in the form of checks, which are discussed below.

3. Postal money orders

Postal money orders are basically money to transfer funds to another individual through the postal service. The recipient can later exchange these securities for currency.

In ancient times, when banking services were relatively limited compared to postal services, traders and nomads greatly benefited from the money order method of sending money.

4. Check

A check is a piece of paper containing a written order from the account holder to the bank to pay a certain amount of money to a certain party.

Typically, these checks also cover a number of mandatory fields, such as identification and other provisions.

The majority of these check users are bank customers who have high savings with priority status. These checks are usually used by wealthy businessmen and government officials.

This is because in transactions involving checks, the nominal amount of money written can reach billions or trillions of rupiah.

5. Bills

Bilyet is a giro in the form of notes, evidence, and written documents that can be used as proof of a transaction. This includes an official statement or order to pay the party concerned.

6. Credit card

Some people use credit cards for transactions because they are considered more efficient.

A credit card is a card issued by a bank that allows the cardholder to make purchases without using cash.

Later, the bill for this transaction will be deducted from your account automatically. This card resembles an ATM in general, but can be distinguished from a debit card based on its appearance and has different terms of service.

Advantages and Disadvantages of Demand Deposits

Giro has advantages and disadvantages, although it is liked by many people. Of course, as a user, you must understand what important information is related to these two things. Immediately, see the following explanation to find out more:

Advantages of Demand Deposits

Advantages and Disadvantages of Demand Deposits

Compared to currency, demand deposit has several advantages. These advantages include:

  1. It's safer if you lose
  2. More practical
  3. It doesn't cost a lot to move a lot of money
  4. Nominally more flexible

So that you can understand the benefits of the demand deposits mentioned above, we will describe them in more detail below:

1. Safer If Lost

Humans are forgetful, so the risk of losing money is very high if you are not careful with your finances. However, with current accounts, this problem can be reduced.

When you lose your current account, it's easier to count than if you lose bills or coins.

You can report the case directly to the bank so that it can be blocked or searched. In addition, thieves cannot use it carelessly because your identity is printed on the money.

2. More practical

Buying luxury goods or properties requires substantial funds. By taking advantage of giro, there is no need to carry a suitcase filled with cash funds.

Just use a check or credit card to make payments easily.

In addition, using this type of money will protect you from the risk of unknowingly committing a crime. Robbery or robbery that targets your money is one example.

3. It's easy to move a lot of money

In addition to the benefits mentioned above, current accounts also make transferring large amounts of money much cheaper and more convenient.

There is no need to carry large sums of money or exchange money to move large sums of money. This will save money, time, and opportunity costs associated with money transfers.

4. Flexible Nominal

With this giro, you don't have to worry about having to make expensive purchases. So that the transaction can be completed in one payment, you can immediately write down the nominal on your current account.

In contrast to currency, which has a fixed nominal value determined by the central bank, current accounts have a variable nominal value which is determined by the owner of the money.

Lack of Giral Money

Giral is not the most popular form of money among the general public despite its many advantages. The following are some of the disadvantages associated with demand deposits:

  1. Not suitable for small nominal transactions
  2. Prone to hacking
  3. Not everyone uses the same money.

1. Not Compatible with Small Nominal Transactions.

The majority of our daily transactions involve small rather than large amounts. Although it has many benefits, this type of money is less effective if it is spent on goods or services of low quality.

If you have to use a credit card to pay for parking, that's pretty unlikely right? Similarly, paying for lunch at the store by check.

However, advances in digital money are gradually solving this problem. It is unimaginable that in the future, vending machines and parking attendants will accept digital payments instead of cash.

2. Prone to Hack

Not all electronics are perfect, safe, and reliable. For example, easy-to-use giro which is very vulnerable to hacking.

It's not uncommon for you to hear that banks have been hacked by cybercriminals, resulting in drained bank accounts and money cards?

Obviously, you should avoid this problem because it will result in losses. Despite the fact that this risk cannot be eliminated, you can be sure that the bank where you put your trust has anticipated it.

3. Not all parties transact using the same money

This is the weakness of demand deposits in Indonesia, where there are still relatively few users and can be counted on the fingers of one hand.

This is because these people believe that they can still use other forms of money without a card.

In addition, caring for it requires certain procedures and requirements. It is therefore necessary to wait and pay a fee as a sign of settlement and when transferring funds to someone else.

Nonetheless, the use of demand deposits such as digital money is growing rapidly in Indonesia. Digital wallets such as OVO and GoPay are one of the forerunners of this trend.

In fact, demand deposits are expected to replace currencies in the near future.

However, you still have to pay attention to how to align the various forms of digital money so they don't clash and can be traded with one another.

Process of Occurrence of Demand Deposits

Process of Occurrence of Demand Deposits

In practice, several countries have adopted Giro because it is considered more practical. So how is this money used? Check out the following reviews:

Primary deposit is a current account formation process in which the customer makes a currency deposit to the bank.

Loan deposits, which are bank deposits that occur when a person or customer makes a loan at a bank where money is not withdrawn into a currency but is deposited in an account, is created when a loan is made.

The process of depositing money at a bank in the form of time deposits, certificates Most users of savings or savings are referred to as quasi-money.


Here we have summarized some frequently asked questions:

Who prints demand deposits?


Quoting the book Economics for Class X SMA/MA by Nurcahyaningtyas, demand deposits are a means of payment in the form of securities issued by commercial banks.

How to get giraffe money?


Demand deposits can be created by selling securities to a bank, then the bank records the proceeds from the sale of these securities as a deposit from the seller. This method is called a derivative deposit.

Is giro and giral the same?


Demand deposits are money in the current accounts of commercial banks whose transactions use checks or demand deposits.

Because they can create demand deposits, commercial banks are known as demand deposit creation banks (BPUG).

Demand deposits or demand deposits are clearly different from currency based on the medium used for transactions

Who circulates currency and demand deposits?


Bank Indonesia is the only party entitled to print and issue currency, while other banks only have the right to circulate it.

Meanwhile, demand deposits can be printed by commercial banks that already have the authority and permission to print the money.


That's a little information about the advantages and disadvantages of demand deposits, as well as the advantages and disadvantages of this demand deposit.

And keep in mind that the presence of this type of money will make transactions easier and more practical.

It's just that the use of this type of money must be regulated in such a way so as not to fall into consumptive behavior and the mention of this money is indeed the same but the form and criteria are far different.

Thus the article about the Pros and Cons of Demand Deposits and don't forget to keep visiting the Infokekinian website.

Because we also have a lot of other information and recommendations which of course will be useful and help current friends.