Which of the following statements is correct about fiduciary matters (matters of trust)?

Correct option is A

The correct answer is (a) It means that the issue of banknotes is not supported by gold.
Explanation:
· In the context of monetary systems, a Fiduciary Issue refers to the issuance of currency notes that are not backed by gold or silver reserves but are instead backed by government securities or simply the trust/faith in the issuing authority.
· The term "fiduciary" comes from the Latin fiducia, meaning trust or confidence.
· Therefore, it implies that the currency's value depends on the confidence that it will be accepted as a medium of exchange, rather than being fully convertible into precious metals.
Information Booster:
· Fiat Money: Currency that is declared legal tender by the government and has no intrinsic value (e.g., modern paper currency). It is distinct from commodity money.
· Minimum Reserve System: India currently follows this system (since 1957) for note issue. The RBI is required to maintain a minimum reserve of ₹200 Crore, out of which at least ₹115 Crore must be in gold, and the rest in foreign securities. This is different from a purely fiduciary system.