Cash
Table of Contents
Summary
Cash narrows currency down further still: in its everyday sense it is physical banknotes and coins, but the bookkeeping and finance sense this note follows is broader – the class of current assets comprising currency or currency equivalents accessible immediately or near-immediately, which includes highly liquid financial assets such as bank deposits alongside physical notes – the standard accounting category of "cash and cash equivalents" (see Wikipedia: Cash and cash equivalents).
Detail
Cash as the liquid end of a currency
Cash is money in its most liquid form for a given currency: physical notes and coins, and – in the financial rather than purely physical sense – any currency-equivalent asset that converts to physical currency immediately or near-immediately, such as an on-demand bank deposit. This is the narrowest of the concepts Currency's foundation rests on: not all money is a currency in the standardised, systemic sense, and not all currency holdings are cash, since a currency can equally be held in a comparatively illiquid financial-asset form.
Cash is an asset
Cash is, trivially, itself an asset – the maximally liquid one, the point every other asset's liquidity is ultimately measured against. Framing cash this way is what makes "liquidity" a coherent, comparable spectrum rather than a vague qualitative label: an asset's liquidity is, precisely, how close it sits to behaving like cash itself.
See also
- Wikipedia: Cash and cash equivalents – the standard accounting category this note follows.
- Currency – hub note; cash is the liquid end of the currency concept this note narrows.
- Assets – the general category cash belongs to.
- Liquidity – the spectrum cash sits at the extreme end of.
- Money – the broadest concept in the money → currency → cash chain.
- Kinds of Money – why not all money is cash-liquid, and why not all currency is standardised.