What is the main difference between money and near money?

Money includes notes and coins circulated in the economy (legal tender money) and demand deposits (bank money) which act as medium of exchange. But near money includes financial assets like treasury bill, bill of exchange, fixed deposits, bond and debentures. Money possesses hundred percent liquidity.

What are the types of near money?

Savings accounts, deposit certificates (CDs), foreign currencies, money market accounts, marketable securities, and Treasury bills are examples of near-money assets.

Is Cheque a near money?

This means that currency which we hold is cent percent liquid. In the same way, the demand deposits such as cheques, demand drafts etc. can be encashed immediately and so they are also liquid assets. These are highly liquid assets that can easily be converted into cash.

Is a credit card near money?

Are Credit Cards Near Money? While credit cards can serve as a means of purchase or provide access to a cash advance, but they would not be considered near money. The primary reason is that credit cards – while capable of providing perceived liquidity – are a revolving liability or debt.

What is the real money?

Real money is a commonly used term in the financial markets to denote a fully funded, long-only traditional asset manager. The term real money means the money is managed on an unlevered basis. This contrasts with hedge funds, which often manage money using borrowed funds or leverage.

Is cheque money if not why?

Cheque is not money. cheque is a paper instructing the bank to pay a specific amount from the person’s account to the person in whose name the cheque has been drawn. The facility of cheque against demand deposits makes it possible to directly settle the payments without the use of withdrawal.

Is credit real money?

Credit money is monetary value created as the result of some future obligation or claim. There are many forms of credit money, such as IOUs, bonds and money markets. Virtually any form of financial instrument that cannot or is not meant to be repaid immediately can be construed as a form of credit money.

What is near money in the money market?

Near money, also known as quasi-money, refers to highly liquid assets that can rapidly be converted into cash such as short-term money market instruments and bank deposits. Near money is similar to cash equivalents.

What’s the difference between near money and liquid money?

Liquidity – money is 100% liquid, near money is not. Converting near-money involves time, and sometimes a fee (exchanging currency, or paying a penalty for taking your money out before the agreed date). “Assets that are easily convertible into cash, such as money market accounts and bank deposits.”

How is near money similar to cash equivalents?

Near money is similar to cash equivalents. Near money means non-cash assets that are very liquid but cannot be used directly for transactions. When determining the current money supply, economists and central banks may utilize near money.

What does near money mean in liquidity analysis?

In general, near money assets included in near money analysis will vary depending on the type of analysis. Near money refers to non-cash assets. Near money can easily be converted to cash. Near money and the nearness of near moneys are important considerations in a variety of different types of liquidity analysis.