What is 'Near Money'

Near money is an economics term describing non-cash assets that are highly liquid, such as bank deposits, certificates of deposit (CDs) and Treasury Bills. Central banks, economists, and statisticians may utilize near money when determining the current M2 money supply. Near money refers to assets that can be quickly converted into cash. Near money is also called quasi-money.

BREAKING DOWN 'Near Money'

Examples of liquid assets that are near money include bonds, money markets, savings accounts and widely traded foreign currencies. Assets that are considered near money may differ depending on the time frame that is used in the definition. Bank accounts, such as savings accounts, allow instant conversion to cash with no penalties. Other near money assets may take longer to access or may incur penalties, such as early withdrawal from a certificate of deposit. Near money is considered part of the M2 money supply since it can be converted into cash with little hassle, but technically is not cash or currency. Cash and currency are considered part of the M1 money supply, or narrow money since it contains money in actual circulation. A third tier call near, near money is typically considered to be part of the M3 money supply.

RELATED TERMS
  1. M2

    M2 is a measure of the money supply that includes cash and checking ...
  2. Money Market Fund

    A money market fund is a type of mutual fund that invests in ...
  3. Multiplier Effect

    The multiplier effect is the increase in economic activity resulting ...
  4. Bank Deposits

    Bank deposits are money placed into a deposit accounts at a banking ...
  5. Money Market Account

    A money market account is an interest-bearing account that typically ...
  6. Call Money

    Call money is money loaned by a bank that must be repaid on demand. ...
Related Articles
  1. Personal Finance

    Where to Put Your Cash: Call Deposit vs. Time Deposit Accounts

    Time deposit accounts and call deposit accounts allow customers to earn higher interest in exchange for less access to their cash.
  2. Insights

    What is Money?

    Money: It's a part of everyone's life, and we all want it, but what is it, how does it gain value, and how it was created?
  3. Personal Finance

    5 Mistakes You're Making With Money Market Accounts

    Money market accounts can be helpful "parking spots" for investors. Here are five key things to keep in mind when opening an account.
  4. Investing

    The Money Market

    The money market provides a relatively stable place to park capital that may be needed within a short time horizon.
  5. Financial Advisor

    Why Cash is King When Markets are Volatile

    After the past several years, you might be addicted to equity. But when markets turn volatile, cash is the best option. Here's why.
  6. Retirement

    Money Market vs. Short-Term Bonds

    Short-term bonds typically yield higher interest rates than money market funds, so the potential to earn more income over time is greater.
RELATED FAQS
  1. What is the difference between the deposit multiplier and the money multiplier?

    Explore the deposit multiplier and the money multiplier, two fundamental concepts of Keynesian economics, and learn how they ... Read Answer >>
Trading Center