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.

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