Cash

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A wad of United States dollars American Cash.JPG
A wad of United States dollars

In economics, cash is money in the physical form of currency, such as banknotes and coins. In bookkeeping and finance, cash is current assets comprising currency or currency equivalents that can be accessed immediately or near-immediately (as in the case of money market accounts). Cash is seen either as a reserve for payments, in case of a structural or incidental negative cash flow or as a way to avoid a downturn on financial markets.

Economics Social science that analyzes the production, distribution, and consumption of goods and services

Economics is the social science that studies the production, distribution, and consumption of goods and services.

Money Object or record accepted as payment

Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The main functions of money are distinguished as: a medium of exchange, a unit of account, a store of value and sometimes, a standard of deferred payment. Any item or verifiable record that fulfils these functions can be considered as money.

A currency, in the most specific sense is money in any form when in use or circulation as a medium of exchange, especially circulating banknotes and coins. A more general definition is that a currency is a system of money in common use, especially for people in a nation. Under this definition, US dollars (US$), pounds sterling (£), Australian dollars (A$), European euros (€), Russian rubles (₽) and Indian Rupees (₹) are examples of currencies. These various currencies are recognized as stores of value and are traded between nations in foreign exchange markets, which determine the relative values of the different currencies. Currencies in this sense are defined by governments, and each type has limited boundaries of acceptance.

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Etymology

The English word "cash" originally meant "money box", and later came to have a secondary meaning "money". This secondary usage became the sole meaning in the 18th century. The word "cash" derives from the Middle French caisse ("money box"), which derives from the Old Italian cassa, and ultimately from the Latin capsa ("box"). [1] [2]

Middle French is a historical division of the French language that covers the period from the 14th to the early 17th centuries. It is a period of transition during which:

Latin Indo-European language of the Italic family

Latin is a classical language belonging to the Italic branch of the Indo-European languages. The Latin alphabet is derived from the Etruscan and Greek alphabets and ultimately from the Phoenician alphabet.

The root is unrelated to the concept of "cash" in British India, which meant "Indian monetary system", and derived from the Kannada kaasu (ಕಾಸು) and Tamil kasu (காசு), Sanskrit karsha or Karshapana and Sinhalese kasi. [2]

Tamil language language

Tamil is a Dravidian language predominantly spoken by the Tamil people of India and Sri Lanka, and by the Tamil diaspora, Sri Lankan Moors, Douglas, and Chindians. Tamil is an official language in three countries: India, Sri Lanka and Singapore. In India, it is the official language of the Indian state of Tamil Nadu and the Union Territory of Puducherry. Furthermore, Tamil is used as one of the languages of education in Malaysia, along with English, Malay and Mandarin. Tamil is spoken by significant minorities in the four other South Indian states of Kerala, Karnataka, Andhra Pradesh and Telangana and the Union Territory of the Andaman and Nicobar Islands. It is one of the 22 scheduled languages of India.

Sanskrit language of ancient Indian subcontinent

Sanskrit is a language of ancient India with a 3,500-year history. It is the primary liturgical language of Hinduism and the predominant language of most works of Hindu philosophy as well as some of the principal texts of Buddhism and Jainism. Sanskrit, in its variants and numerous dialects, was the lingua franca of ancient and medieval India. In the early 1st millennium CE, along with Buddhism and Hinduism, Sanskrit migrated to Southeast Asia, parts of East Asia and Central Asia, emerging as a language of high culture and of local ruling elites in these regions.

Karshapana Ancient Indian coins

Kārshāpaṇa, according to the Ashtadhyayi of Panini, refers to ancient Indian coins current during the 6th century BCE onwards, which were unstamped and stamped (āhata) metallic pieces whose validity depended on the integrity of the person authenticating them. It is commonly supposed by scholars that they were first issued by merchants and bankers rather than the state. They contributed to the development of trade since they obviated the need for weighing of metal during exchange. Kārshāpaṇas were basically silver pieces stamped with one to five or six rūpas ('symbols') originally only on the obverse side of the coins initially issued by the Janapadas and Mahajanapadas, and generally carried minute mark or marks to testify their legitimacy. Silver punch-marked coins ceased to be minted sometime in the second century BCE but exerted a wide influence for next five centuries.

"To cash", the verbalization of the noun, means "to convert to cash", as in the expression "to cash a cheque".

History

Traditional holed Chinese coinage is also known as cash Ancientchinesecoins.jpg
Traditional holed Chinese coinage is also known as cash

In Western Europe, after the fall of the Western Roman Empire, coins, silver jewelry and hacksilver (silver objects hacked into pieces) were for centuries the only form of money, until Venetian merchants started using silver bars for large transactions in the early Middle Ages. In a separate development, Venetian merchants started using paper bills, instructing their banker to make payments. Similar marked silver bars were in use in lands where the Venetian merchants had established representative offices. The Byzantine Empire and several states in the Balkan area and Kievan Rus also used marked silver bars for large payments. As the world economy developed and silver supplies increased, in particular after the colonization of South America, coins became larger and a standard coin for international payment developed from the 15th century: the Spanish and Spanish colonial coin of 8 reales. Its counterpart in gold was the Venetian ducat.

Fall of the Western Roman Empire Political change in late antiquity that came with the collapse of the Western Roman Empire

The Fall of the Western Roman Empire was the process of decline in the Western Roman Empire in which the Empire failed to enforce its rule, and its vast territory was divided into several successor polities. The Roman Empire lost the strengths that had allowed it to exercise effective control over its Western provinces; modern historians posit factors including the effectiveness and numbers of the army, the health and numbers of the Roman population, the strength of the economy, the competence of the Emperors, the internal struggles for power, the religious changes of the period, and the efficiency of the civil administration. Increasing pressure from invading barbarians outside Roman culture also contributed greatly to the collapse. Climate change has been suggested as a driver of the changes in some of these factors. The reasons for the collapse are major subjects of the historiography of the ancient world and they inform much modern discourse on state failure.

Hacksilver Fragments of cut and bent silver items used as currency

Hacksilver consists of fragments of cut and bent silver items that were used as bullion or as currency by weight in antiquity.

Republic of Venice Former state in Northeastern Italy

The Republic of Venice or Venetian Republic, traditionally known as La Serenissima, was a sovereign state and maritime republic in what is now northeastern Italy, which existed for over a millennium between the 7th century and the 18th century from 697 AD until 1797 AD. It was based in the lagoon communities of the historically prosperous city of Venice, and was a leading European economic and trading power during the Middle Ages and the Renaissance. Citizens spoke primarily the still-surviving Venetian language, although publishing in (Florentine) Italian language became the norm during the Renaissance and after.

Coin types would compete for markets. By conquering foreign markets, the issuing rulers would enjoy extra income from seigniorage (the difference between the value of the coin and the value of the metal the coin was made of). Successful coin types of high nobility would be copied by lower nobility for seigniorage. Imitations were usually of a lower weight, undermining the popularity of the original. As feudal states coalesced into kingdoms, imitation of silver types abated, but gold coins, in particular, the gold ducat and the gold florin were still issued as trade coins: coins without a fixed value, going by weight. Colonial powers also sought to take away market share from Spain by issuing trade coin equivalents of silver Spanish coins, without much success.

Seigniorage, also spelled seignorage or seigneurage, is the difference between the value of money and the cost to produce and distribute it. The term can be applied in two ways:

In the early part of the 17th century, English East India Company coins were minted in England and shipped to the East. In England over time the word cash was adopted from Sanskrit कर्ष karsa,[ dubious ] a weight of gold or silver but akin to the Old Persian 𐎣𐎼𐏁 karsha, unit of weight (83.30 grams). East India Company coinage had both Urdu and English writing on it, to facilitate its use within the trade. In 1671 the directors of the East India Company ordered a mint to be established at Bombay, known as Bombain. In 1677 this was sanctioned by the Crown, the coins, having received royal sanction, were struck as silver reupees; the inscription runs "The rupee of Bombaim", by the authority of Charles II.

Old Persian is one of the two directly attested Old Iranian languages. Like other Old Iranian languages, this language was known to its native speakers as Iranian language. Old Persian appears primarily in the inscriptions, clay tablets and seals of the Achaemenid era. Examples of Old Persian have been found in what is now Iran, Romania (Gherla), Armenia, Bahrain, Iraq, Turkey and Egypt, with the most important attestation by far being the contents of the Behistun Inscription. Recent research (2007) into the vast Persepolis Fortification Archive at the Oriental Institute at the University of Chicago have unearthed Old Persian tablets, which suggest Old Persian was a written language in use for practical recording and not only for royal display.

Urdu National language and lingua franca of Pakistan; one of the official languages of India; standardized register of Hindustani

Urdu —or, more precisely, Modern Standard Urdu—is a Persianised standard register of the Hindustani language. It is the official national language and lingua franca of Pakistan. In India, it is one of the 22 official languages recognized in the Constitution of India, having official status in the six states of Jammu and Kashmir, Telangana, Uttar Pradesh, Bihar, Jharkhand and West Bengal, as well as the national capital territory of Delhi.

At about this time coins were also being produced for the East India Company at the Madras mint. The currency at the company’s Bombay and Bengal administrative regions was the rupee. At Madras, however, the company's accounts were reckoned in pagodas, fractions, fanams, faluce and cash. This system was maintained until 1818 when the rupee was adopted as the unit of currency for the company's operations, the relation between the two systems being 1 pagoda = 3-91 rupees and 1 rupee = 12 fanams.

Meanwhile, paper money had been developed. At first, it was thought of for emergency issues, hence were most popular in the colonies of European powers. In the 18th century, important paper issues were made in colonies such as Ceylon and the bordering colonies of Essequibo, Demerara and Berbice. John Law did pioneering work on banknotes with the Banque Royale. However, the relation between money supply and inflation was still imperfectly understood and the bank went under, while its notes became worthless when they were over-issued. The lessons learned were applied to the Bank of England, which played a crucial role in financing Wellington's Peninsular war against French troops, hamstrung by a metallic Franc de Germinal.

The ability to create paper money made nation-states responsible for the management of inflation, through control of the money supply. It also made a direct relation between the metal of the coin and its denomination superfluous. From 1816, coins generally became token money, though some large silver and gold coins remained standard coins until 1927.[ citation needed ] The World War I saw standard coins disappear to a very large extent. Afterward, standard gold coins, mainly British sovereigns, would still be used in colonies and less developed economies and silver Maria Theresa thalers dated 1780 would be struck as trade coins for countries in East Asia until 1946 and possibly later locally.

Cash has now become a very small part of the money supply. Its remaining role is to provide a form of currency storage and payment for those who do not wish to take part in other systems, and make small payments conveniently and promptly, though this latter role is being replaced more and more frequently by electronic payment systems. Research has found that the demand for cash decreases as debit card usage increases because merchants need to make less change for customer purchases. [3]

Cash is increasing in circulation. The value of the United States dollar in circulation increased by 42% from 2007 to 2012. [4] The value of pound sterling banknotes in circulation increased by 29% from 2008 to 2013. [5] The value of the euro in circulation increased by 34% from August 2008 to August 2013 (2% of the increase was due to the adoption of euro in Slovakia 2009 and in Estonia 2011). [6]

Cashless society

Cashless society is the idea that in the future cash will be redundant having been replaced by electronic means of transfer. In 2016, 1 in 7 people in the UK were reported to no longer carry or use cash. [7]

See also

Related Research Articles

Commodity money Money with value derived from composition from a commodity (such as silver or gold coins)

Commodity money is money whose value comes from a commodity of which it is made. Commodity money consists of objects having value or use in themselves as well as their value in buying goods. This is in contrast to representative money, which has little or no intrinsic value but represents something of value, and fiat money, which has value only because it has been established as money by government regulation.

Australian dollar Official currency used in Australia; also used in Kiribati, Nauru, Tonga, Tuvalu, and Vanuatu

The Australian dollar is the currency of Australia, including its external territories: Christmas Island, Cocos (Keeling) Islands, and Norfolk Island. It is officially used as currency by three independent Pacific Island states: Kiribati, Nauru, and Tuvalu. It is legal tender in Australia. Within Australia, it is almost always abbreviated with the dollar sign ($), with A$ or AU$ sometimes used to distinguish it from other dollar-denominated currencies. The $ symbol precedes the amount. It is subdivided into 100 cents.

Afghan afghani currency of Afghanistan

The afghani is the currency of the Islamic Republic of Afghanistan, which is issued by the nation's central bank called Da Afghanistan Bank. It is nominally subdivided into 100 puls (پول), although there are no pul coins currently in circulation. In 2019, one U.S. dollar was exchanged for approximately 75 afghanis.

Banknote Form of physical currency made of paper, cotton or polymer

A banknote is a type of negotiable promissory note, made by a bank, payable to the bearer on demand. Banknotes were originally issued by commercial banks, which were legally required to redeem the notes for legal tender when presented to the chief cashier of the originating bank. These commercial banknotes only traded at face value in the market served by the issuing bank. Commercial banknotes have primarily been replaced by national banknotes issued by central banks.

Legal tender is a medium of payment recognized by a legal system to be valid for meeting a financial obligation. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered (“tendered”) in payment of a debt extinguishes the debt. There is no obligation on the creditor to accept the tendered payment, but the debt is nevertheless discharged. The creditor is not obligated to give change. Some jurisdictions allow contract law to overrule the status of legal tender, allowing for example merchants to specify that they will not accept cash payments. Coins and banknotes are usually defined as legal tender in many countries, but personal cheques, credit cards, and similar non-cash methods of payment are usually not. Some jurisdictions may include a specific foreign currency as legal tender, at times as its exclusive legal tender or concurrently with its domestic currency. Some jurisdictions may forbid or restrict payment made by other than legal tender.

Indian rupee The official currency of the Republic of India

The Indian rupee is the official currency of India. The rupee is subdivided into 100 paise, though as of 2019, coins of denomination of 1 rupee is the lowest value in use. The issuance of the currency is controlled by the Reserve Bank of India. The Reserve Bank manages currency in India and derives its role in currency management on the basis of the Reserve Bank of India Act, 1934.

Pakistani rupee currency

The Pakistani Rupee (Urdu: روپیه‎ / ALA-LC: Rūpiyah; sign: ; code: abbreviated as PKR, is the official currency of Pakistan since 1948.

Ukrainian hryvnia currency in Ukraine

The hryvnia, hryvna, or sometimes hryvnya, has been the national currency of Ukraine since 2 September 1996. The hryvnia is subdivided into 100 kopiyok. It is named after a measure of weight used in medieval Kievan Rus'.

French Indian rupee currency of French India

The roupie or rupee was the currency of French India. It was equal to the Indian rupee issued by the British and then Indian governments. Until 1871 it was issued as coins with the roupie divided into 8 fanons, each of 3 doudous or 20 cash. From 1871, banknotes were issued by France's Banque de l'Indochine, which circulated alongside coins issued by British India.

The gulden was the unit of account of the Dutch East Indies from 1602 under the United East India Company, following Dutch practice first adopted in the 15th century. A variety of Dutch, Spanish and Asian coins were in official and common usage. After the collapse of the VOC at the end of the 18th century, control of the islands reverted to the Dutch government, which issued silver 'Netherlands Indies' gulden and fractional silver and copper coins until Indonesian independence in 1948.

Straits dollar currency

The Straits dollar was the currency of the Straits Settlements from 1898 until 1939. At the same time, it was also used in the Federated Malay States, the Unfederated Malay States, Kingdom of Sarawak, Brunei, and British North Borneo.

Travancore Rupee

The Travancore rupee was a type of currency issued by the State of Travancore, now mainly a part of Kerala in South India. The rupee was largely a newer currency in comparison to the older currencies of Kerala such as the Fanams, Achus, Chuckrams as well as the Kasu. Its creation was probably intended for the increased trading with British India and the high-value transactions therein.

The fanam was a currency issued by the Madras Presidency until 1815. It circulated alongside the Indian rupee, also issued by the Presidency. The fanam was a small silver coin, subdivided into 80 copper cash, with the gold pagoda worth 42 fanams. The rupee was worth 12 fanams. After 1815, only coins of the rupee currency system were issued.

Cash is a name for several historical currencies used in Asia. It is applied to units used in China, Vietnam, and of Madras and Princely state of Travancore in British India. It is also occasionally used to refer to the Korean mun and the Japanese mon.

Currency in circulation continued use of currency

In monetary economics, the currency in circulation in a country is the value of currency or cash that has ever been issued by the country’s monetary authority less the amount that has been removed. More broadly, money in circulation is the total money supply of a country, which can be defined in various ways, but always includes currency and also some types of bank deposits, such as deposits at call.

Travancore Fanam currency of Travancore

The Travancore Fanam was a type of money that was issued by the State of Travancore, now mainly a part of Kerala in South India. The Fanams and Chuckrams were known to be some of the smallest coins in the world. The word Fanam appears to be an Anglo-Germanic sound shift from the word Panam, which means money in Dravidian languages. Historically, the Fanam and Chuckram coins were the regular unit of currency in medieval Travancore and appear to have been extensively used for trading in the region of South India. The words Fanam and Panam literally mean money and are still used as a synonym for wealth in Kerala in the native language of Malayalam.

The history of Philippine money covers currency in use before the Hispanic era with gold Piloncitos and other commodities in circulation, as well as the adoption of the peso during the Hispanic era and afterwards.

References

  1. "Cash". Merriam-Webster. Retrieved 2017-08-20.
  2. 1 2 "Cash". Online Etymology Dictionary. Retrieved 2017-08-20.
  3. "Federal Reserve Bank of Chicago, ''Debit Card and Cash Usage: A Cross-Country Analysis'', March 2007" (PDF). Retrieved 15 November 2013.
  4. Williams, John. "Cash Is Dead! Long Live Cash!". Federal Reserve Bank of San Francisco.
  5. "Banknote Statistics". Bank of England.
  6. "Banknotes and coins circulation". European Central Bank.
  7. Alex West (23 October 2016). "One in seven Brits no longer carries cash, as we become increasingly reliant on card and smartphone payments". thesun.co.uk. The Sun. Retrieved 12 November 2016.

Further reading