Cash

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

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 of two countries: Sri Lanka and Singapore and official language of the Indian state Tamil Nadu. It has official status in the Indian state of Tamil Nadu and the Indian Union Territory of Puducherry. It 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 India

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 mention 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. 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 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.

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. 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. It is a registered regional language of Nepal.

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

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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 that have value in themselves as well as value in their use as money.

Thai baht currency

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Afghan afghani اسعارcurrency of Afghanistan

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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. Paper currency and coins are common forms of legal tender in many countries. Legal tender is variously defined in different jurisdictions. Formally, it is anything which when offered in payment extinguishes the debt. Thus, personal cheques, credit cards, and similar non-cash methods of payment are not usually legal tender. The law does not relieve the debt obligation until payment is tendered. Coins and banknotes are usually defined as legal tender. Some jurisdictions may forbid or restrict payment made other than by legal tender. For example, such a law might outlaw the use of foreign coins and bank notes or require a license to perform financial transactions in a foreign currency.

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 2018, coins of denomination of 50 paise or half 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.

Ethiopian birr currency

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Trinidad and Tobago dollar currency

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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.

History of the Canadian dollar History of currency in Canada

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

Japanese currency has a history covering the period from the 8th century to the present. After the traditional usage of rice as currency medium, Japan's currency was characterized by an early adoption of currency systems and designs from China before developing a separate system of its own.

Fiat money currency established as money by government regulation or law.

Fiat money is a currency without intrinsic value that has been established as money, often by government regulation. Fiat money does not have use value, and has value only because a government maintains its value, or because parties engaging in exchange agree on its value. It was introduced as an alternative to commodity money and representative money. Commodity money is created from a good, often a precious metal such as gold or silver, which has uses other than as a medium of exchange. Representative money is similar to fiat money, but it represents a claim on a commodity.

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.

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