Near money definitions
| Word backwards | raen yenom |
|---|---|
| Part of speech | The word "near money" is a noun phrase. |
| Syllabic division | Near mon-ey. |
| Plural | The plural of near money is near monies. |
| Total letters | 9 |
| Vogais (3) | e,a,o |
| Consonants (4) | n,r,m,y |
Near money refers to assets that are easily converted into cash and act as a substitute for cash. These assets are not entirely liquid like cash but can be quickly converted when needed. They are often included in the calculation of a country's money supply.
Characteristics of Near Money
Near money assets include savings accounts, money market accounts, certificates of deposit, and treasury bills. These assets offer a lower level of liquidity compared to cash but can still be readily converted into cash without significant loss of value. Near money provides a balance between liquidity and return on investment.
Liquidity and Stability
Near money assets are characterized by their liquidity and stability. While they may not be as liquid as cash, they can be quickly converted into cash without major restrictions. This makes them a valuable part of an individual or organization's financial portfolio, providing quick access to funds when needed.
Role in Monetary Policy
Near money plays a crucial role in the implementation of monetary policy by central banks. Changes in the money supply, which includes near money, can impact interest rates and inflation levels in the economy. Central banks often monitor near money assets to assess the overall health of the economy and make informed decisions about monetary policy.
Examples of Near Money
Savings accounts offered by banks and credit unions are common examples of near money. These accounts allow individuals to earn interest on their deposits while still maintaining relatively easy access to their funds. Money market accounts and certificates of deposit (CDs) are also considered near money assets due to their liquidity and stable value.
In conclusion, near money assets provide a valuable source of liquidity and stability in a financial portfolio. While they may not offer the same level of liquidity as cash, they can be quickly converted into cash when needed. Understanding the role of near money in the economy is essential for making informed financial decisions and assessing overall market conditions.
Near money Examples
- I keep some cash in my wallet as near money for emergencies.
- Certificates of deposit are considered near money because they can be easily converted into cash.
- Money market accounts are often classified as near money due to their liquidity.
- Short-term government bonds are examples of near money because they can be quickly sold for cash.
- Commercial paper is considered near money as it represents short-term loans that can be easily converted into cash.
- Treasury bills are often used as near money because they are highly liquid and low-risk investments.
- Savings accounts are sometimes considered near money as they can be accessed quickly in case of need.
- Money market mutual funds are classified as near money because they offer high liquidity and low risk.
- Repurchase agreements are examples of near money as they involve short-term borrowing and lending of funds.
- Traveler's checks are a type of near money that can be easily exchanged for cash while traveling.