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From Wikipedia, the free encyclopedia
For other uses, see Cash (disambiguation).
Etymology[edit]
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" comes from the Middle French caisse ("money box"),
which comes from the Old Italian cassa, and ultimately from the Latin capsa ("box").[1][2]
History[edit]
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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.
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.
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 – discuss] 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 rupees; the inscription runs "The rupee of Bombaim", by
the authority of Charles II.
At about this time coins were also being produced for the East India Company at
the Madras mint. In Tamil term for money is kaasu[3] may be this is the place where the
word Kaasu may get modified into Cash. To be noted is here both the term 'Kaasu' and
'cash' has same meaning, not like money box or something else. 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.
Transactions motive
Precautionary motive
Speculative motive.
The transactions motive covers the business needs of economic subjects, the
precautionary motive serves to hold money for liquidity purposes and to provide for
crisis situations, and the speculation motive, according to John Maynard Keynes, results
from the uncertainty about future interest rate developments and relates to financial
investments.
In addition to this purely economic importance, there are other aspects of cash use: [12][13]
Cash in circulation[edit]
Cash in circulation is characterized by strong seasonal fluctuations. Wage and salary
payment dates, tax payment dates or holidays lead to statistically perceptible increases
in cash in circulation, for which the credit institutions are preparing. Since cash holdings
at banks do not earn interest and can also lead to security problems (bank robbery),
banks usually only hold very small amounts of cash. They are therefore forced to
involve the central bank in times of higher cash requirements. Therefore, the cash in
circulation only remains unchanged if the banks hand over cash from their own cash
holdings to their bank customers or take cash deposits from their customers into their
own holdings.
The ratio of the cash in circulation in relation to the gross domestic product (cash to
GDP ratio) is a good indicator of cash usage and payment behavior in an economy. In
countries like the United States, increased use of debit and credit cards is increasing
the amount of cash in circulation at a slower rate than in countries with a high amount of
cash payments. In 2018, it ranged from 1.3% (in Sweden) to more than 21% (in Japan),
10.5% in Switzerland and 10.7% in the eurozone. [14]
Since around 2018, exacerbated by the COVID-19 pandemic, cash in circulation in
the eurozone has increased significantly while the share of cash payments (i.e.
transactions) has decreased, known as the paradox of banknotes. Analyzes show that
private households are increasingly keeping cash as a precaution against crises and
that negative interest rates also play a role.[15] This effect is also observed in many other
currency areas, e.g. in the USA and Japan.[16]
Banknote tracking[edit]
Theoretically, it is possible to track cash usage by capturing the unique serial
numbers on the banknotes during transactions. To do this, the serial numbers would
have to be recorded personally for all withdrawals from automated teller
machines (ATM) and for each payment transaction at a retail checkout, including
change. In practice, such comprehensive tracking requires a high level of technical
effort and generates immense amounts of data. It would combine the disadvantages of
payment methods, the somewhat cumbersome nature of cash from the offline world and
the lack of anonymity of electronic money from the online world. In addition, in most
countries, personal tracking of payment transactions is not permitted for the reasons
of information privacy.
There are the following exceptions in cash applications:
https://en.wikipedia.org/wiki/Cash