Cash

What Is Cash?

Cash is the physical form of currency, including coins and banknotes, that individuals can carry and use for immediate payment of goods and services. 

However, the definition of cash can vary in different contexts and may also include bank accounts and marketable securities such as government bonds. In a broader financial sense, cash includes all currency equivalents that can be quickly converted into liquid assets.

Throughout history, gold and silver coins served as a primary means of payment worldwide. The limited supply of precious metals ensured their value, and their standardized form simplified accounting practices.

The introduction of paper money in the seventh century CE brought about a significant change in the concept of cash. It separated the value of currency from its material composition, leading to the emergence of fiat currencies like the U.S. dollar and the euro. These currencies are declared as legal tender by the government and do not possess any intrinsic value.

Since the 1980s, there has been a global trend of reducing reliance on cash. Debit and credit cards, as well as mobile payment methods, have increasingly replaced physical currency. As of November 2020, the total global volume of cash amounts to approximately $6.6 trillion, which represents only a small fraction of the total volume of all forms of money, estimated to be between $630 trillion and $1.2 quadrillion.