A quasi-money, also called "money in the broad sense", is an asset with less liquidity than money but that can be converted into it with a high degree of certainty.
A quasi-money can act as a store of value or as an instrument of exchange, the difference with money is the lack of generality in its circulation, since they are only used in certain markets.
The quasi-money assets are part of the intermediate monetary aggregate or expanded money supply M2.
Definition
Cuartas (p.130) indicates that a quasi-money is a financial asset that is a good substitute for money in its functions of store of value and means of payment. It can be said that quasi-money is a more restricted means of payment acceptance than money. It is common to regard savings deposits and time deposits in commercial banks as quasi-money. In general, liquid financial assets constitute quasi-money.
According to Tacsan (p.154), quasi-money fully fulfills the functions of money except for its function as a means of payment. On the other hand, it has the advantage of accruing interest, which is not the case with money. Instruments with a fixed yield and a specific maturity (bonds, investment certificates, fixed-term deposits, etc.) are highly liquid since they can be exchanged for cash quickly without incurring significant losses in value. However, it is not possible to make generalized payments with them, much less small payments.
What is included as quasi-money
Schettino (p.197) states that the concept of quasi-money includes:
- Liquid investments in the bank (checking, savings, etc.) or foreign currency. Although they are not completely money since they cannot be used for any transaction they can be easily and quickly converted into money Bonds issued by the government Long-term assets. Other less liquid but more profitable assets, among them there are government papers and some other banking instruments and brokerage houses that have a very slow recovery period and whose market is no longer the money market but the capital market.
Bibliography
- Cuartas Mejía, Vicente. Financial Economic Dictionary. University of Medellin, 2006.Schettino, Macario. Introduction to Economics for Non-Economists. Pearson Education, 2003. Tacsan Chen, Rodolfo. Elements of macroeconomics. EUNED, 2007.
