Near money
Also called: Quasi-money · Topic: Money: From Barter to Digital Currency · NCERT: Beyond NCERT
Meaning
Near money means assets that are highly liquid, meaning they are easy to turn into cash. You still cannot use them directly to pay for things. Common examples are time deposits (fixed deposits) and treasury bills (short-term borrowing papers issued by the government). They sit close to money because converting them into cash is quick and safe. The extra step of converting them is what keeps them from being money. Time deposits are counted in broad money (M3), but not in narrow money (M1).
Example
Suppose you have a fixed deposit in a bank. You cannot hand it to a shopkeeper to pay for groceries. You must first break the deposit or wait for it to mature. Only then does it become cash or a savings balance that you can spend.
Don't confuse with
- Demand deposits: you can withdraw them any time or pay from them by cheque or UPI. Because they are widely accepted for payment, they count as money and are part of M1. Near money is not itself a means of payment.