Close this search box.

Table of Contents

Near Money


Near money, also known as quasi-money, refers to highly liquid financial assets that can be easily converted into cash with minimal to no impact on their value. These assets include short-term securities like savings deposits, bank certificates of deposit (CDs), treasury bills, and money market funds. Although not the same as cash, their close-to-cash nature allows them to function as a store of value and a medium of exchange in financial transactions.


The phonetic pronunciation of the keyword “Near Money” is:/ nɪər ˈmʌni /(Neer Muh-nee)

Key Takeaways

  1. Near money refers to highly liquid assets that can be quickly and easily converted into cash with minimal risk of losing their value. These assets generally include savings accounts, money market funds, short-term bonds, and other similar financial instruments.
  2. Investors and businesses often hold near money to fulfill their short-term needs and obligations or diversify their investment portfolios. These assets provide a level of safety and security by reducing the exposure to more volatile, higher-risk investments.
  3. While near money offers liquidity and relative stability, it often provides lower returns compared to higher-risk investments like stocks or long-term bonds. As a result, holding large amounts of near money may result in lower overall investment performance in the long run.


Near money is an important concept in the realm of business and finance because it plays a significant role in a company’s liquidity and overall economic stability. Near money refers to financial assets that are effortlessly converted into cash with minimal impact on their value. Examples of near money include savings accounts, short-term debt securities, and other highly liquid investments. These assets provide businesses with ready access to capital without having to liquidate long-term assets or risk creating panic in the financial market. Furthermore, near money acts as a safety net in periods of economic volatility and offers a quick solution for meeting short-term financial needs, such as paying off debts, managing daily operations, and responding to unforeseen expenses.


Near money, often referred to as quasi-money, serves primarily as a highly liquid asset that can easily be converted into cash. The purpose of near money lies in its ability to provide convenience and stability to individuals and businesses when managing their financial transactions and investment portfolios. These assets offer similar benefits as cash while not being precisely the same. Examples of near money include savings accounts, short-term certificates of deposit, and money market accounts. By holding these assets, market participants are given easier access to funds whenever the need arises, allowing them to capitalize on opportunities or respond to unexpected financial events without sacrificing much on returns or incurring additional risks. Beyond personal or business financial management, near money is particularly useful during times of economic uncertainty or market fluctuations. Central banks and other financial institutions often utilize the concept of near money in their monetary policy strategies. By adjusting interest rates for these near money assets, a central bank can influence the overall economy, either promoting or discouraging investment and spending, thereby stabilizing the economy. In essence, near money helps maintain the proper balance between liquidity and investment opportunities, fostering a healthier financial ecosystem for individuals, businesses, and entire economies.


Near money, also known as quasi-money or cash equivalents, refers to highly liquid financial assets that can quickly be converted into cash with minimal risk of loss. Here are three real world examples of near money: 1. Savings Accounts: Savings accounts in banks and credit unions serve as near money because the funds are easily accessible and can be withdrawn on demand or converted to cash with little to no loss in value. The interest rates on savings accounts are typically low, but the funds remain relatively liquid. 2. Money Market Accounts: Money market accounts (MMAs) are interest-bearing accounts offered by banks and credit unions. They typically offer a higher interest rate compared to savings accounts but may have minimum balance requirements and limitations on the number of transactions per month. Like savings accounts, funds in MMAs remain relatively liquid and can be withdrawn or converted to cash with minimal risk. 3. Certificates of Deposit (CDs): A certificate of deposit (CD) is a time deposit offered by banks and credit unions. It comes with a specified maturity date (ranging from a few weeks to several years) and a fixed interest rate. CDs are considered near money because they can be easily converted to cash by simply waiting for the maturity date or, in some cases, paying an early withdrawal penalty. The associated risks and loss in value are minimal, and the longer the maturity period, the higher the interest rate.

Frequently Asked Questions(FAQ)

What is Near Money?
Near money, also known as quasi-money or near-cash, refers to highly liquid financial assets that can be quickly and easily converted into cash with minimal effect on their value. These assets are not legal tender but possess characteristics that make them easily substitutable for cash.
What are some examples of Near Money?
Examples of near money include savings accounts, short-term government bonds, treasury bills, money market accounts, and marketable securities such as commercial paper and certificates of deposit (CDs).
Why is Near Money important in finance and business?
Near money is important because it provides flexibility, liquidity, and security for businesses and individuals. It supports the efficient allocation of resources in the economy and safeguards against financial uncertainties.
How does Near Money differ from money?
Money, also known as cash or legal tender, is the official medium of exchange, easily recognizable and accepted for transactions without question. Near money, on the other hand, is not a legal tender but has characteristics that make them similar to cash, providing a degree of liquidity for financial planning and investments.
How can Near Money affect monetary policy?
Central banks and policymakers closely monitor near money and its components as it can influence the money supply, interest rates, and overall financial stability. An increase in near money could indicate a potential excess of liquidity, leading to a lower demand for money and lower interest rates.
Can Near Money be used to directly pay for goods and services?
No, near money cannot be directly used to pay for goods and services since it is not legal tender. However, since these assets are easily convertible to cash, you can quickly and conveniently convert near money to cash when needed to make transactions.
Is Near Money risk-free?
While near money is generally considered low-risk due to its liquidity and stability, it is not completely risk-free. Factors such as inflation, changes in interest rates, or market dynamics can potentially affect the value of near money assets.

Related Finance Terms

  • Liquidity
  • Quasi-money
  • Money market instruments
  • Short-term investments
  • Savings account

Sources for More Information

About Our Editorial Process

At Due, we are dedicated to providing simple money and retirement advice that can make a big impact in your life. Our team closely follows market shifts and deeply understands how to build REAL wealth. All of our articles undergo thorough editing and review by financial experts, ensuring you get reliable and credible money advice.

We partner with leading publications, such as Nasdaq, The Globe and Mail, Entrepreneur, and more, to provide insights on retirement, current markets, and more.

We also host a financial glossary of over 7000 money/investing terms to help you learn more about how to take control of your finances.

View our editorial process

About Our Journalists

Our journalists are not just trusted, certified financial advisers. They are experienced and leading influencers in the financial realm, trusted by millions to provide advice about money. We handpick the best of the best, so you get advice from real experts. Our goal is to educate and inform, NOT to be a ‘stock-picker’ or ‘market-caller.’ 

Why listen to what we have to say?

While Due does not know how to predict the market in the short-term, our team of experts DOES know how you can make smart financial decisions to plan for retirement in the long-term.

View our expert review board

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More