Is it time to think of cash and bank deposits as different currencies?

[Jet Cash]

There seems to be a blurring of the meanings of words like money, currency and cash. Warren Buffet is reputed to have over $2billion in cash, but that won't be banknotes stuffed under his mattress, it will be fiat currency deposits in banks. Similarly people refer to fiat banknotes as money, but money is a medium of exchange with a hard underlying asset value. Strictly speaking, fiat banknotes are no longer. money, as they have no hard asset value. However, most dictionaries define money as a generally accepted medium of exchange. The English pound used to be exchangeable for a pound of silver, but that is no longer the case. The promise of the banknotes to pay the bearer one pound is pretty meaningless today. So what will happen to that promise if the new quasi-crypto currency is no longer called the pound?

Some US states have developed an interesting currency - it is a gold infused note ( not a banknote ), and this indicates the appreciation that there is a need for a hard asset currency. Bitcoin is the only crypto that has a hard asset value, and so do gold and silver coins. My speculation is whether the current banknotes will continue to be used after the current virtual fiat currencies are replaced. Will they cease to have value like the national currencies of countries that were sucked into the Eurozone? Will people try to replace them with new "money" like the gold infused notes, or will they carry on using the old banknotes as tokens?

[crwth]

So basically, you can be considered rich even if you don't have the tangible assets in your hand based on what number is in your bank account. That's it pretty much. I think that poses a problem with cash because of the non-availability of withdrawing money makes it more like it's not yours. The banks would have a problem if they cannot guarantee the amount that they can give to their clients, and I agree with the difficulties in the future.

I'm still quite mixed with it, to be honest, because cashless transactions have always been the future, and we are almost there, to be honest. More applications with crypto would be excellent, but despite all of that, there would still be cash transactions.

Maybe consider cash and bank deposits as digital and the physical type? Which you cannot wholly disregard, any of the two. I can't seem to find good reference material for those gold-infused notes that you are talking about as well.

[slapper]

I know they are both based on fiat values, and governments are trying to reduce the use of cash, but many people seem to be withdrawing large amounts of cash at the moment. Obviously they are expecting difficulties with the use of banking accounts in the future. I suspect that they are expecting a financial reset, as governments try to replace the current virtual currency with a pseudo-crypto currency. Cash may become important in the transition period.

Bitcoin and alternative crypto currencies do provide alternatives,but they may continue to be slow in adoption. Cash has been trusted for many years despite the fact that it is a depreciating asset, and I believe that it will continue to be used after the change from the current banking system. Obviously banks will resist this, and any cash deposits will be withdrawn to reduce the supply. This could lead to an increase in the value of cash based on the current fiat currency, always providing that the public continues to use it of course.

Actually, the banking system works very well up to now. They always make something new in order to be suitable for everyone. Withdrawing money does not mean that the bank is losing its strength. The world is in the middle of a crisis and therefore, people want to keep the money close to them so as to deal with daily needs. There are still many benefits created by cash which can not be replaced in the near future. And cash is still being controlled by the bank and the government. You can never change that. After all, money is just a tool for people to manipulate everything

[bitgolden]

I feel like maybe digital currency thing is just all about numbers, not crypto by the way, the money you have on your bank that you never spend, all that looks like just a regular numbers play and not really all that realistic to me.

The funny thing we all see online for example about how "world owes 40 trillion dollars" and all that and everyone is asking like "who do we owe it to, sun?" makes sense to be honest, everyone owes money to each other, and I mean everyone, nobody is debt free, individually you owe taxes to government if you do not owe to banks, and those same banks just uses the money they have on their vaults and even more just to both invest and give out loans to make more money, well there is a limited amount of money, how could everyone pay it back with interest if there isn't that much money to begin with?

[The Sceptical Chymist]

Jet Cash, great to see you're still around.

I hadn't heard any news about cash hoarding, so thanks for that link to the article--but it was from April (as stompix pointed out), when people were really freaking out about what was going to happen with COVID-19.  I remember going to the grocery store around the time when the outbreak was declared a pandemic, and the cat food shelves were nearly empty.  People were starting to hoard all sorts of stuff.

Governments could demonetize paper currency and coins if they wanted to, and they could thus force citizens to use the banking system (or create an electronic currency themselves, as OP alluded to).  I think China is or was headed down that path, but I'm hoping N. America, Europe, and the rest of the developed parts of the world don't consider it.  I would hate to lose the ability to use physical money as a means of payment, especially when the power goes out.

I'd also hate to use a digital form of money issued and tracked by the government.  The banking system is bad enough, but the loss of privacy would be devastating--to me, at least.  Seems like most people don't care about anonymity when it comes to their financial transactions.

[Findingnemo]

People who deposited large amount of cash in their bank accounts are not really smart enough to understand about these things in my opinion, I guess they are doing it just because of usage purpose because banks are not user friendly with their payments to be honest,so of they have they can use it in the way they want and also another reason could to for buying gold.

[shield132]

I know they are both based on fiat values, and governments are trying to reduce the use of cash, but many people seem to be withdrawing large amounts of cash at the moment. Obviously they are expecting difficulties with the use of banking accounts in the future. I suspect that they are expecting a financial reset, as governments try to replace the current virtual currency with a pseudo-crypto currency. Cash may become important in the transition period.

Bitcoin and alternative crypto currencies do provide alternatives,but they may continue to be slow in adoption. Cash has been trusted for many years despite the fact that it is a depreciating asset, and I believe that it will continue to be used after the change from the current banking system. Obviously banks will resist this, and any cash deposits will be withdrawn to reduce the supply. This could lead to an increase in the value of cash based on the current fiat currency, always providing that the public continues to use it of course.

What gives us a reason to say that many people seem to be withdrawing large amounts of cash at the moment? Personally I haven't seen such fact and news too. Is there any reliable website that states statistics? Things are going as they were in past, personally that's what I see.
Also I want to say that people aren't that much interested in economics and they don't think like oh, governments are going to make fiat useless and I think me and my friends have to use alternatives like cryptocurrencies in order to escape from this situation me and population. No! People don't think that way and don't give a much shit to that.

The benefits of cash is that it can be untraceable if two or more persons that have a deal trust each other blindly and are a men of their words. That's were cash shines.

[exstasie]

Banknotes give you freedom as well.

Anyway this thread was intended to be speculation about the future,rather than comments on the past or present. I'm holding banknotes just in case there are difficulties in the future.

Beware, those banknotes can be demonetized. Just ask Indians who were holding large denomination bills in 2016. They had to deposit all that cash into the banking system or otherwise risk losing all its value. There were widespread and prolonged cash shortages at the same time.

https://en.wikipedia.org/wiki/2016_Indian_banknote_demonetisation

Cash is one exit plan, but it's best to have multiple. BTC and physical gold are a couple other reasonable options.

[Wexnident]

Hmmm, imo digital fiat has always been what we've always needed, especially to make it a lot easier in the sense of probably everything? Even if we do consider the money inside the bank and a centralized digital wallet controlled by the government different, it'd still only take a tap wherever you are to transact a withdrawal, but if they combined both (wallet and bank) then that would make things a lot easier. Still, I think there's no need to differentiate the two, since it's more like you're just putting your money in a storage, and you can't really call it a different currency by then right?

Still, I highly doubt that the existence of fiat banknotes would disappear anytime sooner. Before cashless transactions are made a thing, a lot of things need to be worked on, especially in third world countries. Still though, I highly doubt it would make a big influence on a possible financial reset, especially since it's a centralized asset. I'm pretty sure most would rather go for the old but gold (literally) or Bitcoin.

[ampu]

Banknotes give you freedom as well.

Anyway this thread was intended to be speculation about the future,rather than comments on the past or present. I'm holding banknotes just in case there are difficulties in the future.

The bank is currently encouraging people to transfer more money using mobile apps and internet banking. I think the numbers in our account are generated by the bank itself and it looks more virtual than the cryptocurrencies in the market. I think they are creating a habit of not using cash for people. Cash is completely different, they have value in existence, anonymity, and cannot track transactions.

[Salauddin1994]

I don't know when to think of cash and bank deposits as different currencies but both help in different ways. If the usable portion of the FC and NFCD accounts of the banks is used to supply liquidity in the local interbank money market instead of cash, it will be possible to reduce the current interest rates on loans and deposits through cash. Deposits in banks are usually made with the future in mind. Banks can take advantage of this for a short period of time but in the case of crypto, it is completely different because crypto is not under anyone's control.

[Jet Cash]

Well, since we have a zero reserve policy at the moment, banks don't need deposits to lend money. In fact deposits can be a nuisance, as they cost money to maintain. However, they do bring in customers to be persuaded to take out loans, and then their assets can be repossessed when they lose their jobs.

Money in the form of gold coins and bullion bars is still used as a currency amongst the elite, and the UK government gives them various tax breaks to do this. I guess this is because they know the true value of fiat currencies.

[Mauser]

Well, since we have a zero reserve policy at the moment, banks don't need deposits to lend money. In fact deposits can be a nuisance, as they cost money to maintain. However, they do bring in customers to be persuaded to take out loans, and then their assets can be repossessed when they lose their jobs.

Money in the form of gold coins and bullion bars is still used as a currency amongst the elite, and the UK government gives them various tax breaks to do this. I guess this is because they know the true value of fiat currencies.

As long as the government is still guaranteeing bank deposits until a certain level we should be fine.  Of course cash at home is different to money at the bank because it's just not the same availability. Most banks have a limit of daily or weekly withdrawl, so full access on your money might not be really there and it could take a few weeks to get all our money converted into cash. But on the other side there are security risk with having a large amount of cash at home.

[MCobian]

In value it may be said to be the same between cash and bank deposits, but the function must be different. So it can be said that the two of
them are different currencies. Now that the number of cash withdrawals is increasing, maybe many people need to buy daily necessities.
Therefore cash withdrawals in various countries are limited by the government, this is the goal so as not to have too much cash money
circulating.

[Jet Cash]

The government only guarantees to replace valueless fiat with more valueless fiat if a bank becomes insolvent. Now that bail-ins have become legal, a bank is unlikely to become insolvent, as it can take your deposits to cover its toxic loan losses. ( and pay bonuses to incompetent ot fraudulent executives).

Cash will become more important as banks chase down credit limits. This means that if you pay money into an overdrawn account, then the bank will reduce your credit limit to absorb the deposit. You may need to maintain the overdraft for daily living expenses. Once you realise the risk, then you will keep your money in cash, and use that to pay for your daily expenses.

[Ucy]

I know they are both based on fiat values, and governments are trying to reduce the use of cash, but many people s...... that the public continues to use it of course.

Actually, the banking system works very well up to now. They always make something new in order to be suitable for everyone. Withdrawing money does not mean that the bank is losing its strength. The world is in the middle of a crisis and therefore, people want to keep the money close to them so as to deal with daily needs. There are still many benefits created by cash which can not be replaced in the near future. And cash is still being controlled by the bank and the government. You can never change that. After all, money is just a tool for people to manipulate everything

The world is in the middle of a crisis

That👆 got me abit confused... So, I had to check again what "middle-class" means and what crisis they are talking about:

Middle-Class by https://www.thestreet.com/personal-finance/working-class-vs-middle-class-14881073 :

"They make more than the poverty line, and may even technically make enough to be earn a middle class by
income , but they still live paycheck to paycheck. Working class today describes having a job but feeling poor, or making enough to get by without much else"

Guess this sounds fair. Other definitions focus more on civil servants and those who "live on paychecks" or something. Made me wonder if they also factor in numerous self-employed "middle-class", and "wealthy" self-employed.

[exstasie]

The government only guarantees to replace valueless fiat with more valueless fiat if a bank becomes insolvent. Now that bail-ins have become legal, a bank is unlikely to become insolvent, as it can take your deposits to cover its toxic loan losses. ( and pay bonuses to incompetent ot fraudulent executives).

Cash will become more important as banks chase down credit limits. This means that if you pay money into an overdrawn account, then the bank will reduce your credit limit to absorb the deposit. You may need to maintain the overdraft for daily living expenses. Once you realise the risk, then you will keep your money in cash, and use that to pay for your daily expenses.

Well is fiat valueless, or does cash have value? Which one is it?

I think you're focusing too much on the bail-in risk and not enough on the demonetization risk. Legal tender can lose its status at any time. Whether you're holding cash or bank deposits, holding fiat money at all exposes you to sudden risk of devaluation. So you certainly don't want to put all your eggs in one basket (cash).

I'm also a bit unclear on this scenario you're suggesting. Bail-ins claw back a percentage of customer deposits, so they should never make customer accounts negative. Where do these overdrafts and credit limits come into play?

[int03h]

I think nature is different. Cash is anonymous and has immediate value remaining money in a bank account that may belong to the bank. If you want to make a large amount of money transaction, a bank officer will call you and they may ask you to come to the bank to make the transaction. When there is too much money in your bank account, you become a target for government audits.
The most important thing is the liquidity and safety we can have stablecoins with staking capabilities.
https://bitcoinist.com/stablecoin-staking-is-finally-possible/

[verita1]

Venezuelans no longer make cash deposits in banks due to the high inflation we have. This situation has been going on for at least three years.

In times of pandemic, banks open their offices one week, and the following week they remain closed. Users can only withdraw cash less than $ 1 daily.

Cash circulates between merchants and consumers. There is also a circulating of the US dollar to a lesser extent.

The supply and demand of goods and services are paid through debit cards, mobile payments, transfers, cash and US dollars.

I can take advantage of the low prices on my purchases if I pay in cash.
This situation is an overwhelming because it results in the high prices of goods and services.

[beerlover]

They have been different things for the past 40 or so years and never been the same thing. Obviously speaking they haven't been the same thing a lot longer before technology caught up as well since the first time banks were a thing or even a treasure was a thing, but it became a lot more professional and legal in the past 40 years. After 80's banks and similar places realized that they could take cash and they could leverage it up a ton more than what they have, they have done it.

So, if you think that cash in your hands is more powerful than the money in the bank, you are 100% right. Plus think of all the rich people, Jeff Bezos said to have 200 billion worth for example, do you think he has 200 billion dollars on bank account? No. He doesn't even have that, he has assets worth that much let alone cash itself. So, there are layers to it too.