Editing Cash (section)

==Motives of cash holding==

In economic theory (according [[Keynesian economics]]), the cash holding of cash (especially [[Fractional-reserve banking#Types_of_money|sight deposits]]) is roughly attributed to three motives:<ref>{{Cite book |title=The General Theory of Employment, Interest and Money |last=Keynes |first=John Maynard |publisher=Palgrave Macmillan |year=1936 |isbn=978-0-230-00476-4}}</ref>
* Transactions motive
* Precautionary motive
* Speculative motive.

The transactions motive covers the business needs of economic subjects, the precautionary motive serves to hold money for liquidity purposes and to provide for crisis situations,<ref>{{Cite journal |last1=Rösl |first1=Gerhard |last2=Seitz |first2=Franz |date=2022-04-08 |title=Cash demand in times of crisis. In: Journal of Payments Strategy & Systems |url=https://www.oth-aw.de/files/oth-aw/Professoren/Seitz/Cash_demand_in_times_of_crisis_JPSS.pdf |journal=Journal of Payments Strategy & Systems |volume=16 |issue=2 |pages=107–119 |doi=10.69554/BFOI8360 |access-date=2024-01-19}}</ref> and the speculation motive, according to [[John Maynard Keynes]], results from the uncertainty about future interest rate developments and relates to financial investments.

In addition to this purely economic importance, there are other aspects of cash use:<ref>{{Cite book |last=Pitters |first=Julia |title=In dubio pro Euroschein: Über den psychologischen Wert des Bargelds. |publisher=Siedler |year=2022 |isbn=978-3-8275-0165-3 |editor-last=Beermann |editor-first=Johannes |series=20 Jahre Euro. Zur Zukunft unseres Geldes |location=Munich |pages=498–510 |language=de |trans-title=In dubio pro euro bill: On the psychological value of cash.}}</ref><ref>{{Cite journal |title=Money as tool, money as drug: The biological psychology of a strong incentive |journal=Behavioral and Brain Sciences |url=https://www.cambridge.org/core/journals/behavioral-and-brain-sciences/article/abs/money-as-tool-money-as-drug-the-biological-psychology-of-a-strong-incentive/3FD8967256F6059739011F8F7C7EFF5E |last1=Lea |first1=Stephen |issue=2 |volume=29 |pages=161–176 |last2=Webley |first2=Paul |publisher=Cambridge University Press |year=2006|doi=10.1017/S0140525X06009046 |pmid=16606498 |hdl=10036/34794 |s2cid=2353982 |hdl-access=free }}</ref><ref name=":0">{{Cite web |last1=Rösl |first1=Gerhard |last2=Seitz |first2=Franz |date=2022-06-01 |title=On the Stabilizing Role of Cash for Societies |url=https://www.econstor.eu/bitstream/10419/261291/1/1808743393.pdf |access-date=2024-01-19 |website=econstor}}</ref>

* Anonymous payment without disclosing personal data
* Trust to the central bank (control and publication of [[money creation]])
* Activation of a reward center in the brain (anticipation of reaching a specific goal)
* Expenditure control (immediate physical payment)
* Tradition (haptic experience, e.g. monetary donation; long-term reliability of value retention)
* [[Inclusion (disability rights)|Inclusion]] (equal participation in economic life for all)
* Identification (symbolic character, solidarity and group membership)
* Educational tool for children (objective handling of assets and expenses)
* Paying a tip as immediate recognition of good service.
In practice, there may be a combination of such motives, with the precautionary motive of preserving value and anonymous payment being decisive. Due to its unique characteristics, there is no perfect substitute for cash. [[Legal tender|Demonetisation]] or [[capital control]] can destabilize the economy if electronic means of payment are not readily available (e.g. [[2016 Indian banknote demonetisation]]).<ref name=":0" />