411-412) doubted whether is it possible to draw a sharp line between what is money and what is not, and noted that all sorts of 'near-money
' had already existed in his time.
* Stefan Nagel, University of Michigan and NBER, "The Liquidity Premium of Near-Money
Assets" (NBER Working Paper No.
Local investors should diversify with emerging market bonds and keep cash for opportunistic investment." He encouraged staying liquid by keeping larger cash, or near-money
balances than in the past, but cautioned that cash will remain a place to hide, rather than make significant returns.
With regards to the various regulations governing banks and other financial institutions, there are broad characteristics dealing with relationships between various balance sheet items which favour the development of an active money and capital market by inducing these financial institutions to trade in money, near-money
, short-term assets, on the one hand; medium--and long-term securities, on the other, among themselves or with non-bank institutions and individuals (Falegan, 1987).
Resources will not be wasted searching for and using near-money
It follows from this, however, that it would be unwise to construct aggregates such as M4 (which includes building society deposits as the only near-money
asset) as such an aggregate would be prone to destabilising substitutions between assets within and assets outside the aggregate.