Money in its most primitive form dates from ancient times, along with domestic animals, Native American wampum, Yap Island wheels of stone, and the cartons of Chesterfields and Lucky Strikes that served as legal tender in post-World War II Europe.

Even though the Assyrians, Babylonians, and Ancient Greeks were proficient at simple forms of banking, comparatively full service banks weren’t established until 12th century, first in Venice and followed by Genoa. After the Middle Ages the goldsmiths of the European Renaissance became world's first modern bankers. Traveling alone or in small groups was infamously unsafe in Renaissance Europe for those suspected of carrying even modest riches and these safe depositories almost had to materialize. Their business began when people left gold with them for protection, even when it was not to be fashioned into jewelry and ornaments. The goldsmith charged a fee to hold the riches. Sooner or later it struck him that since it was just sitting there he could loan it out for a fee. This was the beginning of account fees and charging interest on loans. A booming business in banking was formed with gold as its asset.

Asset is commonly used as the term that denotes anything of value, primarily any possession that can be turned into cash to cover liabilities. Liquidity describes the simplicity with which an asset can be transformed into the economy’s standard of trade, specifically that which is readily convertible into money. These articles of trade or money takes the structure of a commodity with a built-in value like gold, silver, or cigarettes.

The Oxford English Dictionary's etymology tracing of the term "cash" categorizes it as meaning both hard coin gold, silver, etc., checks, and short-term debt instruments predating the 17th century. Liquid is derived from Latin liquere meaning, “to be fluid”. Asset has its origins in French assez meaning “enough”.

A liquid asset is a valuable that is in cash or otherwise quickly convertible into cash without having to diminish the asset's price very much. Some examples of liquid assets include, but are not limited to, most stocks, bonds, short-term certificates and money market funds. Houses, artwork, boats and star-studded baseball card collections are not liquid assets because they more difficult to value, take time to sell, and the price at which others are willing to buy is frequently less than the market value or book value of the asset.

Fiat money is used as currency due to government decree and doesn’t have intrinsic value. Coins, currency, and check deposits would be examples of fiat money. Another kind of liquid asset of note is called near money--like near beer. It’s a highly liquid asset, which is readily exchangeable into cash. A savings account would be an example of near money, one that has no restrictions and can be easily converted into coins, currency or demand deposits.

Today assets with virtual liquidity are emerging defined as “money (that) is little more than a list of locations or "accounts" in which specified sums are certified to reside and from which they can emerge on short notice to pay bills and satisfy creditors.” Among several examples are credit cards and debit cards that are by now readily recognized , and prepaid "electronic wallets" are well into the test-marketing phase and the retail use of the Internet for money transfer is just getting off the ground.

Sources: :

IU Northwest Dr. Gary Lynch-Outline-Chapter 10:

PKT: feb98 : Rochon thesis on money:

Virtual Liquidity---An Elusive New Form of Liquid Asset:

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