Money and Near Money

1. Money includes notes and coins circulated in the economy (legal tender money) and demand deposits (bank money) which act as medium of exchange. But near money includes financial assets like treasury bill, bill of exchange, fixed deposits, bond and debentures.
2.  Money possesses hundred percent liquidity. It can be converted into any goods and services at any time. But near money does not have 100 percent liquidity. It can be converted into money within short without loss of value.
3. Money acts as the unit of account. That means it acts as the common measure of value. The value of all goods and services is expressed in terms of money. Near money cannot perform this function. On the other hand, its own value is expressed in terms of money.
4. Money acts as the medium of exchange. Near money is not a medium of exchange. It will have to be converted into money first for the purpose.
5. Money is not an income-earning asset. But near money is an income earning asset.