View source for Template:M intro banking money

{{quote|''“I don’t need [[money]]. I need questions answered. Question number one: Can I have some [[money]]?”''
:—Ford Fairlane, in {{fr|The Adventures of Ford Fairlane, Rock ’n’ Roll Detective}}}}{{qd|Money|/ˈmʌni/|n|{{L1}}
The simplest, most elemental, most basic and yet most ''perplexing'' thing in all of [[financial services]]. In being an abstract, immaterial, token of value, it is a simple, but gravely misunderstood thing. This makes money at its deepest essence, ''[[cunisian]]''. <Li>
A will ’o’ the wisp, a woodland sprite, an ephemerality which floats freely of the mortal chains of commerce. It is [[derivative]] of ''nothing'', beyond the common opinion of merchants in the town square. It is like Sandy Denny, or one of those free-spirited hippie types that dances round toadstools. It cannot be owned, only ''held''<ref>{{ford fairlane bonus plan}}</ref> — which is another way of saying ''whoever holds it [[Ownership|holds]] it, outright, against all the world''.  No-one has a better claim over a unit of money that the one who, [[for the time being]] holds it. <Li> 
What it is not: ''Money is not an [[asset]]. It is not [[property]].'' </ol>}}
{{Drop|C|ash demands your}} total commitment, or nothing. You can’t futz around with it, you can’t declare a [[trust]] over it,<ref>You can declare a [[trust]] over an account that ''holds'' cash, of course: a subtly, but significantly, different thing.</ref> [[pledge]] it, or even hold it for anyone other than ''yourself''. If you ''could'', this would undermine the practical value of money ''as'' money: a £5 note, to be meaningful, must be a token worth exactly £5. A [[bank note]] has no intrinsic value — it’s a scruffy bit of paper. If its [[nominal value|''nominal'' value]] is £5 but you fear that the person giving it to you may not own it — that is, may not have the ''unalienable legal right to give that piece of paper to you''; that there is a risk that some random may snatch it from your hands after you have given up your own precious goods in exchange for it, alleging some prior, superior, ownership right — ''then it does not have a value of £5 any more''. 

It is ''really'' important to the economy that banknotes have the value they say they do. So, cash is a special thing. It has special [[Metaphysics|metaphysical]] properties — or more to the point, it ''lacks'' certain metaphysical properties possessed by ordinary [[chattel]]s.

===''Holding'' cash is different from putting it in a [[bank account]]===
It follows from the above that if you put ''your'' [[money]] in ''your'' [[bank account]], it isn’t ''your'' [[money]] any more. It is the [[bank]]’s. 

''Wait, wha — ?''

Stop. Go see the [[Bank account|article]].
===Whoever holds it holds it outright. No exceptions.===
Transfer of [[cash]] to another person<ref>This is called “[[payment]]”, not “[[delivery]]”, as those who have had to dally with [[Physical settlement|physical]] and [[cash settlement]] wording will, to their chagrin, know.</ref> with the expectation of its return fundamentally, ''necessarily'', creates '''[[indebtedness]]'''. By transferring cash to someone else in expectation of its return, you convert your own ''holding of that abstract token'' into ''a claim on the estate of the person to whom you transferred it for [[repayment]] of that [[debt]]''. [[Indebtedness]] is not in any sense a [[proprietary]] claim over some [[money]]. It is a simple contractual obligation, owed by the [[debtor]], to pay the [[creditor]] an [[equivalent]] amount of [[money]]. But it confers no rights over ''that'' money. There can be no kind of [[bailment]] or [[custody]] arrangement over [[money]]. 

This isn’t just an English law point. It is not a function of the {{t|CASS}} rules. It is fundamental to the nature of [[cash]] in any place, under any law. It dates back to the Code of Hammurabi. 

An instrument whose deposit doesn’t automatically create [[indebtedness]] ''is not [[money]]''. 

Therefore, you cannot eliminate [[credit exposure]] to a person who holds “your” [[money]]. If someone else holds it, it isn’t ''your'' [[money]]. That person owes you an equivalent sum. Event if she has physically and permanently put it aside – that is, she has taken an equal amount of cash out of circulation and put in a vault or something – ''and'' the [[debt]] represented by that cash payment benefits from some kind of statutory protection against claims from other [[creditor]]s there is still some basic credit risk. Even this only amounts to a statutory preference as against the holder which defeats claims of lower-ranking creditors.

===But what about [[client money]]?===
We have much to say about [[Client money|client money elsewhere]]. But the [[beneficiary]] of [[client money]] protection has no [[credit risk]] to the person offering [[client money]] protection because that person never holds the cash in question. It is instead placed on deposit with a third party [[bank]].  The client ''does'' have full credit risk to that third party bank. This tends to surprise those clients who have the dim impression that [[client money]] protection is some kind of amulet; a [[patronus charm]]; a magical cloak of [[mithril]], protecting the [[little pot of money]] in the bank’s vault with their names on it against all machinations of the succubi and incubi who infest their dreams. 

Why ''no'', good sir: [[client money]] merely ''changes'' the banshee to whose freakish conspiracies your [[little pot of money]] is exposed, ideally just to a ''less'' nasty,<ref>I.e., better [[Capital Adequacy Directive|capitalised]] and prudentially regulated, but don’t tell the Extinction Rebellion that: nastiness is in the eye of the beholder of course.</ref> more ''banky'' type of hobgoblin or foul fiend.