The Demand for Money Holdings by Firms and Households

D. Gareth Thomas () and David S. Bywaters
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D. Gareth Thomas: University of Hertfordshire Business School

Chapter Chapter 4 in The Creators of Inside Money, 2021, pp 51-70 from Springer

Abstract: Abstract This part of the theory examines the desire of agents, for example households and firms, to hold wealth and assets in the form of money balances by identifying the three motives for holding the medium of exchange, which is also a store of value in the form of saving. This will provide a clear description of the nature and origins of liquidity demand, which goes on to show how it can be met by the various banking institutions, providing current and time deposits in competition to other interest-bearing assets such as government bonds. Once the scissors of demand and supply of saved money are applied to the decisions to save within the banking sector, then the rate of interest on saving will appear as a crucial component of the model. In this revised version, there are significant changes to the presentation from the original first edition.

Date: 2021
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DOI: 10.1007/978-3-030-70366-0_4

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