What is Elastic Money?

Flexible money is money that can be flexibly and easily converted into its existing form. There are usually two ways to convert currency in circulation: (1) Mutual conversion of cash currency and deposit currency. For example, when an enterprise withdraws deposits and pays wages, the currency of the deposit will decrease, and the currency of the cash will increase; while when the commercial enterprise sends the sales income (cash part) of the goods to the bank, the currency of the currency will decrease, and the currency of the deposit will increase. (2) The mutual conversion of time deposits and demand deposits in the deposit currency. Due to different levels of productivity development and different currency management systems, the flexibility of various currencies in different countries is also different. Generally speaking, the elasticity of cash currency is large, and the elasticity of deposit currency is small. Among the deposit currency, the elasticity of demand deposit is large, and the elasticity of time deposit is small. ^[1]