<p>I'm not a lawyer, but my understanding is, as a matter of US law, cash is not a security because it is explicitly exempted under <a href="http://white-summers.com/wp-content/uploads/2013/05/SECURITIES-LAW-4-23-13-v.1.pdf" rel="nofollow noreferrer">The Securities Exchange Act of 1934</a>:</p>

<blockquote>
  <p>The term ‘‘security’’ means any note, stock, treasury stock, security
  future, security-based swap, bond, debenture, certificate of interest
  or participation in any profit-sharing agreement or in any oil, gas,
  or other mineral royalty or lease, any collateral-trust certificate,
  preorganization certificate or subscription, transferable share,
  investment contract, voting-trust certificate, certificate of deposit
  for a security, any put, call, straddle, option, or privilege on any
  security, certificate of deposit, or group or index of securities
  (including any interest therein or based on the value thereof), or any
  put, call, straddle, option, or privilege entered into on a national
  securities exchange relating to foreign currency, or in general, any
  instrument commonly known as a ‘‘security’’; or any certificate of
  interest or participation in, temporary or interim certificate for,
  receipt for, or warrant or right to subscribe to or purchase, any of
  the foregoing; <strong>but shall not include currency or any note, draft,
  bill of exchange, or banker’s acceptance which has a maturity at the
  time of issuance of not exceeding nine months, exclusive of days of
  grace, or any renewal thereof the maturity of which is likewise
  limited</strong>.</p>
</blockquote>

<p>SECURITIES EXCHANGE ACT OF 1934, Section 3, Part 10</p>

CC BY-SA 3.0
2017-01-23T20:17:54.933Z
2017-01-23T20:17:54.933Z
BKay
<p>I don't think cash could be described as a security... one of the characteristics of securities is that they have imperfect (if very high) liquidity and provide a return (be it fixed or variable). Cash is the definition of liquid and inherently provides no return - you could earn interest on cash by depositing it in a bank but then you are creating a debt obligation in effect - the cash inherently, as in cash in a physical safe, generates zero return nominal by definition. You could think of cash as a debt security where a debt is theoretically placed on the issuer. But: in practice the debt is impossible to pay. You cannot bring a bill into the fed and demand they honour it. So I suppose it would be a debt security in the theoretical sense but it lacks almost all properties of debt securities:
cannot be repaid in practice, never intended to be repaid, perfectly liquid etc, and it has a value that cannot be expressed in terms of anything but itself. </p>

CC BY-SA 3.0
2016-12-23T00:38:33.610Z
2016-12-23T00:38:33.610Z
Robert Brown
<p>I know that cash is a financial asset and securities are defined as tradable financial assets, so cash is a security, right?
<br>Another thing I'm wondering is that whether cash/banknote is a debt instrument or not. <a href="https://en.wikipedia.org/wiki/Security_(finance)" rel="nofollow noreferrer">On wikipedia</a> it is defined as one of a debt securities. </p>

<financial-economics><definition>
Is cash(currency) a security and a debt instrument?
John Richard
# Is cash(currency) a security and a debt instrument?

(Asked by: username_0 on 2016-12-22)

I know that cash is a financial asset and securities are defined as tradable financial assets, so cash is a security, right?
  
Another thing I'm wondering is that whether cash/banknote is a debt instrument or not. [On wikipedia](https://en.wikipedia.org/wiki/Security_(finance)) it is defined as one of a debt securities.

**Tags:** financial-economics, definition

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## 2 answers

### Answer by username_1 on 2017-01-23. Score: 2

I'm not a lawyer, but my understanding is, as a matter of US law, cash is not a security because it is explicitly exempted under [The Securities Exchange Act of 1934](http://white-summers.com/wp-content/uploads/2013/05/SECURITIES-LAW-4-23-13-v.1.pdf):

> The term ‘‘security’’ means any note, stock, treasury stock, security
> future, security-based swap, bond, debenture, certificate of interest
> or participation in any profit-sharing agreement or in any oil, gas,
> or other mineral royalty or lease, any collateral-trust certificate,
> preorganization certificate or subscription, transferable share,
> investment contract, voting-trust certificate, certificate of deposit
> for a security, any put, call, straddle, option, or privilege on any
> security, certificate of deposit, or group or index of securities
> (including any interest therein or based on the value thereof), or any
> put, call, straddle, option, or privilege entered into on a national
> securities exchange relating to foreign currency, or in general, any
> instrument commonly known as a ‘‘security’’; or any certificate of
> interest or participation in, temporary or interim certificate for,
> receipt for, or warrant or right to subscribe to or purchase, any of
> the foregoing; **but shall not include currency or any note, draft,
> bill of exchange, or banker’s acceptance which has a maturity at the
> time of issuance of not exceeding nine months, exclusive of days of
> grace, or any renewal thereof the maturity of which is likewise
> limited**.

SECURITIES EXCHANGE ACT OF 1934, Section 3, Part 10


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### Answer by username_2 on 2016-12-23. Score: 2

I don't think cash could be described as a security... one of the characteristics of securities is that they have imperfect (if very high) liquidity and provide a return (be it fixed or variable). Cash is the definition of liquid and inherently provides no return - you could earn interest on cash by depositing it in a bank but then you are creating a debt obligation in effect - the cash inherently, as in cash in a physical safe, generates zero return nominal by definition. You could think of cash as a debt security where a debt is theoretically placed on the issuer. But: in practice the debt is impossible to pay. You cannot bring a bill into the fed and demand they honour it. So I suppose it would be a debt security in the theoretical sense but it lacks almost all properties of debt securities:
cannot be repaid in practice, never intended to be repaid, perfectly liquid etc, and it has a value that cannot be expressed in terms of anything but itself.


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