Crime Against Humanity: the Holy GAAP, 25

We talked a great deal about these two types of money, the “legal” money issued by the central bank, and the “bank”, “scriptural” money issued by commercial banks; for our purposes here, we set aside the issues related to the “legal” money and assumed that that was the real money, legitimately issued by the lawful holder of monetary sovereignty, in order to concentrate on, and investigate, commercial bank money. Now I think the time has come to make explicit an ambiguity whose presence is implicit in commercial bank scriptural money from the first duck we’ve put in a row: actual money or promise of money?

Let’s start from IAS 32, Appendix, Application Guidance, from its paragraph AG3 previously quoted.
A first remark is that it says that the reason why cash is a financial asset is because it represents the medium of exchange. A medium of exchange does not necessarily have intrinsic value, and “to represent” does not necessarily mean “to be”, hence something enters the financial statement here as a financial asset which may not even be the medium of exchange, which in turn may not have intrinsic value. A bit confusing, but maybe preparatory for something else.
A second remark is that it says that the reason why a deposit of cash is a financial asset is because it represents the right of the depositor to cash or to transfer that right to others. And that’s the point here: when “money” is not physically in our hands but “deposited”, is it still money, or is it a promise of money? After all, IAS 7 in definitions, paragraph 6, tells us that both cash on hand and demand deposits are cash, and this does not help us to get our thoughts in order about money and cash.