What is the difference between 100 euros in cash and 100 euros in a bank account?
Correct answer
Answer B: Cash is held directly; a bank balance is a claim on the bank.
Quick explanation
€100 in cash and €100 in an account have the same face value but are different forms of money: you hold cash directly, while the bank balance is a claim on your bank.
Detailed explanation
Today’s monetary system contains different forms of money in the same currency. Euro banknotes are issued by central banks. Euro coins are also cash, although their issuance follows different legal and accounting arrangements. Commercial banks additionally hold electronic central-bank reserves for payments between banks.
A household's or business's current-account balance is different. It is a claim against the commercial bank. The bank promises to make payments or convert the balance into cash under the applicable conditions.
In everyday life, €100 in cash and €100 in an account are treated at the same face value. Payment systems, banking supervision, liquidity provision, and deposit protection support this equivalence. Legally and on balance sheets, however, the forms of money are not identical.
Private customers normally do not own central bank reserves. They mainly use cash and commercial bank deposits. Understanding these two levels matters because central banks and commercial banks play different roles in money creation, payment settlement and risk.
Example or everyday application
You can hand over €100 in cash directly. €100 in a current account is instead a claim on your commercial bank that you use, for example, through transfers or card payments.
Common misconception
Many people picture their account balance as banknotes personally stored for them. Bank deposits are instead claims against the bank.
What the sources support
The Bundesbank and ECB distinguish cash from bank or account money. Bitcoin wallet documentation adds the control question: with Bitcoin, direct control depends on who controls the private keys.