Opinions differ on the nature of cash. But Zurich based bank Julius Bär uses an unusual term for an important reason.
What is cash? There are multifaceted answers to this question.
Focus on Use
For some, it is a medium in the form of banknotes and coins that facilitates the exchange of goods and services. For others, it is a store of value.
But aside from its function and use, there is another way of looking at cash.
Non-interest-bearing note
It always represents an obligation on the part of the issuer.
In Switzerland, this would be the Swiss National Bank (SNB). Cash is nothing more than a perpetual bond issued by a central bank, according to a publication by the Zurich-based financial institution Julius Bär.
This obligation does not even bear interest, Group Chief Investment Officer (Group-CIO) Yves Bonzon further explained regarding cash.
Inflation as a Problem
From this perspective, banknotes look like bonds with a virtually infinite maturity – if we set aside the fact that banknote series are periodically replaced.
But when investors compare the interest coupon on cash to that of other bonds, cash comes up short.
Perpetual Bond with Zero-Coupon
The statement on cash from Julius Bär is no coincidence. In times of rising inflation, investors do not want to hold low-yielding bonds in their portfolios.
But cash, in fact, pays no interest at all and is therefore the worst form of investment, explained Group CIO Bonzon regarding the situation.
Governments are having serious difficulties refinancing their national debt at current low interest rates. And this is precisely what ultimately applies to cash as well: A country’s zero-coupon debt securities offer investors little return.
The sacrifice of consumption is far too poorly compensated, and the function of preserving value is not properly fulfilled.
Swiss People Have Been Duped
Apparently, there is even a country in the world that has enshrined the existence of cash in its federal constitution.
In doing so, however, it was essentially only the elites and central bankers of that country who cemented their “business model,” because it takes a long time for a constitutional amendment to gain acceptance among the citizens.
We’re talking about Switzerland, the federal government, and the SNB.
So, anyone who understands all the real names behind an issue – such as cash – can also clearly see the marketing tactics of all the various interest groups.
June 24, 2026/kut./ena.
