Legal Definitions - moneyed capital

Moneyed capital refers to financial assets that are readily available for use in business operations, investment, or lending. It typically includes cash, bank deposits, stocks, bonds, and other liquid investments, as opposed to physical assets like real estate or machinery. This concept is often relevant in tax law, where different types of capital may be assessed or regulated differently, particularly for financial institutions.

Here are some examples to illustrate this concept:

• Imagine a state government implementing a new tax policy. The policy imposes a specific tax rate on the moneyed capital held by banks, such as their customer deposits, investment portfolios, and cash reserves. This tax rate is different from the one applied to their fixed assets, like the physical branch buildings or office equipment they own.

  This example demonstrates moneyed capital as the liquid financial resources a bank possesses, which are treated distinctly for taxation purposes compared to its non-liquid, physical assets.

• Consider a financial regulatory body that mandates investment firms to maintain a certain percentage of their total assets as moneyed capital in highly liquid forms, such as cash or easily marketable government securities. This requirement ensures that the firms can quickly access funds to meet client withdrawal requests or cover unexpected losses, even during periods of market instability.

  In this scenario, moneyed capital refers to the firm's readily available financial resources that are subject to specific liquidity requirements to protect investors and maintain financial stability.

• A large technology company, after a very profitable year, decides to allocate $200 million from its accumulated profits and short-term investments to establish an internal venture capital fund. This fund will be used to invest in promising startups and acquire smaller companies, rather than spending the money on building new manufacturing plants or purchasing additional office space.

  Here, the $200 million represents moneyed capital because it is liquid funds being deployed for financial activities (investing in other businesses), distinct from capital invested in physical, non-liquid assets.