The desire to hold money in order to finance transactions. The transactions to be financed include both current and capital account payments. The amount of money required seems certain to be an increasing function of each type of transaction. There is no fixed ratio between transactions and money balances; use of credit allows the timing of cash settlements to be deferred, and it is possible to economize on money holdings, at some cost of organizing cash budgeting and careful record-keeping. The desired ratio of cash to transactions may also be affected by interest rates and expectations of inflation. See also demand for money.