The need to hold cash as a safety margin to act as a ﬁnancial reserve is called the:

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The need to hold cash as a safety margin is to act as a financial reserve for unexpected events such as emergencies or unforeseen expenses. This is called the precautionary motive. The speculative motive is holding cash to take advantage of anticipated price changes, the transaction motive is holding cash to carry out daily transactions, the float motive is delaying or speeding up cash disbursements or deposits to maximize interest earned or minimize interest paid, and compensating balances motive is holding cash to meet the minimum balance requirements on bank accounts.

The Need to Hold Cash as a Safety Margin to Act