I investigate the conditions under which the coexistence of cash (outside money) and credit (inside money) can be supported in equilibrium and be welfare-improving. Asset managers exchange assets to diversify their portfolios using cash and credit with the latter being limited by a non-standard -yet incentive compatible- collateral constraint. If cash is more pledgeable than capital, an equilibrium where cash is “over-leveraged” is welfare-improving. For inflation low enough, debt promises are optimally backed solely by a cash multiple, yielding the emergence of nominal debt contracts.I investigate the conditions under which the coexistence of cash (outside money) and credit (inside money) can be supported in equilibrium and be welfare-improving. Asset managers exchange assets to diversify their portfolios using cash and credit with the latter being limited by a non-standard -yet incentive compatible- collateral constraint. If cash is more pledgeable than capital, an equilibrium where cash is “over-leveraged” is welfare-improving. For inflation low enough, debt promises are optimally backed solely by a cash multiple, yielding the emergence of nominal debt contracts.