They represent a monetary means, the value and purchasing power of which as money is significantly higher than the costs of its issue (the cost of minting, printing), and also higher than the possible proceeds from the sale of the material from which they are made. banknotes, or from their sale as souvenirs. Almost all paper money and most metal money can rightly be called symbolic, fiat. They became money only because the state decreed them in this role.

A very significant place in monetary system and money circulation of developed countries took cash checks. A check is an order to a bank to issue money from the account of the owner of the check to its bearer. Checks are legitimately perceived as one of the forms of money due to the fact that, not being actually money in cash, they fully realize their functions as a means of payment.

Recently, "electronic money" has been widely developed. These include plastic cards - credit and debit. A debit card involves the acquiring client depositing a certain amount of money into a bank account, within which he can subsequently carry out his expenses. A credit card provides credit for a short period of time and in a predetermined amount.

1.3. Role in market economy

Due to the above functions, money plays a key role in the development of a market economy. The social role of money in the economic system is that they are a link between independent commodity producers.

Chapter 2 money market.

2.1. Money market.

The network of institutions that ensure the interaction between the supply and demand for money is usually called the money market. However, this term should be used with reservations. The fact is that the term “money market” means the market for short-term highly liquid securities. Secondly, it should be emphasized that money is not "sold" and "not bought" in the same sense that goods are sold and bought. In transactions in the money market, money is exchanged for other liquid assets at an opportunity cost, measured in units of the nominal rate of interest.

To implement a certain monetary policy, it is necessary to measure the money supply. However, measuring the amount of money is a very difficult task. The problem is that in modern economy various types of assets simultaneously in one form or another perform all the functions of money. Therefore, there are no clear grounds for drawing a line between money proper and other liquid assets.

Maintaining the money supply in the country at such a level that it does not cause either an economic recession or inflation is the function of central banks (the Federal Reserve System in the USA). Influencing the economy by expanding their reduction in the volume of money supply (money supply), these bodies carry out monetary (monetary) policy. The purpose of monetary policy is to create conditions in the money market for the economy to constantly have such a mass of money and loans that is necessary for development, and thereby provide the country with a growing number of goods, services, jobs. On the other hand, central banks must ensure that there is not too much money and credit in circulation, because such surpluses always lead to inflation.

There are difficulties in the way of monetary policy implementation. For example, when the volume of the money supply increases and more money enters circulation, they become cheaper, and banks can lower the interest rate on loans. But the growing supply of money in the market can lead to an increase in spending and thereby increase the rate of inflation. During periods of inflation, the money that borrowers pay to lenders has a lower purchasing power than that which was once borrowed. To make up for the loss purchasing power, lenders must add a certain percentage (corresponding to the rate of inflation) to the rates they would charge in a different situation. Therefore, if the growth of inflation is due to the growth of the money supply, it can actually lead to an increase in interest rates.

To conduct monetary policy in the US, the Federal Reserve has four main tools:

Level change reserve requirements;

Change in the interest rates that banks must pay when they borrow from a central institution (discount rate)

Buying and selling government securities (open market operations)

Determination of conditions for various types of loans (selective credit control).

The first tool assumes that all banks and financial institutions create reserves, that is, set aside a certain amount of money equal to a certain percentage of their deposits. The proportion of deposits that banks must set aside as reserves is called the reserve requirement.

If the central institution concludes that individual consumers and firms are buying too much and that inflation is on the rise, it raises reserve requirements. When they rise, banks will not be able to issue loans to their customers as before. Banks can take additional funds to lend to their customers by borrowing money from the regional branch of the Central Bank, which in a figurative sense plays the role of a banker for banks. The interest rate on loans, which is set in this case, is called the discount (discount) rate. Such discount transactions attract banks when they can charge their customers even more high percent for loans.

This means that if the central institution considers it necessary that more loans be issued, then it lowers the discount rate and vice versa. In general, it is believed that the impact of the interest rate on the economy leads to an increase in economic growth. Thus, reducing the average rate by 1% gives an increase in the annual economic growth of the country by 13%.

Operations on the open market are carried out through the purchase and sale of government bonds, which provide for an obligation to repay the debt with interest. Since in such a case anyone can buy government bonds, this practice is called an open market operation.

If the central financial institution is afraid of inflation and wants to reduce the amount of money in circulation, then it sells government bonds to banks and the public. Money received for bonds can be withdrawn from circulation immediately. Conversely, when the institution again sets out to stimulate a recovery in the economy, the government buys back its bonds, and similarly, quite a lot of additional cash flows into the economy. As the money supply increases, the interest rate decreases and companies borrow more, which increases their growth opportunities and strengthens

competition between us.

Between individual market sectors economic system there is a circulation (closed flow) of income and products. In it, as a kind of liquid, money rotates. The relationship between money and circulation is expressed by the equation of exchange.

The purpose of the money markets is to funnel savings out of the hands of those economic units who earn more than they spend into the hands of units who spend more than they earn. In these markets, direct financing channels operate, through which funds go directly to borrowers in exchange for shares and debt, or indirect, where funds pass through financial intermediaries - banks, mutual funds, Insurance companies.

In fact, today there are several theories of the functioning of the money market. One of them is the monetarist theory of the money market by M. Friedman and A. Schwartz. While the opinion prevailed in economic thought that money is not the main thing in the economy, M. Friedman made a different conclusion: firstly, this theory considers the velocity of money circulation as a variable, not a constant. Secondly, monetary theory allows for a discrepancy between the money supply, indicators of the gross national product and the absolute level of prices. The main recommendation in the monetary policy strategy of monetarist theory is to mitigate the negative moments during the business cycle and the central financial institutions should implement a constantly predictable monetary policy. The constant growth of the money supply in circulation, approximately equal to the three percent level of growth in real volume, characteristic of long-term time intervals, is a scientific monetary policy from the point of view of most monetarists.

Monetarism is only one of the directions of money market analysis.

An important contribution to the development of understanding of its issues was made by the teachings of D.M. Keynes and his followers, which can be considered an alternative to monetarism.

For the theory presented by D. Keynes in scientific work “General theory

employment, interest and money”, important views on the inefficiency of monetary policy and the need to regulate and stimulate the economy through changes tax system and structures public spending. Today, there is a synthesis that includes elements common to both theories. According to the modern Keynesian-neoclassical synthesis, monetary policy and fiscal policy pursued by central government and its financial institutions, provides them with significant opportunities in the field of control over cash GNP. Meanwhile, this new approach does not confirm the confidence of the ability to ensure the prosperity of the economy and defeat inflationary processes.

Banks and their role in the economy

Banks are the main financial intermediary in the economy. The activities of banks represent the channel through which changes in the money market are transformed into changes in the commodity market.

Banks are financial intermediaries, since, on the one hand, they accept deposits (deposits), attracting money from depositors, i.e. they accumulate temporarily free funds, and on the other hand, provide them at a certain percentage to various economic agents (firms, households, etc.), i.e. issue loans. Thus, banks are intermediaries in the loan. Therefore, the banking system is part of credit system. The credit system consists of banking and non-banking (specialized) credit institutions. Non-bank credit institutions include: funds (investment, pension, etc.); companies (insurance, investment); financial companies (savings and loan associations, credit unions); pawnshops, i.e. all organizations that act as intermediaries in the loan.

However, the main financial intermediaries are commercial banks. The word "bank" comes from the Italian word "banco", which means "bench (changers)". The first banks with modern accounting principle double entries appeared in the 16th century in Italy, although usury (i.e. lending money) as the first form of credit flourished even before our era. The first special credit institutions arose in the Ancient East in the 7th - 6th centuries BC, the credit functions of banks in Ancient Greece and Ancient Rome were performed by temples, in Medieval Europe - by monasteries.

The modern banking system has two levels. The first level is the Central Bank. The second level is the system of commercial banks.

The Central Bank is the main bank of the country. In the US, it is called the FRS (Federal Reserve System), in the UK it is the Bank of England, in Germany it is the Bundesdeutchebank, in Russia it is the Central Bank of Russia, etc.

The Central Bank performs the following functions, being:

The issuing center of the country (has a monopoly right to issue banknotes, which provides it with constant liquidity. The money of the Central Bank consists of cash (banknotes and coins) and non-cash money (accounts of commercial banks in the Central Bank)

Government banker (serves the financial operations of the government, mediates payments to the treasury and lends to the state. The treasury stores free cash resources in the Central Bank in the form of deposits, and, in turn, the Central Bank gives the treasury all its profits in excess of a certain, predetermined rate.)

Bank of banks (commercial banks are clients of the central bank, which keeps their required reserves, which allows them to control and coordinate their domestic and foreign activities, acts as a lender of last resort to struggling commercial banks, providing them with credit support by issuing money or selling securities)

Interbank Settlement Center

The custodian of the country's gold and foreign exchange reserves (serves the country's international financial transactions and controls the state of the balance of payments, acts as a buyer and seller in international currency markets).

The Central Bank determines and implements monetary (monetary) policy.

The second level of the banking system is made up of commercial banks. There are: 1) universal commercial banks and 2) specialized commercial banks. Banks can specialize: 1) according to their goals: investment (lending investment projects), innovative (issuing loans for the development of scientific and technological progress), mortgage (carrying out lending secured by real estate); 2) by industry: construction, agriculture, foreign trade; 3) by customers: serving only firms, serving only the population, etc.

Commercial banks are private organizations that have the legal right to raise free cash and make loans for profit. Therefore, commercial banks perform two main types of operations: passive (for attracting deposits) and active (for issuing loans). In addition, commercial banks perform: settlement and cash operations; fiduciary (trust) operations; interbank operations (credit - for issuing loans to each other and transfer - for transferring money); operations with securities; transactions with foreign currency, etc.

The main part of the income of a commercial bank is the difference between interest on loans and interest on deposits (deposits). Additional sources of income for the bank may be commission fees for the provision of various types of services (trust, transfer, etc.) and income from securities. Part of the income goes to pay the bank's expenses, which include the salary of bank employees, the cost of equipment, the use of computers, cash registers, rent of premises, etc. The amount remaining after these payments is the bank's profit, dividends are accrued from it to the holders of the bank's shares, and a certain part can be used to expand the bank's activities.

Historically, banks mainly originated from jewelry stores. Jewelers had reliable guarded cellars for storing jewelry, so over time, people began to give them their valuables for storage, receiving in return jewelers' IOUs, certifying the ability to get these valuables back on demand. This is how bank loans came into existence.

At first, the jewelers only kept the valuables provided and did not issue loans. This situation corresponds to a system of full or 100% reservation (the entire amount of deposits is kept in the form of reserves). But it gradually became clear that all clients cannot demand the return of their deposits at the same time.

Thus, the bank faces a contradiction. If he keeps all his deposits in the form of reserves and does not issue loans, then he deprives himself of profit. But at the same time, he provides himself with 100% solvency and liquidity. If he lends money to depositors, he makes a profit, but there is a problem with solvency and liquidity. A bank's solvency means that its assets must at least equal its debt. Bank assets include the banknotes they hold and all financial resources(bonds and debentures) that he buys from other persons or institutions. Bonds and debt obligations serve as a source of income for the bank. The bank's debt (liabilities) - its liability - is the amount of deposits placed in it, which it is obliged to return at the first request of the client. If a bank wants to have 100% solvency, then it should not lend any of the funds placed in it. In this way, high risk is eliminated, but the bank does not receive any profit in the form of interest on the amount provided on credit and is not able to pay its costs. To exist, a bank must take risks and lend. The larger the amount of loans issued, the higher both the profit and the risk.

In addition to solvency, the bank must have one more property - the property of liquidity, i.e. the ability at any time to give any number of depositors a part of the deposit or the entire deposit in cash. If the bank keeps all deposits in the form banknotes, it has absolute liquidity. But keeping money, unlike, for example, bonds, does not give any income. Therefore, the higher the bank's liquidity, the lower its income. The bank must carefully weigh the costs of illiquidity (ie loss of customer confidence) and the costs of not using available funds. The need to have more liquidity always reduces the bank's income.

The main source of bank funds that can be provided on credit are demand deposits (funds on current accounts) and savings deposits. Bankers around the world have long understood that despite the need for liquidity, a bank's daily liquid funds should be approximately 10% of its total funds placed with it. According to the theory of probability, the number of customers who want to withdraw money from the account is equal to the number of customers who deposit money. AT modern conditions banks operate in a fractional reserve system, when a certain part of the deposit is kept as a reserve, and the rest can be used to provide loans.

In the last century, the reservation rate, i.e. the share of deposits that could not be issued on credit (the share of reserves in the total amount of deposits - (R / D)), was determined empirically (by trial and error). In the nineteenth century, due to numerous bankruptcies, banks were cunning and cautious. The reserve ratio was set by the commercial banks themselves and was, as a rule, 20%. At the beginning of the 20th century, due to the instability of the banking system, frequent banking crises and bankruptcies, the Central Bank assumed the function of setting the required bank reserves (in the USA this happened in 1913), which gives it the ability to control the work of commercial banks.

The required bank reserve ratio (or reserve requirement ratio - rr) is a percentage of the total amount of deposits that commercial banks are not allowed to lend, and which they keep in the Central Bank in the form of interest-free deposits. In order to determine the value required reserves(required reserves) of the bank, you need to multiply the amount of deposits (deposits - D) by the rate of reserve requirements: R vol. = D x rr , where R vol. - the amount of required reserves, D - the amount of deposits, rr - the rate of reserve requirements. Obviously, with a full redundancy system, the rate of reserve requirements is 1, and with a partial redundancy system 0

If we subtract the amount of required reserves from the total amount of deposits, then we get the amount of credit opportunities or excess reserves (in excess of the required ones):

K \u003d R ex. = D - R vol. \u003d D - D x rr \u003d D (1 - rr)

where K is the credit capacity of the bank, and R izb. – excess (above required) reserves.

It is from these funds that the bank provides loans. If a bank's reserves fall below the required amount of reserve funds (for example, due to "depositor raids"), then the bank can take three options: 1) sell some of its financial assets (for example, bonds) and increase the amount of cash, losing interest income on bonds); 2) ask for help from the central bank, which lends money to banks to eliminate temporary difficulties at an interest rate called the discount rate of interest; 3) borrow from another bank in the interbank loan market; the interest paid in this case is called the interbank interest rate (in the US, the federal funds rate).

If a bank lends out all of its excess reserves, this means that it has used its full credit facilities. In this case, K \u003d R est. However, the bank may not do this, and keep part of the excess reserves without lending. The amount of required reserves and excess reserves, i.e. funds not issued on credit (excess reserves), represents the actual reserves of the bank: R fact. = R vol. +R excess

With a reserve requirement rate of 20%, having deposits in the amount of $1000 (Fig. 12.3.), The bank must keep $200 (1000 x 0.2 = 200) in the form of required reserves, and the remaining $800 (1000 - 200 = 800) it can issue on credit. If he issues loans for this entire amount, then this means that he uses his credit opportunities in full. However, the bank can only lend a fraction of this amount, such as $700. In this case, $100 (800 - 700 = 100) would be his excess reserves. As a result, the bank's actual reserves will be $300 ($200 required + $100 excess = $300)

Thanks to the fractional reserve system, universal commercial banks can create money. It should be borne in mind that only these credit institutions can create money (neither non-bank credit institutions nor specialized banks can create money.

The process of creating money is called credit expansion or credit multiplication. It starts when banking money gets in and the deposits of a commercial bank increase, i.e. if cash turns into non-cash. If the amount of deposits decreases, i.e. the client withdraws money from his account, then the opposite process will occur - credit compression.

Assume that bank I receives a deposit of $1,000 and that the reserve requirement is 20%. In this case, the bank must allocate $200 to the required reserves (R obligatory = D x rr = 1000 x 0.2 = 200), and its lending capacity will be $800 (K = D x (1 - rr) = 1000 x (1 - 0.2) = 800). If he uses them in full, then his client (any economic agent, since the bank is universal) will receive a loan of $800. The client uses these funds to purchase the goods and services he needs (the firm - investment, and the household - consumer or housing), creating income (revenue) for the seller, which will go to his (the seller's) current account in another bank (for example, bank P) . Bank P, having received a deposit of $800, will deduct $160 (800 x 0.2 = 160) to the required reserves, and its credit capacity will be $640 (800 x (1 - 0.2) = 640), by issuing which on credit the bank will enable its client to pay transaction (purchase) for this amount, i.e. will provide revenue to the seller, and $640 in the form of a deposit will go to the current account of this seller in Bank Sh. Bank Sh's required reserves will be $128, and credit facilities will be $512.

By providing a loan for this amount, Bank III will create a prerequisite for increasing the lending capacity of Bank IV by $409.6, Bank V by $327.68, and so on. We get a kind of pyramid:

This is the process of deposit expansion. If money does not leave the banking sector and settle with economic agents in the form of cash, and banks will fully use their lending capabilities, then the total amount of money (the total amount of bank deposits I, P, III, IV, V, etc.) , created by commercial banks, will be:

M \u003d D I + D P + D W + D IV + D V + ... =

D + D x (1 - rr) + x (1 - rr) + x (1 - rr) +

1000 + 800 + 640 + 512 + 409.6 + 327.68 + …

Thus. we got the sum of an infinitely decreasing geometric progression with base (1 - rr), i.e. values ​​less than 1. In general terms, this sum will be equal to

M \u003d D x 1 / (1 - (1 - rr)) \u003d D x 1 / rr

In our case, M = 1000 x 1 / 0.8 = 1000 x 5 = 5000

The value 1/rr is called the banking (or credit, or deposit) multiplier multbank = 1/rr

Another name for it is the deposit expansion multiplier. All these terms mean the same thing, namely: if the deposits of commercial banks increase, then the money supply increases to a greater extent. The bank multiplier shows how many times the value of the money supply will change (increase or decrease) if the value of deposits of commercial banks changes (increases or decreases, respectively) by one unit. So the multiplier works both ways. The money supply increases as money enters the banking system (increases in deposits) and decreases as money leaves the banking system (i.e., withdrawn from deposits). And since, as a rule, in the economy, money is both invested in banks and withdrawn from accounts, the money supply cannot change significantly. Such a change can only occur if the Central Bank changes the required reserve ratio, which will affect the lending capacity of banks and the value of the bank multiplier. It is no coincidence that this is one of the important instruments of monetary policy (policy to regulate the money supply) of the Central Bank. (In the US, the bank multiplier is 2.7).

Using the bank multiplier, you can calculate not only the amount of money supply (M), but also its change (Δ M). Since the value of the money supply is made up of cash and non-cash money (funds on current accounts of commercial banks), i.e. M = C + D, then the deposit of bank I received money ($1000) from the sphere of cash circulation, i.e. they already constituted a part of the money supply, and only a redistribution of funds between C and D took place. commercial banks have created money for this amount. This was the result of their lending out their excess (in excess of required) reserves, so the process of increasing the money supply began with an increase in the total amount of deposits of bank P as a result of a loan from bank I in the amount of its excess reserves (credit capacity), equal to $ 800. Therefore, the change in the money supply can be calculated by the formula:

Δ M \u003d D P + D W + D IV + D V + ... =

D x (1 - rr) + x (1 - rr) + x (1 - rr) +

X (1 - rr) + x (1 - rr) + ... =

800 + 640 + 512 + 409.6 + 327.68 + ... = 800 x (1/0.8) = 800 x 5 = 4000

Δ M \u003d x (1 / rr) \u003d K x (1 / rr) \u003d R ex. x (1/rr) = 800 x (1/0.8) = 4000

Thus, the change in the money supply depends on two factors:

1. the amount of reserves of commercial banks issued on credit
2. bank (deposit) multiplier

Influencing one of these factors or both factors, the Central Bank can change the value of the money supply, pursuing a monetary (credit and monetary) policy.

Considering the process of deposit expansion, we assumed that: 1) money does not leave the banking sector and does not settle in the form of cash, 2) credit opportunities are fully used by banks, and 3) the money supply is determined only by the behavior banking sector. However, when studying the money supply, it should be borne in mind that its value is influenced by the behavior of households and firms (non-banking sector), and it is also important to take into account the fact that commercial banks may not fully use their credit opportunities, leaving excess reserves, which they do not lend. And under such conditions, the change in the value of deposits has a multiplier effect, but its value will be different. Let's derive the money multiplier formula:

The money supply (M1) consists of funds in the hands of the population (cash) and funds in current bank accounts (deposits): M = C + D

However, the central bank, which controls the money supply, cannot directly influence the value of the money supply, since it does not determine the value of deposits, but can only indirectly influence their value through a change in the reserve requirement rate. The central bank regulates only the amount of cash (since it puts it into circulation) and the amount of reserves (since they are kept in its accounts). The amount of cash and reserves controlled central bank, is called the monetary base or high-powered money and is denoted by (H): H = C + R

How can a central bank control and regulate the money supply? This is possible through regulation of the value of the monetary base, since the money supply is the product of the value of the monetary base and the value of the money multiplier.

To derive the money multiplier, we introduce the following concepts: 1) the reserve ratio rr (reserve ratio), which is equal to the ratio of the amount of reserves to the amount of deposits: rr = R/D or the share of deposits placed by banks in reserves. It is defined economic policy banks and laws governing their activities; 2) the deposit rate cr (), which is equal to the ratio of cash to deposits: cr = C / D. It characterizes the preferences of the population in the distribution Money between cash and bank deposits.

Since C \u003d cr x D, and R \u003d rr x D, then we can write:

M \u003d C + D \u003d cr x D + D \u003d (cr + 1) x D (1)

H \u003d C + R \u003d cr x D + rr x D \u003d (cr + rr) x D (2)

Divide (1) by (2), we get:

The quantity [(cr + 1)/ (cr + rr)] is the money multiplier or the monetary base multiplier, i.e. a coefficient that shows how many times the money supply will increase (decrease) with an increase (decrease) in the monetary base by one unit. Like any multiplier, it works both ways. If the central bank wants to increase the money supply, it must increase the monetary base, and if it wants to decrease the money supply, then the monetary base must be reduced.

Note that if we assume that there is no cash (C=0), and all money circulates only in the banking system, then from the money multiplier we get the bank (deposit) multiplier: multD = 1/ rr . It is no coincidence that the bank multiplier is often called the "simple money multiplier" (simple money multiplier), and the money multiplier - the complex money multiplier or just the money multiplier (money multiplier).

The value of the money multiplier depends on the reserve rate and the deposit rate. The higher they are, i.e. the larger the share of reserves that banks do not lend and the higher the share of cash that the population keeps on hand without investing it in bank accounts, the smaller the multiplier. This can be shown on a graph that shows the ratio of the monetary base (H) and the money supply (M) through the money multiplier equal to: (cr + 1) / (cr + rr) Obviously, the tangent of the slope is (cr + rr) /(cr + 1) (Fig. 1.).

With a constant value of the monetary base H1, an increase in the deposit rate from cr1 to cr2 reduces the value of the money multiplier and increases the slope of the money supply (money supply) curve, as a result, the money supply decreases from M1 to M2. In order for the money supply not to change with a decrease in the multiplier value (to remain at the level of M1), the central bank must increase the monetary base to H2. So, an increase in the deposit rate reduces the value of the multiplier. reserves), i.e. the larger the amount of excess, not issued on credit, bank reserves, the smaller the value of the multiplier.

The equilibrium of the money market is established automatically by changing the interest rate. The money market is very efficient and almost always in equilibrium, because the securities market is very well acted by dealers who track changes in interest rates and make them move in one direction.

The money supply is controlled by the central bank, so the money supply curve can be drawn as a vertical one, i.e. independent of the interest rate (M/P)S. The demand for money depends negatively on the rate of interest, so it can be represented by a curve with a negative slope (M/P)D. The point of intersection of the curve of demand for money and the supply of money allows you to get the equilibrium interest rate R and the equilibrium value of the money supply (M / P) (Fig. 2. (a)).

Consider the consequences of a change in equilibrium in the money market. Suppose that the value of the money supply does not change, but the demand for money increases - the curve (M / P) D1 shifts to the right-up to (M / P) D2. As a result, the equilibrium interest rate will increase from R1 to R2 (Fig. 2.(b)). The economic mechanism for establishing equilibrium in the money market is explained using the Keynesian theory of liquidity preference. If, under conditions of a constant money supply, the demand for cash increases, people who, as a rule, have a portfolio of financial assets, i.e. a certain combination of monetary and non-monetary financial assets (for example, bonds), experiencing a shortage of cash, begin to sell bonds. The supply of bonds in the bond market increases and exceeds demand, so the price of bonds falls, and the price of a bond, as has already been proven, is inversely related to the interest rate, therefore, the interest rate rises. This mechanism can be written as a logical chain:

An increase in the demand for money led to an increase in the equilibrium rate of interest, while the money supply did not change and the demand for money returned to its original level, because at a higher rate of interest (higher opportunity cost of holding cash), people will reduce their cash holdings by buying bonds.

Let us now consider the consequences of a change in the money supply for the equilibrium of the money market. Suppose that the central bank increased the money supply and the money supply curve shifted to the right from (M/P)S1 to (M/P)S2 (Fig. 2.(c)). As can be seen from the graph, the result is the restoration of equilibrium in the money market by lowering the interest rate from R1 to R2. Let's explain economic mechanism this process, again using Keynesian theory liquidity preferences. With an increase in the money supply, people have more cash on hand, but some of this money will be relatively redundant (unnecessary to buy goods and services) and will be spent on buying income-generating securities (for example, bonds). There will be more demand for bonds in the bond market as everyone wants to buy them. An increase in demand for bonds in the conditions of their unchanged supply will lead to an increase in the price of bonds. And since the price of a bond is inversely related to the interest rate, the interest rate will fall. Let's write a logical chain:

So, an increase in the money supply leads to a decrease in the interest rate. A low interest rate means that the opportunity cost of holding cash is low, so people will increase the amount of cash, and the quantity demanded for money will increase from (M/P) 1 to (M/P) 2 (moving from point A to point B along money demand curve (M/P) D).

Thus, the theory of liquidity preference proceeds from the inverse relationship between the price of a bond and the interest rate and explains the equilibrium of the money market as follows: a change in the demand for money or the supply of money corresponding changes in the supply and demand for bonds, which causes a change in bond prices and through them - in interest rates. A change in interest rates (changing the opportunity cost of holding cash) affects people's willingness to hold cash (preferring its liquidity) and a change in people's willingness to hold cash restores equilibrium in the money market, the equilibrium rate of interest equalizes the amount of cash supplied and demanded .

belong to the group of goods called services. However, in practice, goods are most often called goods - items that can be stored, stored, packaged, mixed, etc.

The movement, the transfer of goods from one owner to another, or, as they say in economics, the circulation of goods, is unthinkable without observing the principle of equivalence (equality) of their value. Its implementation occurs with the help of .

The economic role of money

In a market economy, the price of a product is formed based on its value with a possible deviation. The price of goods is influenced by the ratio of supply and demand, as well as competition, which allows you to reduce the price of goods. The pricing mechanism is aimed at increasing, reducing the level of costs. The money supply is equivalent to nominal GNP, or, in a simplified form, the sum of the prices of goods, if we do not take into account redistributive processes and the repeated counting of material costs, which is generally consistent with the quantity theory of money. The use of money allows actions to be taken to link and balance cash income and expenses. The role of state authorities is great in this, which can help expand the production of certain industries and goods by financing capital investments for these purposes, providing tax benefits.

3. Demand financial assets - these are operations with real estate, (GKO, OFZ), foreign currency, bank deposits, bank certificates, shares of companies. To buy them, "high-efficiency" money is required, i.e. cash or cash in the reserve of the Bank of Russia.

4. Interest rates on financial assets. The modern one establishes an inverse relationship between the demand for money and the growth of asset interest rates. In Russian conditions, this dependence is still weakly effective due to the absorbing effect of other factors. A high level of interest rates on financial assets maintains a high conjuncture of demand for them, reduces the demand for cash and for cash. But in times of crisis stock market financial assets are dumped, and there is an excessive demand for cash rubles and foreign currency.

5. Velocity of money. The higher the velocity of circulation of money, the lower, other things being equal, the demand for money.

6. Set of currency factors. In our conditions, the demand for dollars exceeds the demand for rubles, which makes the task of stimulating the demand for rubles urgent, so that the national currency is the main reference point in the activities of market entities. Money is used to assess the profitability of export and import operations, for cash settlements for these operations. Money is used when making settlements on credit and non-commodity transactions, when compiling the country's trade balance as a result of comparing the volume of exports and imports for a certain period, when summing up in the form of an active or passive trade balance.

7. Needs that go beyond the current financial turnover, is the demand for money needed for expanded reproduction. The size of real money demand is determined by the resource endowment of the subjects. The structure of the money supply in Russia does not take into account the shares of commercial banks and joint-stock companies, government debt obligations. The policy of public debt obligations is subordinated to the tasks of financing the budget deficit and does not affect the problems of economic restructuring, the flow of capital from financial to real sector economy.

8. Demand for money depends on application of modern financial and banking technologies, clarity of operation of the entire system of payment and settlement turnover. The demand for money is reduced after the introduction of an electronic method of transferring securities from one owner to another.

9. Demand for money depends on the intensity of the processes of saving money on the accounts of legal entities and individuals. The growth of savings expands the possibilities of using money in, since the increase in money is ensured by the fact that part of the previously issued money is in bank circulation. Given this property of money, many economists believe that the most important factor in shaping the demand for money is the demand for real money. cash balances because what matters to people is the purchasing power of money, not its face value. Given the value of real cash balances, the effectiveness of the price factor remains. If you count main task assistance economic growth and welfare, then the creation of incentives for the savings of the population and their transfer into savings should help expand the boundaries for the growth of the money supply, financial support for expanded reproduction.

Thus, the demand for money is the demand for funds necessary for commodity circulation, foreign economic transactions for the implementation of financial transactions for the acquisition of government securities. The dynamics of the physical volume of production, as well as prices, have a decisive influence on the demand for money. The basic basis for the demand for money is the cash balances in the accounts of market entities and the propensity of entities to save, trust in the national currency and in the credit policy of central banks. The diverse use of money and its impact on the development of the country are largely based on the fact that products are produced by market entities not for their own needs, but for other consumers, to whom they are sold for money. Manufactured products take the form of goods, and commodity-money relations are formed between the participants in the production and sale of goods.

Features of the manifestation of the role of money in different models of the economy

The role of money in various models of the economy is as follows:

• the impact of money on improvement economic activity;
• strengthening the interest of subjects of economic relations in the development of production with the help of prices and cost reduction;
• the dependence of cash costs on income;
• control over prices, volume and quality of goods and services.

With the existing until recently in Russia command economy the role of money was limited. Money was assigned a supporting role as an instrument of accounting and control by the economic management bodies. The volume and assortment of manufactured products were established by higher organizations for each enterprise in the form of plans in physical and value terms. At the same time, the cost indicators of the planned volume and range of products were of subordinate importance and were calculated on the basis of physical indicators based on prices set by the central authorities.

Produced products were distributed among consumers. When selling products, money and monetary settlements were assigned a subordinate role. With this model of the economy, the role of money is reduced, which is associated with the use of stable prices. Prices remained unchanged with a different ratio of supply and demand and continued to be applied when there was a shortage of goods and their normalized distribution. In such conditions, suppressed inflation arose, accompanied by a decrease in the role of money, since for the purchase of goods it was not so important that the buyer had money, how important was the possibility of obtaining them in accordance with established norms.

However, the use of money makes it possible to determine the total amount of costs. Comparison of planned and actual level the cost price made it possible to assess the deviations of the actual level from the planned one and to apply measures to normalize it. The use of money made it possible to evaluate the implementation of the plan in terms of the total volume of production and develop measures to improve its implementation. However, despite the fact that the use of money increases the possibilities of accounting and control, this does not allow money to be assigned an independent value in the economy.

AT market economy the role of money is greatly enhanced. This is due to the fact that the conditions of economic activity are changing, they are changing into tools and new conditions for managing the processes of production and sales of products arise. In a market economy, commodity producers acquire independence in establishing the volume and range of manufactured and sold products. At the same time, the role of money is enhanced, with their help an assessment of effective demand is given, taking into account which the volume and range of products are formed. Considerations of the profitability of activities are taken into account, which take into account the level of prices for manufactured products and the level of costs.

An increase in the role of money is taking place in retail trade, in which distribution according to norms and coupons has been abolished, and money plays a decisive role in determining the possibility of buying goods. Regulation of the economy by the state is carried out not by administrative, but by market methods.

Plan:

1. Money essence and functions

2. Money as a medium of exchange

3. Money as a measure of value

5. Money as a means of payment

6. Liquidity problem

1. Money essence and functions

Money is a special commodity that is the universal equivalent of the value of other goods and services.

Modern economics highlights five functions of money:

1. The measure of value. Money allows you to evaluate the value of goods by setting prices.

2. medium of exchange. Money plays the role of an intermediary in the process of exchange.

3. Instrument of payment. A function of money that allows the time of payment to not coincide with the time of payment, that is, when goods are sold on credit.

4. Means of accumulation and savings. The ability of money to participate in the process of formation, distribution, redistribution of national income, the formation of savings of the population.

5. Function of world money. Manifested in the relationship between economic entities: states, legal and individuals located in different countries.

It is believed that money performs its task only with the participation of people who use the possibilities of money. It is people who can determine the prices of goods, use money in the processes of sale and payments, and use it as a store of value. Thus, theoretically, any item that performs these functions can be considered money.

Types of money

1. Full money- money, in which the nominal value (the value indicated on them) is equal to the real value of this money, that is, the cost of their production costs.

Commodity money. In ancient times, the only way to get what you want without resorting to force or theft was barter, that is, the exchange of goods without intermediaries (in our time, when exchanging goods, money is considered an intermediary). Suppose some settlement had a large grain harvest in one year, and they exchanged this grain for metal received by people from a neighboring settlement. And everything seems to be fine. But it may happen that the neighbors do not need so much grain, and then the grain will not be in demand and will disappear. And if there are not two parties to the exchange, but more, and each party with its own product. It will be almost impossible to make an exchange.

The inconvenience of barter exchange has led to the emergence of intermediaries capable of satisfying a wide range of requests. These intermediaries were grain and livestock. This is how commodity money was born.

Metal money. Metal money or coins (copper, silver, gold) were made in different forms: at first they were piece, then by weight. Later, the coin began to have distinctive features established by the state: appearance coins, its weight. The most convenient to use was the round shape of the coin, its front side was called - obverse, reverse - reverse, bleed - edge

The first round metal money appeared in Lydia, back in the 7th century BC, on the territory of present-day Turkey. They were made in the form of coins from electrum (a type of gold with a high content of silver). From Lydia, coinage quickly spread to Greece. Each coin had an image of the patron god of the city. Somewhere in the middle of the 5th century BC, coins were brought to a single standard and were minted only from silver and gold. This was done to facilitate trading and to more accurately determine the value of a coin. On each coin there were symbols indicating the place of production.

Greek monetary culture has had a huge impact on modern money. It was the Greeks who were the first to engrave images of living people on coins. After the conquests of Alexander the Great, minting technology using two molds for obverse and reverse extended to all territories under his control. On the basis of this technology, Rome and later Western Europe began to mint coins. In Kievan Rus, the first minted coins appeared in the 9th-10th centuries. Zlatniks - gold coins, and silver coins - silver coins were in circulation at the same time.

Gold coins became very popular. Completely, the countries switched to gold circulation in the middle of the 19th century. Great Britain was the leader among these countries. As you know, she had a huge number of colonies and dominions, so Great Britain ranked first in gold mining.

The properties of gold made this metal the most suitable for fulfilling the purpose of money. But gold circulation did not last long in the world. After the First World War, the demonetization of gold began - the process of the gradual loss of the functions of money by gold. Gold was a competitor to the dollar, so the US tried to abolish gold as the basis of the world monetary system. After World War II, the US set the exchange rate for foreign central banks, at which the dollar was exchanged for gold. This strengthened the global position of the dollar. In the 70s, at the Jamaica Conference, a decision was made to exclude gold from circulation.

2. Defective money- money, the nominal value of which is greater than the real. Their purchasing power exceeds the cost of their production.

Paper money. Paper money is the most important discovery of mankind. Of course, we owe this discovery to the Chinese. As you know, the Chinese created paper, and later printing. Mode of production paper money combined both of these discoveries. The first paper money appeared in China as early as the 800s of our era. It was very difficult to transport metal coins over long distances, so the government thought about creating paper money. It began to pay merchants not with coins, but with special certificates, which were easily exchanged for "hard" money. These certificates depicted people, trees, officials put their signatures and seals. Paper money was most likely brought to the west by travelers returning from China. They appeared in Russia in 1769.

Paper money is very easy to handle. Compared to coins, they are easier to store and convenient for payments. This money is issued by the state. Paper money is protected by special signs such as watermarks, various color schemes, etc. This is done to protect public money. It is very difficult to counterfeit such money.

Paper money has two functions: a medium of exchange and a means of payment. They cannot be exchanged for gold, so they do not go out of circulation. Sometimes, the state, experiencing a lack of funds, issues more and more paper money. But this can be dangerous if you do not take into account the commodity turnover in the country. As a result, paper money "gets stuck" in circulation, and their depreciation occurs.

So, the essence of paper money lies in the fact that they are issued by the state, are not exchanged for gold, and are endowed with a certain course.

Credit money. Credit money arises when the purchase and sale is made on credit. Their appearance is associated with the function of money as a means of payment, where money is an obligation that must be repaid in advance. fixed time real money. At the very beginning of the development of credit money, their goal was: to save paper and metal money; promote the development of credit relations.

Credit money developed gradually: promissory note, banknote, check, electronic money, credit cards.

bill of exchange- a written unconditional obligation of the debtor to pay a certain amount after a certain period of time at a specified place.

banknote money issued by the central bank. They began to be produced in the 17th century. Unlike a bill of exchange, a banknote means an indefinite debt obligation, secured by a guarantee from the central bank, which in many countries is state-owned. Central banks of countries issue banknotes of a certain type and size. Banknotes are national money in the territory of a given country. For the manufacture of banknotes, special paper is used, and measures are also taken to protect banknotes from counterfeiting.

A banknote enters circulation at the moment when banks provide loans to the state and when exchanging foreign currency for banknotes of a given country. Banknotes cannot be exchanged for gold.

Check- a document of a certain form, which contains an order, coming from the legal owner of the account, to pay the bearer of this check, the amount indicated in it. Basically, checks are used to receive cash paper money, in a bank or in another credit institution.

Electronic money. The development of computer technologies already yesterday deprived state central banks of the monopoly on issuing their money and allowed non-state organizations to start issuing their own in parallel. The peculiarity of this money is that it cannot be touched or simply held in the hands. You can't put them in your pocket. It's like they don't exist materially. Nevertheless, this money is not only completely material, but also acquired a number of such remarkable qualities that are not available to ordinary currency. We list just a few of them:

Electronic money has such a degree of protection that it is impossible to fake it even theoretically. If you put them in your wallet, you can be 100% sure that no one will steal them from there;

Since your wallet is created by a computer, and since you can create as many of them as you like, there is no way for third parties to discover them. The secrecy of deposits, as they say, is guaranteed. Moreover, in order to get such a wallet, you are not obliged to give anyone any information about yourself. You can open such a wallet, and after five minutes close it forever;

The amounts of money that you can transfer are determined by you, not by the instructions of the Central Bank. Where you will list them is also determined only by your desire. What you pay is your personal secret, even if you have no reason to make a secret out of it;

With all this, digital money is not impersonal electrons: the one to whom they are intended accurately determines the source of their receipt. Moreover, digital money makes it possible to avoid elementary fraud on the part of the seller: until the buyer receives the goods, the seller will not be able to use the transferred money (the so-called "protection deal");

The conveniences that the owner of an electronic wallet receives can apparently be imagined independently. Since the number of goods and services that can be purchased for electronic money without looking up from your favorite chair is growing like an avalanche, you get crazy time savings - one, and save your priceless nerves - two. Three is that there are already a number of goods and services that you can only purchase with electronic money;

Electronic money holders can give or receive loans;

Multi-banking, multi-currency, amazing performance and resistance to disconnections are also not the last features of digital money.

Of course, digital money, existing quite independently, is closely tied to the usual paper equivalent. At any time, you can convert them into ruble and foreign currency cash or perform the reverse procedure. You instantly replenish your wallet using prepaid cards, such as WebMoney or Yandex.Money, or transfer money from your account from a bank or simply through a bank. You receive cash in your hands through an ATM or through a bank.

money supply is a set of cash and non-cash purchasing and payment means that ensure the circulation of goods and services in the economy, which are owned by individuals, enterprises and the state.

Liquidity- this is the speed (ease) of turning any type of property directly into money.

Groupings of market values ​​according to different degrees of liquidity are called monetary aggregates.

Monetary Aggregates- these are indicators of the structure of the money supply, which differ from each other in terms of the degree of liquidity, i.e. the ability to quickly turn into money.

The most commonly used are the following monetary aggregates:

M 0 - cash;

M 1 - cash + checks + demand deposits;

M 2 - cash + checks + demand deposits + small term deposits;

M 3 - cash + checks + demand deposits + small term deposits + any deposits.

The amount of money necessary for the normal servicing of commodity circulation is determined by the formula called "exchange equation (Fischer equation)"

Where: M - the amount of money;

P - the average level of prices for goods;

Q- aggregate demand for goods and services;

V is the velocity of money circulation.

Law of currency- the purchasing power of money is inversely related to their quantity: the more money in circulation, the lower their value.

2. Money as a medium of exchange

The process of commodity circulation gives rise to the need for money as a means of circulation. It is known that the direct exchange of goods for goods has many inconveniences, leads to the creation of the most complex exchange operations, covering many types of goods.

With the advent of money, the process of direct exchange of goods (T-T) breaks up into two acts, two metamorphoses: sale and purchase. First, a commodity is exchanged for money (C-M), and then money is exchanged for another commodity (M-C). The process of circulation of goods takes the following form: T-D-T. The change in the forms of value, as a result of which the exchange of products takes place, presupposes that the commodity is the starting point and the final point of this process. Money, on the other hand, acts as an intermediary, a means of circulation.

Functioning as a means of circulation, money contributes to the movement of goods from one commodity producer to another, bringing the goods to the consumer, and thereby pushing them out of the sphere of circulation. The money itself, passing from one person to another, remains in the sphere of circulation, being in constant motion, continuously serving the exchange of goods.

For the function of money as a means of circulation, an indispensable condition is the simultaneous and in the same space movement of money and goods. In addition, money, like goods, must be available, that is, really present, since when buying and selling goods, their ideal prices must turn into real money.

The functioning of money as a means of circulation contributes to the development of commodity exchange, as it helps to overcome the individual, temporal and spatial boundaries that are characteristic of the direct exchange of goods for goods. On the other hand, this function of money can reinforce the contradictions of exchange. If in direct commodity exchange the sale of one commodity meant at the same time the purchase of another, then in commodity-money circulation the sale and purchase of commodities may be separated in time and space. For example, if one commodity producer, when selling his commodity, does not immediately buy another, then some commodity producers will not be able to sell their goods, as a result of which there will be a delay in the sale of these goods and exchange will be disrupted.

Initially, in the early stages of the development of commodity-money relations, the function of a medium of circulation was performed by metal ingots (gold). But the exchange of goods for gold bars gave rise to a number of difficulties: they had to be weighed, a sample determined, crushed, etc. Objectively, there was a need to switch to the circulation of coins that are identical in shape and contain known quantity metal by weight and sample. For this stage of commodity exchange, it was characteristic that gold, acting as a universal equivalent, simultaneously performed the function of both a measure of value and a medium of circulation. But the further development of exchange and the specificity of the performance of the function of a medium of circulation by money led to the separation of functions from each other. This contributed to the emergence of special forms of money within them: money of account as a measure of value and tokens of value as a means of circulation.

In the process of circulation, money constantly changes hands: having served one commodity transaction, it serves another, then the next. Thus, money acts as a fleeting intermediary in the exchange of goods.

The transience of money fulfilling the function of a medium of circulation makes it possible to replace full-fledged money by their representatives - defective money, or paper tokens of value. For such a replacement, it is sufficient that the given sign of value is recognized by society as the representative of a certain amount of monetary material.

In modern conditions, the function of a means of circulation is performed by cash banknotes, which cannot be exchanged for gold. Functioning as a means of circulation, they serve those sectors of the economy where there is a simultaneous counter movement of money and goods (services).

The degree of implementation and efficiency of the function of a medium of circulation by banknotes depends on many factors: the level of inflation, the level of development of non-cash payments, the frequency of payments wages workers and employees, the form and size of banknotes, etc. Thus, in conditions of high inflation, the rapid depreciation of money can lead to the fact that they are no longer used as an intermediary in the exchange of goods, and barter is being revived. The introduction and development of the system of cashless payments, associated with a decrease in distribution costs, reduces the scope of money as a means of circulation. Since goods and services are purchased by the population not for cash, but with the help of plastic cards, money here does not act as a means of circulation, but as a means of payment.

3. Money as a measure of value

The function is a concrete specific manifestation of the essence of the economic category. The essence of money is most fully revealed precisely through the functions that money performs in the process of commodity production and circulation. Characterizing one of the sides of the socio-economic content of money, each function reflects the quantitative and qualitative changes in the reproduction process itself and is under their influence. The degree of development of this or that function of money reflects the stages of the evolution of commodity production and circulation.

Different approaches to the definition of the nature of the origin and essence of money give rise to differences in views on the issue of their functions. The list and content of the functions of money are revealed in accordance with the evolution of commodity-money relations, as well as with the change in the material carriers of the types of money. From these positions, one should consider the functions of full-fledged money and their modification in the conditions of circulation of paper and credit money. The most complete description of the functions of valuable money was given by K. Marx in Capital. He singled out five functions of money: a measure of value, a means of circulation, a means of accumulation and formation of treasures, a means of payment and world money. According to the definition of some economists, paper and credit money perform these functions specifically, and according to others, they perform only some of these functions (for example, a medium of exchange, a measure of value, a means of accumulation).

The first constitutive function of sound money is the measure of value, by means of which money can measure the value of all commodities and serve as an intermediary in determining the price.

The results of labor embodied in a commodity must be measured by converting commodity value into exchange value. Only the presence of value in a monetary commodity ensures the simultaneous appearance of commodity and money equivalents at opposite poles and their subsequent exchange in accordance with the law of value.

However, it is not money that makes goods commensurable. All commodities are products of socially necessary labor. Valuable money (gold and silver) can become their measure of value, because they have a value, and because social labor is spent on commodities and gold.

To express the value of the goods, its measurement, there is no need to have cash on hand. Money performs the function of a measure of value as mentally represented, ideal money. Every commodity producer understands that he is not yet converting his commodities into money by giving their value a monetary expression; he does not need a gram of real gold in order to express a large amount of values ​​in gold. However, such an ideal measurement of the value of a commodity in terms of gold is possible only because money really exists as a universal equivalent. The relation between money and commodities imagined by people reflects the actual relation between the value of a commodity and the value of gold.

The value of a commodity, expressed in money, is the price of a commodity, which signifies the equivalence of the value of a definite quantity of a commodity to the value of a definite mass of gold.

The value of money cannot be expressed in itself, so money has no price. Instead of a price, money has purchasing power, expressed in the absolute quantity of goods and services that it can buy.

The price of a commodity corresponds to its value only if the supply and demand for this commodity coincide. In this case, the change in price will occur either in connection with a change in the value of the commodity, or in connection with a change in the value of money (gold). When there is a discrepancy between supply and demand, price deviations inevitably arise from the value of goods. Thus, the prices of commodities depend on the value of the commodities themselves, the value of money (gold), the ratio of supply and demand.

The establishment of the price of a commodity occurs by equating the value of the commodity with a certain amount of gold as a monetary commodity. The amount of gold, its mass is measured by its weight. A certain weight of gold is taken as a unit of measurement of its mass. This unit is established by the state as a monetary unit and is called the price headquarters. Indeed, in order to compare the prices of different goods, it is necessary to express them in the same units, that is, to reduce them to the same scale. Thus, the scale of prices serves to measure the mass of gold (money). The prices of commodities are expressed in a certain number of monetary units, or, in other words, in a certain number of weight units of gold.

It is impossible to confuse the economic function of money as a measure of value and the scale of prices. Money performs the function of a measure of value because it is the embodiment of social labor. As a scale of prices, money acts as a fixed weight of gold and serves to measure its mass, regardless of how much social labor is contained in one gram of gold.

The scale of prices appeared at a certain level of development of commodity-money relations as a technical function of money. With its appearance, there was no need to weigh money - they simply began to be counted (minted coins). The state fixed the scale of prices by law.

Initially, the weight content of the coins coincided with the scale of prices. In the course of historical development, the scale of prices became isolated from the real weight content of the precious metal in the monetary unit. The states by their legislative acts periodically changed the weight content of national monetary units.

With the cessation of the exchange of credit money for gold, for a long time there was a gap between the official and market prices of gold, in connection with which the official price scale lost its original economic meaning. After the abolition at the Jamaica Conference (1976) of the official price of gold and gold parities, the modern banknote price scale has no internal cost basis and is mobile. It develops spontaneously in the market and depends on the amount of money in circulation, that is, with a change in the money supply, the scale of prices changes.

With the circulation of credit money, which cannot be exchanged for gold, the mechanism of action of the function of the measure of value changes. In the economic literature there is no single point of view on the issue of modern money performing the function of a measure of value. Some economists believe that inferior money is representative of gold and replaces it in all functions, including the function of a measure of value. At the same time, a change in the price of gold in world markets has a certain effect on the price level.

A different point of view is related to the fact that the modern price ratio of various goods is based to a large extent on traditions that have developed even when full-fledged money was used. However, it should be borne in mind that price changes occur not only in connection with a change in the scale of prices, inflationary processes, but also in connection with changes in the cost of goods.

In Western economic literature, the function of money as a measure of value is most often identified with the scale of prices. In this case, money is considered as a unit of account. In fact, the function of money as a measure of value is reduced to the function of a means of accounting. So, according to some economists, money in this function allows you to compare the selling price of a product with the price at which it was purchased, and to determine whether the company will make a profit by selling this product. In addition, it becomes possible to track how the value of various assets, sales proceeds and profits change over time. In the textbook "Economics" (authors K.-R. McConnell and S.-L. Brew), the content of this function of money is considered on the basis that society considers it convenient to use the monetary unit as a scale for comparing the relative costs of heterogeneous goods and resources . This use of money allows participants in the exchange to easily compare the relative value of various goods and resources and make rational decisions.

At the same time, almost all Western economists consider the function of a medium of circulation to be the main function of money, and the function of a measure of value is considered as an auxiliary one. The ability of money to measure the value of a commodity is not associated with the amount of social labor expended on its production.

Among economists, there is also a popular point of view, according to which, in the circulation of fiat credit money, the price is confirmed not in gold, but directly in goods. The price of a commodity is based not on the value of money, but on the magnitude of the value of the commodities themselves circulating in this moment On the market. Therefore, the price of a commodity is a form of manifestation of the exchange relation of a given commodity to all commodities, and not specifically to one precious metal, which is fixed with the help of money.

Thus, in the process of evolution, the function of money as a measure of value is modified. Modern money, having no value of its own, performs the function of commensuration of values.

4. Money as a store of value

The allocation of the function of money as a means of accumulation is due to the fact that money can stop the process of its movement and leave the sphere of circulation for some time. The desire to accumulate money is dictated by various circumstances: the property of money in the conditions of commodity production to act as the embodiment of social wealth; the desire of commodity producers to insure themselves against the accidents of the market and to be able to buy the necessary goods, regardless of whether their own goods are sold or not; the need to expand production; the desire to ensure consumption in the future, etc.

Any asset can serve as a store of value. However, money accumulation differs from wealth accumulation in that money is the most liquid form of accumulation. Here value is preserved in its general form, in which it is always ready to enter into circulation as a means of purchase and payment. Money in the function of a store of value is used to preserve its purchasing power and carry it into the future.

As already noted, in the conditions of the functioning of full-fledged money, they were collected in order to accumulate treasures. The function of treasure was performed not only by gold coins, but also by the monetary material itself in its natural form: gold bars, gold items, etc. In this role, money acted as a spontaneous regulator of monetary circulation. So, with a decrease in the volume of production of goods and a reduction in trade, part of the gold went out of circulation and turned into a treasure (thesaurus). When production expanded and trade grew, this gold again entered circulation.

As commodity production developed, the importance of the function of money as a means of accumulation increased. Monetary accumulation has become a necessary condition for the resumption of the process of reproduction. The creation of cash reserves at enterprises ensured the smoothing of violations of the production cycle in individual economic entities, and the reserves on a national scale ensured disproportions in the national economy.

Gold money circulation required the accumulation of gold reserves by central issuing banks, which was used to replenish domestic circulation, exchange tokens of value for gold and international payments. At present, the purpose of the gold reserve for the exchange of signs of value has disappeared due to the demonetization of gold. However, gold is accumulating in central banks as a strategic payment reserve, to maintain the stability of the national currency and other purposes.

Under the conditions of functioning of coins that are not exchangeable for gold, paper and credit money, the function of creating treasures loses its economic meaning, since money that does not have real value of its own does not create real wealth for their owners. They can only be used as a means of accumulation (store of value). At the same time, a necessary condition for the functioning of money as a means of accumulation is the compliance of their quantity with the requirements of the law of monetary circulation. If the amount of paper and credit money exceeds the needs of the economy, then they depreciate and lose their attractiveness as a means of accumulation despite their high liquidity. Then preference is given to more reliable, albeit less liquid, forms of conservation of value.

Acting at the present stage as a necessary condition for social reproduction, the accumulation of money is carried out both at the state level in the form of gold and foreign exchange reserves, and at the level of individual economic entities in the form of deposits or in securities. The population can also accumulate money in various forms.

Different forms of accumulation develop differently. An important task is to attract the savings of the population that are in hoarding.

5. Money as a means of payment

The emergence of the function of money as a means of payment is associated with a higher stage in the development of commodity production - when the acts of sale and purchase of goods were separated in time and space. Thus, when goods are sold on credit, that is, with deferred payment, money is used as a measure of value in setting the price of goods, but is not used as a medium of exchange; they are needed by the buyer as a means of paying off his debt obligation when it falls due. In the process of movement of goods, money does not directly confront them, but enters circulation only after a certain time. In the sale of commodities on credit, there is first a real movement in use-value, and the value of the commodity is ideally expressed in a promissory note; real movement value occurs only when the loan is repaid. In this case, money does not mediate the movement of goods, but completes the process of exchange, carrying out a relatively independent movement.

Thus, if during the functioning of money as a means of circulation there is a simultaneous counter movement of money and goods, then when they are used as a means of payment, there is a gap in this movement.

The discrepancy in time and space of the movement of goods and money may be associated with prepayment or various kinds of advance payments. In any case, a characteristic feature of the function of money as a means of payment is their one-way movement and the gap in time between the transfer of goods (services, works) to the buyer and the receipt of money by the seller.

The functioning of money as a means of payment is not limited to the sphere of commodity circulation. As a means of payment, money acts in non-cash payments; payment of taxes and fees; payment of wages, pensions, scholarships, allowances; the implementation of credit operations, etc. The use of money as a means of payment is expanding significantly in connection with the development of credit and the credit system. At the same time, the sphere of application of money as a means of circulation narrows. Non-cash money is mainly used as a means of payment. Cash performs this function when one of the subjects of payment relations monetary obligations is the population, as well as when there is a gap in time between the occurrence of liabilities in cash and their maturity.

The separation of the movement of money from the movement of goods, the performance of work, the provision of services creates the danger of non-payment by the debtor to the creditor, which is fraught with crisis situations in the economy. Untimely repayment of debt obligations by one of the commodity producers can lead to non-payment of the debt by others and affect the interests of a large number of commodity producers along the chain. In this regard, it is important to reduce the time gap between the movement of money and the movement of goods. The introduction of electronic money into the payment turnover contributes to the acceleration of payments and the reduction of distribution costs. Implementation automated systems settlements, the modernization of communication networks, the widespread use of bank plastic cards can ensure the minimization of the time gap between the movement of money and the movement of goods. However, this does not completely exclude the uncertainty and risks arising in connection with the implementation of this function of money. In a market economy, the risks of using money as a means of payment are especially high, because they are largely associated not with the movement of goods, but with the movement of capital and financial instruments.

6. Liquidity problem

Money is, first of all, a universal measure ("counting unit") of the economic value of market goods. But money is therefore a generally accepted unit of account because it is used as a means of payment for any realizable (sold) good. The "payment" function of money gives rise to the main theoretical and practical problem of money - liquidity problem.

The explanation of the essence of liquidity is contained in the fundamental principle of the modern theory of money - "everything that acts as money is money".

Indeed, the majority of “assets” (this is the term for marketable values ​​that, under certain circumstances and conditions, can be alienated by their owners) are potential money. This ability of any real asset to act as a means of payment (albeit "illegal"), and thus in the role of a kind of money, received in economic theory title "liquidity".

Direct experience tells us that liquidity is a real property of assets in a market economy: any asset for which there is effective demand in the market can potentially act as a means of payment. The point is only in the costs associated with the exchange of this asset for the acquired good (or, more often, for money). "Degree of liquidity" and means the comparative value of the costs of exchanging this asset and similar costs for exchanging another asset (in economic theory, such exchange costs are called "transaction costs" .

Assets can be arranged according to the degree of liquidity. One pole of this long series will be occupied by assets whose transaction costs are minimal. The "champion" among them are cash, possessing the property of direct, direct exchange for any another asset with zero exchange costs - all sellers, always and in any quantity, are ready to accept this “asset” from you. Shortly speaking, cash is a completely liquid asset. At the other extreme, there will be an absolutely illiquid asset, for which there is and will not be market demand.

Between these poles and stay all other assets. It is clear that the higher the liquidity of an asset, the closer it becomes to money, the more it looks like money.

Liquidity characterizes three properties of any asset (value owned by the subject, which he, if necessary, could exchange for another value):

The real possibility of using this asset as a means of payment,

The rate of transformation of a "reliable" asset into means of payment,

The ability of an asset to maintain "in time and space" its original nominal value (the "degree of anti-inflationary stability").

It is no coincidence that most people evaluate their assets as "potential cash", making, in particular, an adjustment for the real degree of their liquidity (turning into cash).

The liquidity of assets is an important characteristic of the market status of an economic agent: the more liquid assets it has, the greater economic opportunities open up for it.

So, it can be argued that practically any alienable market (ie, having demand) asset can act as a means of payment and thus, albeit with losses, as single, one-time money.

How, then, to determine the size of the money supply? Knowledge of the essence of liquidity helps to answer this question: depending on what degree of liquidity is included in the characteristics of the means of payment (circulation). If only absolute liquidity is recognized, then only cash will be classified as a means of payment, if highly liquid assets (for example, short-term government securities) - then the volume of money supply will expand significantly.

The question of how to determine the size of the money supply is not idle: if the monetarists are right who believe that the size of this mass is of decisive macroeconomic importance, then it is necessary to determine what is subject to regulation. The liquidity approach is at the heart of the so-called "monetary aggregates"- groupings of liquid assets in order to calculate their total value.

Questions for the seminar:

1. cash reserve

2. The role of money in the economy

The essence of money is directly manifested in the performance of their functions in the aggregate. At the same time, the use of money is not limited to their participation as an intermediary in the process of exchanging goods. The functioning of money acquires the features of an independent movement, separated from the movement of goods (accumulation of money, transfers, etc.). The currently existing concepts of the essence of money consider the issue from different positions and therefore give unequal definitions of money:

Money is a historical category of commodity production; it expresses economic relations between various participants and links in the reproduction process. Relatively independent commodity producers, not being directly connected with each other, enter into relations through the exchange of products of their labor with the help of money.

Money is the universal commodity equivalent. Only money has the property of general direct exchange for commodities. In barter transactions, the possibilities of exchange are limited by the framework of mutual needs and the observance of the equivalence of such operations.

Money is an absolutely liquid medium of exchange, i.e. product with the highest marketability.

The recognition of modern paper and credit money as a functioning universal equivalent required additional clarification of their essence and functions. Modern money has no real intrinsic value. They perform all the functions because they have a representative value, which they receive in the sphere of circulation. economic credit money

So, money is a special commodity that plays the role of a universal equivalent (general exchange) in the exchange of goods, due to which it expresses the value of all other goods and establishes economic relations (primarily economic property relations) between economic entities.

The economic role of the universal equivalent is that it represents an abstract human labor, which is exchanged for all other goods and creates qualitatively new form movements for product contradictions. The development of commodity production and commodity-money relations, in particular the formation and evolution of money, led to the transformation of the circulation of goods in the process of trade, and the value of goods into price, which is, first of all, the monetary expression of the socially necessary labor embodied in the commodity and the exchange value of the commodity. .

The essence of money lies in the fact that it serves as a necessary active element and an integral part of economic activity society, relations between various participants and links of the reproductive process.

The essence of money is characterized by their participation in:

• * implementation of various types of economic relations;
• * distribution of gross national product (GNP), in the acquisition of real estate, land. Here, the manifestation of the essence is not the same, since the various possibilities of money are explained by different socio-economic conditions;
• * determination of prices expressing the cost of goods. Manufacture of goods (provision of services) is carried out by people with the help of tools, using objects of labor. Produced commodities have a value, which is determined by the total amount of the transferred value of tools and objects of labor, and the value newly created by living labor.

In addition, the essence of money is characterized by the fact that they:

• * serve as a means of general exchange for goods, real estate, works of art, jewelry, etc. This feature of money becomes noticeable when compared with the direct exchange of goods (barter). The fact is that individual goods are also capable of being exchanged for others on a barter basis. However, such exchange opportunities are limited by mutual needs and compliance with the requirement of equivalence of such operations. Only money has the property of general direct exchange for commodities and other values.
• * improve the conditions for maintaining value. By storing value in money and not in goods, storage costs are reduced and spoilage is prevented. Therefore, it is preferable to keep the value in money.

When characterizing money, attention is often drawn to their commodity origin and, accordingly, commodity nature. The commodity origin of money can hardly be in doubt. However, gradually, including in connection with the transition from the use of full-fledged money to the use of banknotes that do not have their own value, as well as in connection with the development of cashless payments, money lost such a feature inherent in goods as their value and consumer value.

In modern conditions, banknotes and money of non-cash circulation do not have their own value, but the possibility of using them as an exchange value remains. This indicates that money is increasingly different from a commodity and has become an independent economic category with the preservation of some properties that make it similar to a commodity.

The essence of money is manifested through the functions they perform. However, these functions can only be performed with the participation of people. It is people who, using the possibilities of money, can determine the prices of goods, use money in the processes of sale and payments, and also use them as a means of accumulation. This approach to the functions of money means that money is an instrument of economic relations in society.