in terms of Money and credit
1. The essence of money, its functions and role in a market economy
Credit mechanism and its basic elements
the Evolution of the world monetary system.
1. the Essence of money, its functions and role in a market economy
Money perform five functions. measures of value, a medium of exchange; means the formation of treasures, savings and savings; means of payment; the world’s money.
the Function of money as measure of value. Money as a universal equivalent measure of the value of all the goods. But no money makes goods commensurate and the amount of socially necessary labour; the comparison of their cost possible, because money itself bear it. When metal handling this function was performed by real money (gold and silver), but they expressed the value of the goods is perfect, i.e. in the form of visualize money.
a Form of manifestation of value is the price of the goods. However, the cost of goods used to make the exchange relations in the possibility of quantitative estimates with the help of money. At the stage of formation of commodity relations Denga played the role of money equating to money, other goods, making them commensurable not merely the products of human labour, and as part of the same monetary material is gold or silver.
Difference of trademark applications from direct exchange of goods for goods is different in that it is served by money as a medium of exchange, allowing overcome individual, temporal and spatial boundaries, typical of direct commodity exchange.
However, if the goods go after their implementation from circulation, the money remains in this area, continuously serving the trade. This fact does not lead to liquidation, and to the deepening of the contradictions of exchange, so that the gap between buying and selling goods in one link causes this gap in the other links, which creates the possibility of economic crises. The base of the economic crisis are structural shifts in the production and implementation of the social product.
Feature of the function of money as means of circulation is that this function is carried out, first, real, or cash, money, and, secondly, the value of paper money and credit. Currently, when gold demonetized, the function of means of circulation perform credit money. Stocks and bonds are the reservoir receiving the released funds and from which they are retrieved if necessary.
the Function of money as means of payment. It arose in connection with the development of credit relations in the capitalist economy. In this function, the money used; ¦ selling goods on credit, which is associated with different conditions of production and sale of goods, payment of taxes and charges;the payment of wages to workers and employees. Consequently, money and function of means of payment have their own specific form of movement that is different from the shape of the movement of money as a medium of exchange, which can be depicted as follows:
T-D-T — function of money as means of circulation,
-OD — function of money as means of payment.
this shows that if the function of money as means of circulation is counter-movement of money and goods, when they are used as means of payment in this movement there is a gap. Buying goods on credit, the debtor gives the seller a promissory note, i.e. debt, which will be finally paid only after a certain period of time (3-6 months).
On the basis of the electronic money arose credit cards. They contribute to the reduction of cash payments, servicing retail trade and services, serve as means of payment, replacing cash and checks, as well as simultaneously an instrument of credit, allowing the owner to obtain a short term loan in cash or in the form of deferred payment.
Order using a credit card is as follows. the Consumer receives from the special campaign of the issuing Bank or plastic card which is assigned an account number and a secret code to identify the owner. At the time of purchase of goods or services, the card is presented at the institution, which is included in this system of payment (retail outlets, hotels, gas stations, restaurants etc). The seller shall issue an invoice for the sold goods (services) from the date of purchase, name, card number, etc. the buyer signs the bill. Then the bill is sent to the Bank, which immediately pays for it, and then incassare debt buyer. Once a month, the buyer will receive the total expense that can be paid during the grace period (25-30 days). The buyer may also prolong the payment, he gets the credit that pays a high interest rate of 1.5% per month or 18% per year.
Thus, the value of credit cards is that their use reduces the scope of use of cash and cheques, is a powerful incentive for the sale of goods and the elimination of the crisis phenomena in the economy.
the Function of world money. It originated in pre-capitalist formations, but got the full development with the creation of the world market. In this market the money dropped national uniforms, i.e. act in the form of ingots of gold (995 purity). By the Treaty of Paris 1867, the only form of world money, it was recognized gold. the international money have a threefold purpose and serve as a universal means of payment; General purchasing agent; materialization of social wealth. As an international means of payment, money in the settlement of international balances, mainly on the balance of payments. As an international purchasing means money is used for the outright purchase of goods abroad and pay them in cash (for example, when crop failure — the purchase of grain, sugar and other food products). Sterling unit was created after the abolition of the gold standard in England in 1931, He included the countries of the British Empire (except the dominions of Canada and Newfoundland, as well as Hong Kong), States, closely associated with the United Kingdom (Egypt, Iraq, Portugal). The basis of the monetary unit;! was the maintenance of the former countries of the solid rate against the currency of the country of the hegemon; all calculations were asked to produce in this currency, which was stored in the Bank of England. On the same principle acted Dollar bloc, created in 1933, after the abolition of the gold standard in the United States (USA, Canada, Latin America), as well as the Gold bloc, headed by France.
During and after the Second world war on the basis of currency blocs emerged currency area — sterling, dollar. In addition, on the basis of the Gold bloc did the franc zone, there were also areas of the Dutch Guilder, Portuguese Escudo, the Italian Lira and the Spanish peseta,
«Currency kliring is a payment between countries based on the netting of mutual claims with payment of the balance in cash. Monetary kliring was created in the years of the global economic crisis, 1929-1933 and then got a big spread in the form of bilateral and multilateral clearings (European payments Union from 1950 to 1958), the appearance of which was caused by the aggravation of the problem of international liquidity, or the ability of countries to pay their external obligations. The result was that 60% of international settlements was conducted through the exchange kliring that to^ the end of the 60s, were abolished in most Western European countries, with the introduction of currency convertibility.
In order to increase international liquidity and the replacement of national currencies international reserve currency, the Board of governors of the International monetary Fund (IMF) approved a plan to create a new type of liquid funds — special drawing rights (SDR Special Drawing Rigts — SDR). SDR is issued by the International monetary Fund payment of funds intended for the regulation of the balance of the balance of payments, replenishment of official reserves and payments to the IMF, commensurable with the value of national currencies. In accordance with this plan SDR gratuitously distributed among member countries of the Fund, which opened their account in the amount of SDR 16.8% of their quota. Emission SDR was conducted in small amounts in the early years (1970) was released more than 9,3 billion SDR, during 1979 — 1981 — 12 billion Total share of SDRs in international assets is only 2.5%.
Originally in 1970 in the SDR unit was established firmly fixed gold content as the US dollar — 0,888671, But after two devaluations of the dollar in 1971 and 1973) and the introduction of floating exchange rates since July 1, 1974, the unit value of the SDR was determined on the basis of weighted average rate of 16 currencies of the major capitalist countries, the share of foreign trade which was not less than 1% of world trade.
the Role of money in a market economy. Money plays a key role in a market economy. First, the role of public money, their place in the economic system is that money acts as a community liaison between producers.
If only concretized in a particular subject, with the cost, they are universal condition of social production, «tool» public economic relations of independent producers, the natural weapon of the public work in retailing.
secondly, money acquires qualitatively new role: they become capital, which is carried out through five functions. Thus, the cost of goods produced by enterprises, expressed in money; this money serves as a measure of value and cash capital.
If the company’s products are sold for cash, and used the money to buy the means of production, money serves as a medium of exchange and capital. But if products are sold on credit, but the expiration of the loan term debt obligations are repaid the money, here they serve as means of payment, and capital. Further, if money is accumulated as treasures for the purchase of means of production and the expansion of production in the future, in this case, money and as a treasure, and as equity. And finally, on the global market, money is used in functions and global money and capital.
third, with money going education and redistribution of national income through the state budget, taxes, loans, and inflation.
fourth, in terms of the nationalization of economic relations serve money exchange process between countries, namely, the movement of goods, labour and capital. that is, both the lender and the borrower. This is because banks operate mostly on borrowed funds and, consequently, in relation to the business divisions, population, government — the owners of these funds placed in Bank accounts, act as borrowers. Redistributing concentrated in resources in favor of those in need, banks act as lenders. The same holds true regarding the other side of the credit deals — population, economy, and state; putting the accounts in the Bank of soybean cash, they play the role of creditors, and, asking for the loan into the borrowers.
Interest loan — it’s what sent this loan. Credits can be sent to:
— on the formation of current assets /short-term/;
— on the formation of fixed assets /medium and long — term/.
current assets are the most common target for lending. They consist of several elements:
1. stocks of consumer goods;
2. merchandise shipped, payment term which nezastupil;
tibetica receivable and other assets.It is forbidden to give loans for the following purposes:
1. losses of economic activity of the borrower;
2. the formation and increase of the authorized capital of commercial banks and other business units;
3. acquisition of securities of any enterprise.
the Formation of working capital can be carried out using the following sources:
— the funds of the founders;
— charitable contributions;
— the Bank loans and other credits, the credits belong to the borrowed funds to the borrower.
According to the methods provide different loans:
• a single order;
• according to open a line of credit;
• loan guarantee.
3. The evolution of the world monetary system.
In his development of the world monetary system has gone through several stages. Each stage is different, the basic principles of functioning of the system, but has some continuity to the previous one. Distinguish the following stages:
Bureiskaya monetary system (1867 20-ies of XX century);
hanuska monetary system (from 1922 in 30-ies);
betton woods monetary system (from 1944 through 1976);
Alaska monetary system (1976-1978 years to present).
the First world monetary system formed spontaneously in the industrial revolution of the nineteenth century and on the basis of the expansion of international trade in the form of gold standard. This global currency system called Paris in accordance with the place where he talks about the principles of its functioning. During this period, the national and the international monetary system were identical, and only the gold served the function of world money, getting on the world market, where payments were made by weight.
Basic principles of the gold standard was the following:
set the gold content of the national currency;
gold was performing the function of world money, and, therefore, the universal means of payment;
in circulation banknotes of the issuing Central banks freely exchanged for gold. The exchange was made on the basis of their gold parities, i.e. weight quantities contained in them is pure gold.
the exchange rate can deviate from the monetary parities within the «gold points» (?1%, sothat is, in fact, was a fixed exchange rate);
in addition to gold, international trafficking was recognized as the British pound sterling;
maintained a tight relationship between the national gold reserve and the domestic money supply;
the balance of payments were covered with gold.
the Relative stability of exchange rates provided free movement of gold between countries. The transformation of capitalism of free competition in monopolistic led to the fact that the classical gold standard ceased to correspond to the scale of economic relations, slowed down regulation of the economy, money, monetary systems in the interests of the monopolies and the state. In the beginning of the century increased the economic power of the United States and France, which undermined the position of the UK in the MAM. During the first world war, the exchange of banknotes for gold in the capitalist countries, except the United States, was suspended and the gold standard collapsed. Gold was withdrawn from domestic circulation and were replaced by notes, the magic of gold. In international payment transactions was prohibited the free movement of gold between countries. The end of the first world war and the restoration of foreign economic relations of countries has led to the development of new principles MVS, so came the second stage in the evolution of the MVS, called solotorevsky standard or Genoese monetary system. At the international conference on economic and financial issues in Genoa in 1922, it was noted that existing stocks of gold capitalist countries is insufficient for the settlement of payments in foreign trade and other transactions. In addition to gold and the British pound, it was recommended to use the US dollar. Both currencies designed to fulfill the role of international means of payment, was named motto. Most countries, such as Germany, Australia, Denmark, Norway, introduced solotorevsky standard.Basic principles of Genoa currency systems were similar to the preceding principles of the Paris system. Gold kept the final role of world money, remained the gold parities. However, there were made some changes. Solotorevsky standard represented a form of the gold standard, in which individual national banknotes exchanged not for gold, and other currencies (mottos, razmahivanie in turn to gold. Thus, there are two main ways of exchange of the national currency into gold: direct — to currencies, carrying out the role of mottos (pound, dollar); indirect — for all other currencies this Sistemi this MVS used a free-floating exchange rates. In accordance with the principles of the Genoa system of Central banks of member countries had to maintain a substantial deviations of the exchange rates of their national currencies, using the methods of the foreign exchange regulation (primarily foreign exchange intervention)Rasprostranenie zolotodeviznoho standard cemented possible dependence of some countries from the US dollar and the British pound sterling became the basis of a number of currencies. However motto form of the gold standard lasted long. The global crisis of 1929-1931 years completely destroyed this system. The crisis has affected the motto exchange. In September 1931, the UK was forced to cancel the gold standard, the pound devalued. This in turn led to the collapse of the currencies of India, Malaysia, Egypt. a number of European States, which depended on England in economic and monetary terms. Later it was cancelled in Japan and in 1936 in France. In 1933 in the US, the exchange of banknotes for gold was discontinued, and the export of gold abroad is prohibited, the dollar was devalued by 41%. The abolition of the gold standard led to what was to be the currency conversion magic gold banknotes, i.e. credit denegri and the end of the 30-ies were not stable for MVS — many countries devalued their currencies. The crisis in the monetary sphere in the period of currency of depression 1929-1933 clearly showed that the world monetary system needs reformirovaniie 1944, comes the third stage of the evolution of the MVS — on the Bretton woods Kon conference adopted solitudinis tion standard. based on gold, and two motto currencies — the US dollar and the pound sterling. The latter played a major role, so the more common name of the gold exchange standard. This standard refers only to the international monetary system, the internal monetary system functioned on the basis of Fiat credit money.
Basic principles of the Bretton woods monetary system was:
gold has retained the function of world money;
at the same time was used reserve currency — the US dollar, British pound sterling;
the U.S. Treasury has established the mandatory redemption reserve currency for gold at the official rate of $ 35 dollars for 1 Troy ounce (31.1 grams.), or 1 dollar was equal to 0,88571, gold;
each of the national monetary unit had its own currency parity in gold and dollars;
have fixed exchange rates, the deviation from the exchange parity without permission of the IMF was allowed only in the limit of ±1%;
regulation of monetary relations is international currency-credit institutions — the International Monetary Fund and the International Bank for Reconstruction and Development;
when the violation of the balance of payments was allowed to settle them with gold.
In the postwar period, when he formed the principles of the Bretton woods monetary system, the United Kingdom did not have sufficient gold reserves to the pound sterling could share in the gold, and practically abandoned its functions motto exchange. Thus, the Bretton woods monetary system bet a dollar in a privileged position, which gave economic and political benefits to the United States. In practice, the dollar was almost unilaterally operatonal foreign trade settlements. The U.S. had the right to repay the balance of payments deficit due to its own national currency. E. cancellation of its function of world money;
Smoking gold parities — the pegging of currencies to gold;
the Central Bank was allowed to buy and sell gold as a regular item at the prices of «free» market;
put the standard SDR (special drawing rights), which should be used as the world’s money, and to establish exchange rates, estimates of official assets and other SDR is an international contingent accounts of the monetary unit, which can act as international payments and reserve funds. Emissions SDR performs the IMF. SDRs are used for clearing international payments through accounts special accounts, and as unit of account of the IMF. The functions of the SDR include: regulation of the balance of payments, replenishment of official foreign exchange reserves, the comparison of the value of national currencies;
reserve currencies officially recognized by the US dollar, mark, Germany, UK pound sterling, Swiss franc, Japanese yen, French franc;
is set to a freely floating exchange rates, i.e. their formation on the world currency market based on supply and demand;
allowed self-determination of States of the exchange rate regime.
In 1995, the exchange rate regimes in the MBC was established as follows: (a) floating — 98 currencies, of which: given a set of parameters — 3; adjustable swimming — 36 (for example, NIS, Russia and other transition economies);floating — 56 (all industrial countries);
b) fixed — 67 currency: USD — 23, to the French franc — 14 to other currencies — 7, SDR — 4, to a basket of currencies — 20;
in) mixed swimming — 4: to a single currency (the U.S. dollar) — 4, to a group of currencies — 10 (EMU countries);
9) not subject to the limits of the exchange rate fluctuations;
10) legalized the creation of a closed monetary units, which are full participants in the international monetary system. An example of such an education was the European monetary system (EMU).
the European monetary system (EMS) is a regional monetary system, which is a set of economic relations associated with the functioning of national currencies within the European economic integration. EMU is an essential component of modern MAM. It includes three main elements:
a) the standard ECU. The ECU is conditional collective currency, is based on the 12 currencies of the major countries of Europe, non EU countries in 1995 in a basket of currencies have not yet been introduced exchange Austria, Sweden, Finland. The weight of each currency in the basket is determined by the share of the member state in EU GNP and exports within the Union, therefore, the most important component of the ECU — 1/3 — is a German brand;
b) jointly floating exchange rate fluctuating within 2.25%; August 1993. in connection with the aggravation of currency frames fluctuations widened to ± 15% (European currency snake»);
in) the mechanism of exchange rates and intervention. EMU is an interstate regional currency regulation by providing the Central Bank of the countries of loans to cover temporary balance of payments and calculations related to currency intervention. Currency intervention is the intervention of the Central Bank operations in the foreign exchange market to influence the exchange rate of the national currency by buying and selling government agencies. Regulation of EMU and the emission of the ECU in place until 1994, the European monetary cooperation Fund (EFS), and since 1994 — established the European monetary Institute (EMI).AT the moment in EMU is the realization of the «Delors plan», involving the introduction on 1 January 1999, the European single currency — the Euro. For this step were ready Germany, France and Belgium, odds, which are estimated at 100%. Slightly below the potential of Austria, Spain, Portugal, Italy, Finland, Ireland (70-80%). Followed by Switzerland and Denmark (60-65%). The big question accession to the monetary Union of great Britain (25%)Razrabotan schedule of forming a Monetary Union and a single currency. The first stage, since the spring of 1998, began the organization of the Central Bank (Frankfurt am main), the Council has identified the countries that will be included in the «Euro Zone». As selection criteria are established as follows: the inflation rate should not exceed those in the three countries with the lowest growth rate in more than 1.5 percentage points; the budget deficit should not exceed 3% of GDP; public debt not exceeding 60% of GDP; the exchange rate of the national currency within two years should not go beyond the fluctuations in force in the EMU (±15%).so, in the «Euro Zone» is composed of 11 countries — Austria, Belgium, Germany, Holland, Spain, Ireland, Italy, Luxembourg, Portugal, Finland, France. Not included in the «Euro Zone» Greece (due to a mismatch in criteria), Denmark (constitutional inconsistencies), Sweden and the UK. The second stage began on 1 January 1999 the exchange rates of their national currencies of the countries included in the «Euro Zone», firmly fixed in relation to each other, the Euro is introduced in the form of cash, replacing the ECU in the ratio of one to one. The third stage will begin on January 1, 2002, will be implemented by the circulation of Euro banknotes and coins of a single sample of different categories and will gradually be replaced with national banknotes. In the fourth stage, from 1 July 2002, the national currencies of the participating countries will completely lose its function of money.
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article Summary: the Ministry of education and science Ukraine.odessa national Maritime Academy Department of M and EMB reference work on the subject of money and credit were carried out by the student Boyko O.Vsepr 609021 Odessa PL. The essence of money, its functions and role in the market economicactivity mechanism and its main elementvalue the world monetary system. The list literature. […] loan money
Source: in terms of Money and credit