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Money and credit - Ivanov V.M.

1.2. The essence of money and credit

In the economic literature there is no single definition of the essence of money. Most often found are:

money is what makes money. Everything that functions as money is money (C. McConell and S. Brue);

• money - a generally accepted means of payment, which is accepted in exchange for goods and services, as well as in the payment of debts (I. Fisher);

• money is a special product serving the universal equivalent (S. Dzyubik, O. Rivak).

These definitions, according to A. Korovsky, follow from the historical aspect of the appearance of money. He rightly states that money serves as a means to measure and express value. So, when buying a product with the help of money, its value is measured. The seller sets the amount of money that he wants to receive for his goods, and the buyer names the amount that he can give for him. Thus, in developed commodity production, the value of goods is expressed in cash.

However, not at all historical stages the cost of goods and services was expressed in money. Even in modern conditions, the possibility of exchanging goods without using money is manifested in barter agreements, when the cost of goods sold and services rendered is expressed in goods and services offered in exchange. In particular, the cost of a ton of oil is expressed in a certain mass of sugar.

A product that can be exchanged for all others is called the universal equivalent,

The emergence of a universal equivalent has eliminated many of the shortcomings inherent in the full, expanded form of value. First of all, there was no need for multiple exchanges to obtain the necessary goods.

But in different regions different goods were used as an equivalent, which hindered the development of trade between regions.

The expansion of trade between different peoples and territories led to a gradual transition to a common product for all, for which it would be possible to exchange their products. This product began to play the role of the universal equivalent, which is money. Gold is most suitable for fulfilling the role of money due to its ability to be stored for a long time. Gold can also be divided into parts. Compared to other equivalents, it is easier to transport and store.

From this we can conclude: money is a special product that is the universal equivalent. With the advent of money, the commodity world was divided into two poles: on one focused all goods as certain useful things and use values, and on the other - money as an expression of the value of these goods.

A loan is an economic relationship that arises between the lender and the borrower when the cost is redistributed on a repayment basis and with interest paid.

Parties involved in loan agreements are called entities.

The object of the loan is the loan value in cash or commodity form.

The most common is a loan between a bank and an enterprise.

With the introduction of commercial credit and bill payments, credit relations between enterprises and business organizations have been widely developed.

Credit relations between banks and the state arise when the country's commercial banks buy bonds of the domestic government, and the national bank - government bonds.

Credit relations between enterprises and the population are carried out through pawnshops, financial companies, etc.

Foreign economic credit relations arise if the subjects of the loan agreement are states, banks and individual enterprises. Such relations are regulated by the legal norms of these states and international law.