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Money and credit - Ivanov V.М.

6.2. Elements of the monetary system

Modern monetary systems of different countries, in spite of certain features, have many common features. They include the following elements: monetary unit; Price scale; Types of money that are legal tender; The issuing system and the state apparatus for regulating money circulation.

Currency - established in law banknotes serving for expression and of comparing the prices of all goods and services. It, as a rule, is divided into small proportional parts. In most countries there is a decimal division system (1 US dollar - 100 cents, 1 English pound sterling - 100 pence). The name of a monetary unit (national currency), as a rule, arises historically, but completely depends on the state, which by its legislative act fixes (or changes) this name. For example, in Russia - the ruble, India - rupee, the US - dollar, Poland - zloty.

By the way, the name "ruble" was fixed for a monetary unit of Russia many centuries ago. According to most researchers, this term arose from the word "cut". They cut silver ingots of a certain form, called hryvnia, and played a leading role in the money circulation of an even earlier (pre-turn) period.

After the collapse of the Soviet Union and the declaration of the former union republics, the monetary system underwent changes in sovereign states. A number of republics introduced their national banknotes and gave them the appropriate names: for example, in Ukraine the hryvnia began to refer, in Lithuania - litas, in Latvia - lat.

Hryvnia - a monetary unit of weight and the time of Kievan Rus Yaroslav the Wise. The weight of the hryvnia is approximately equal to a pound of silver. The name comes from the name of the hoop of gold or silver, which women wore around the neck as an ornament. For convenience, the hoops were cut to pieces, which independently entered into circulation. This served as the basis for the name of the currency - the ruble. During the days of the UPR (1918-1920), the Bank of Ukraine issued credit cards for hryvnia. In 1991, after the proclamation of independence on the basis of a thousand-year tradition, the Supreme Council of Ukraine decided to call the hryvnia currency of Ukraine.

The scale of prices - a means of expression of value in monetary terms, based on a fixed amount of money the government weight of the metal in the monetary unit. Usually, when establishing new monetary systems, carrying out monetary reforms, devaluations and revaluations, the state established the gold content of the monetary unit, which was an important element of the pricing system in the country. For example, with the denomination of the ruble in 1961, its gold content was set at 0.987412 g of pure gold, although the currency was not exchanged for gold. By the way, now no country in the world exchanges money for gold. In those countries where the gold content of monetary units is legally preserved, it has lost economic meaning. The scale of prices is actually formed under the influence of supply and demand, serves to measure the value of goods through price.

Types of money, which are legal means of payment, are primarily credit money, as well as paper money. So, in the USA in circulation there are bank tickets in 100, 50, 20, 10, 5, 2 and 1 dollar (issue of tickets worth 500 dollars and more is stopped), treasury notes (tickets issued by the US Treasury) of $ 100, and also Silver-copper and copper-ni-kele coins in 1 dollar, 50, 25, 10 and 1 cent. In economically developed countries, as a rule, state paper money (treasury notes) is not produced or produced in limited quantities, whereas in underdeveloped countries they have quite a wide circulation. For example, in Indonesia, banknotes worth 10,000, 5,000, 1,000, 500, 100 rupees, treasury notes - 200, 100, 25, 10, 5 and 1 rupees and coins - 100, 50, 25, 10, 5, 2 and 1 Sep (1 Sep equals 0.01 rupees).

Emission system - legally established procedure for the issuance and circulation of bank notes. Issue operations (operations on issuance and withdrawal of money from circulation) in the state are carried out by:

• a central (issuing) bank that enjoys the exclusive right to issue banknotes (banknotes), which constitute the bulk of the cash circulation;

• The Treasury (the state executive body), issuing small paper money notes (treasury notes and coins made from cheap metal), which account for about 10% (in developed countries) of the total cash issue.

Issue of banknotes is carried out by the central bank in three ways:

• granting loans to credit institutions in the form of rediscounting commercial bills;

• lending the treasury to secure government securities;

• the issue of banknotes through their exchange for foreign currency.

The state, trying to weaken possible cyclical fluctuations in economic processes, takes measures to regulate the production process, using monetary and credit systems that are closely interrelated, especially as a result of the dominance of credit money.

In many industrialized countries, under the influence of increased inflation and the growth of crisis phenomena in the economy, targeting in the mid-1970s was widespread-setting targets for regulating the growth of money supply and credit, which should guide central banks.

The Central Bank, in agreement with the state authorities, determines the amount of the increase in the money supply, limiting its growth in real terms. This measure is seen as an important form of combating inflation and ensuring the stabilization of the economy. In the United States, all four monetary aggregates (M1, M2, M3, M4) are targeted, in France - only the M2 unit. However, practice has shown the weak effectiveness of this form of regulation, since monetary circulation is influenced by different economic factors, and not just by the volume of monetary operations. In this regard, in the 80 years, central banks of several countries (Canada, Japan) refused to target.

So, the main features of the modern monetary system of foreign countries are:

• cancellation of the official gold content of monetary units, demonetization of gold;

• the transition to gold-denominated credit money, slightly different in nature from paper money;

• preservation in cash circulation along with credit money of paper money in the form of treasury notes;

• issuance of banknotes in circulation in the order of lending to the economy, the state, and also for the growth of official gold and foreign exchange reserves;

• development and prevalence of non-cash turnover in cash circulation, while reducing cash;

• Strengthening of the state regulation of monetary circulation in connection with the permanent violation of the fundamental principle of the monetary system-the correspondence of the amount of money to the objective needs of the economic turnover, which leads to the inflationary process.