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Money and credit - Ivanov VM

1.2. The essence of money and credit

In the economic literature there is no uniform definition of the essence of money. The most common are:

• Money - this is what makes money. All that performs the functions of money, and have the money (K. McConnell and Brue C);

• Money - the generally accepted means of payment that is accepted in exchange for goods and services, as well as the payment of debt (Irving Fisher);

• Money - this is a special commodity, the universal equivalent employee (S. Dzyubik, O. Rivak).

These definitions, according to A. Korovsky, derived from the historical aspect of the emergence of money. He rightly argues that money serves as a means to measure and value expression. So, when buying goods with money is measured by its cost. The seller sets the amount of money that he wants to get for their goods, and the buyer calls the amount he can pay for it. Thus, in the development of commodity production value of goods is expressed in monetary terms.

However, not all historical stages of the value of goods and services expressed in money. Even in modern conditions the opportunity to exchange goods without using money appears in barter agreements, when the cost of goods sold and services reflected in the products and services offered in exchange. In particular, the value is expressed in tonnes of oil certain weight sugar.

This product, which can be exchanged for any other, called the universal equivalent,

The emergence of a universal equivalent has eliminated many of the shortcomings inherent in full, the cost of the expanded form. First of all, no longer a need for reusable exchange for necessary goods.

But in different regions as the equivalent of using various products, that interfere with the development of trade between the regions.

Increased trade between the different peoples and territories led to a gradual transition to the single for all the goods for which it would be possible to exchange their products. This product started to play the role of a universal equivalent, which is money. To fulfill the role of money is most suitable gold due to its ability to be stored for a long time. Also, the gold can be divided into parts. Compared with other equivalents it easier to transport and store.

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

Credit is the economic relations that occur between the lender and the borrower with the redistribution of the value to return conditions and the payment of interest.

The parties involved in the loan agreements, called actors.

The object is to lend loan costs in money or goods.

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

With the introduction of commercial loans and bill payments received extensive development of credit relations between enterprises and economic organizations.

Credit relations between the banks and the state arise when commercial banks purchased domestic loan bonds and National Bank - government bonds.

Credit relations between businesses and the public are carried out through pawn shops, finance companies and others.

Foreign trade credit relationships arise in the event that the loan agreement are subjects of the state, banks and private companies. These relations are governed by legal provisions of these states and norms of international law.