How banks create money. Presentation on the topic "money and banks" Presentation on the topic of credit money

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Lesson in economics Lesson topic: Tamara Muratovna Trenyusheva, teacher of economics MBOU "Kuvakinskaya secondary school"

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DEPARTMENT TO DETERMINE THE FUNCTIONS OF THE CENTRAL BANK DETERMINE THE FUNCTIONS OF A COMMERCIAL BANK GET TYPES OF DEPOSITS GET TYPES OF BANK RESERVOES DISCOVER THE DASHKITOPS OF THE DASHINKINS DISCOVER THE DASHIENTOUNCIUM

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MONEY is a special type of product for which you can exchange any product or service. MONEY SUPPLY is the sum of symbolic and bank money held by the population. BANK MONEY - a medium of exchange in the form of checks, accounts issued by banks. MONETARY BASE is the sum of bank reserves and cash in the hands of the population. SYMBOLIC MONEY is a means of payment, whose value or purchasing power is several times higher than production costs. CENTRAL BANK is an organization established by the authorities of the country that is responsible for control over money circulation and lending conditions, control over the financial system, which is a bank of banks that accepts deposits from commercial banks, as well as a banker of the state.

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LESSON OUTLINE: 1. The money heart of the market; 2. Central bank and its functions; 3. Commercial banks and its functions; 4. Spend today - pay tomorrow; 5. How banks create money.

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"Since the beginning of time, humanity has made three great discoveries: fire, the wheel and the central banking system." Will Rogers (1879-1935)

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BANKING SYSTEM Until 1989, a three-tier system GOSBANK of the USSR Promstroybank Agrobank Zhilsotsbank Sberbank Vnesheconombank SPECIALIZED BANKS BRANCHES OF SPECIALIZED BANKS (ABOUT 6,000)

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The functions of the Central Bank are the issuing center of the country; government banker; bank of banks; interbank settlement center; custodian of the country's gold and foreign exchange reserves; determines and implements monetary (monetary) policy.

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Functions of a commercial bank: Acceptance and storage of all types of financial assets; credit transactions; money creation; organization of settlements; purchase and sale of securities.

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Operations of banks are active Operations on the placement of resources by banks at their disposal passive Operations, through which banks form their resources for lending and other operations deposit credit settlement currency cash desk, etc. Attraction and storage of funds on accounts acceptance of deposits receipt of loans by the bank receiving income from the placement of securities, etc.

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BANK DEPOSITS ENTREPRENEURS CREATION OF NEW FORMS OF MONEY% BY% ON LOAN DEPOSITS = MARGIN (from the English "margin" border) - the bank's income Margin (from the English "margin" border) - the bank's income

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Lending - (from Lat. Creditum - loan, debt) provision of money for temporary use and for a fee

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REMINDER TO THE DEPOSER: 1. Before entrusting your savings to the bank, inquire about it. Try to choose a reliable bank. A long-standing bank is better protected from bankruptcy than a new one. 2. Time deposits are best done for the shortest possible time. 3. It is risky to place large sums of money in one bank. 4. If the bank reduced the interest rate on the deposit, that is, unilaterally changed the terms of the agreement with the depositor, then the bank violated the client's rights.

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R = D x rr, vol. R vol. is the amount of required reserves, D is the amount of deposits, rr is the rate of reserve requirements. K = R g. = D - R vol. = D - D x rr = D (1 - rr) K - credit opportunities of the bank, R ex. - excess (in excess of the required) reserves.

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1000 rubles Bank 1 800 rubles 200 rubles Bank 2 640 rubles 160 rubles Bank 3 512 rubles 118 rubles Bank 4 409.6 rubles 102.4 rubles Bank 5 81.92 rubles 327.68 rubles ...

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M = D1 + D2 + D3 + D4 + D5 + D6 +… = 1000 + 800 + 640 + 512 + 409.6 + 327.68 +… that is, the sum of an infinitely decreasing geometric progression with base (1 - rr) M = D x 1 (1- (1-rr)) = D x 1 rr In our case: M = 1000 x 1 0.2 = 1000 x 5 = 5000

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Results of the study of the topic: Banks carry out business operations and earn profits. They provide depositors with the safety of their money, check service of their deposits. Banks provide loans and guarantee the stability of the payment system. They minimize the cost of seeking loans, take on the risk of monetary transactions and offer clients highly liquid investment vehicles; Commercial banks are required to hold reserves as part of their deposits in the event of significant withdrawals. To exercise control over their operations, commercial banks use balance sheets, which provide information on the movement of assets, liabilities and equity capital of the bank;

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The most important link in the banking system is the Central Bank. He is the bank of the government. The main function of the Central Bank is to ensure three main macroeconomic tasks: sustainable economic growth, high employment and, especially, a stable price level. The Central Bank establishes a mandatory rate of reserves, controls the activities of commercial banks and other financial intermediaries, issues fiat money; The central bank usually enjoys a significant degree of independence. The facts show that the higher the independence of the Central Bank, the lower the inflation rate in a given country; Together, commercial banks carry out lending operations using excess reserves. Banks' credit expansion depends on the value of the deposit expansion multiplier. The value of the multiplier is influenced by the rate of reserves, the conversion of part of the check turnover into cash and the desire of many banks to keep the volume of reserves above the required rate.

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LESSON OUTLINE: 1. The money heart of the market; 2. Central bank and its functions; 3. Commercial banks and its functions; 4. Spend today - pay tomorrow; 5. How banks create money.

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"Since the beginning of time, mankind has made three great discoveries: fire, the wheel and the central banking system." Will Rogers (1879-1935)

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Economic interests Savings owner Entrepreneur

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BANKING SYSTEM Until 1989, a three-tier system GOSBANK of the USSR Promstroybank Agrobank Zhilsotsbank Sberbank Vnesheconombank SPECIALIZED BANKS BRANCHES OF SPECIALIZED BANKS (ABOUT 6,000)

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Currently, a two-tier system Central Bank Commercial banks

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Commercial banks universal specialized 1. Purpose: - investment; - innovative; - mortgage. 2. By industry: - construction; - agricultural; - foreign economic. 3. By clients: - only firms; - only the population.

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Functions of a commercial bank: Acceptance and storage of all types of financial assets; credit transactions; money creation; organization of settlements; purchase and sale of securities.

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Lending - (from Lat. Creditum - loan, debt) providing money for temporary use and for a fee Types of loans short-term medium-term long-term up to 1 year From 1 year to 5 years over 5 years

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"Money makes money" "Money to money"

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R = D x rr, vol. R vol. is the amount of required reserves, D is the amount of deposits, rr is the rate of reserve requirements. K = R g. = D - R vol. = D - D x rr = D (1 - rr) K-credit opportunities of the bank, R ex. - excess (in excess of the required) reserves.

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1000 rubles Bank 1 800 rubles 200 rubles Bank 2 640 rubles 160 rubles Bank 3 512 rubles 118 rubles Bank 4 409.6 rubles 102.4 rubles Bank 5 81.92 rubles 327.68 rubles ...

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Deposit expansion process M = D1 + D2 + D3 + D4 + D5 + D6 +… = 1000 + 800 + 640 + 512 + 409.6 + 327.68 +… that is, the sum of an infinitely decreasing geometric progression with the base (1 - rr) M = D x 1 (1- (1-rr)) = D x 1 rr In our case: M = 1000 x 1 0.2 = 1000 x 5 = 5000

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Results of studying the topic:

Banks carry out business operations and earn profits. They provide depositors with the safety of their money, check service of their deposits. Banks provide loans and guarantee the stability of the payment system. They minimize the cost of seeking loans, take on the risk of monetary transactions and offer clients highly liquid investment vehicles; Commercial banks are required to hold reserves as part of their deposits in the event of significant withdrawals. To exercise control over their operations, commercial banks use balance sheets, which provide information on the movement of assets, liabilities and equity capital of the bank;

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The most important link in the banking system is the Central Bank. He is the bank of the government. The main function of the Central Bank is to ensure three main macroeconomic tasks: sustainable economic growth, high employment and, especially, a stable price level. The Central Bank establishes a mandatory rate of reserves, controls the activities of commercial banks and other financial intermediaries, issues fiat money; The central bank usually enjoys a significant degree of independence. The facts show that the higher the independence of the Central Bank, the lower the inflation rate in a given country; Acting jointly, commercial banks carry out lending operations using excess reserves. Banks' credit expansion depends on the value of the deposit expansion multiplier. The value of the multiplier is influenced by the rate of reserves, the conversion of part of the check turnover into cash and the desire of many banks to keep the volume of reserves above the required rate.

PLAN: Introduction. 1. Money The origin of money. 1.2 Functions of money. 2. Banks. The emergence of banks. Bank operations. 3. Calculated part. Conclusion. List of used literature.

INTRODUCTION Nowadays money for many has become the meaning of life. A lot of people spend all their time making money, sacrificing their family, relatives, personal life. "Money bewitches people. Because of it, they suffer, they work for them. They come up with the most skillful ways to spend it. Money is the only commodity that cannot be used other than to get rid of it. It will not feed you, clothe you, don’t will provide shelter and entertainment until you spend or invest it. People will do almost everything for money, and money will do almost everything for people. Money is a fascinating, repetitive, mask-changing enigma "(Honoré de Balzac).

Having surplus funds, people invest them in real estate, development of their business, etc. But in the conditions market economy this can be risky and does not always lead to increased income. Money, like any commodity, can be bought and sold in the market. And just as a business cannot exist without the exchange of money and goods, so the circulation of money is unthinkable without the participation of intermediaries - banks. Due to the fact that at present the activities of banking institutions are very diverse, their true essence is uncertain. Today banks are engaged in various types of transactions. In addition to organizing monetary circulation and credit relations, insurance operations, purchase and sale of securities, intermediary transactions and property management, financing of the national economy are carried out through them.

Each person is already or may be a potential client of banks. That is why the topic of this study is relevant in our time. Research objectives: 1) determination of the place and role of money and banks in modern society; 2) to show with specific examples the essence of banking operations, as well as their profitability both for the client of the bank and for the bank itself.

1. MONEY Origin of money. Many thousands of years ago, people came up with something that after a short time began to be appreciated more than anything else. That which made a real revolution in the sphere of the movement of material goods, and pushed economic life itself several stages forward. Historical periods of the development of monetary circulation are quite consistent with the types of monetary units, therefore, it would be most expedient to consider the following milestones in the development of money: 1) Quasi-money - this includes all means of exchange that do not fit into a person's modern idea of money. 2) Metal money. They mean money made from various metals, be it gold, silver or copper. 3) Paper money. 4) Electronic signs of modern network payment systems. The main criterion in this classification is not the source material with which the cash, namely the way of their circulation, circulation in commodity circulation.

The first money invented by mankind least of all resembled a banknote, and few people will turn their tongues to call it money in the traditional sense of the word. Nevertheless, they could perform the main monetary function - the function of the universal commodity equivalent, therefore, accordingly, they were money. As a matter of fact, initially the role of money was played by goods exchanged for each other in certain quantitative and qualitative ratios. So, for example, products were exchanged for valuable goods with a long shelf life: furs, grain, rare stones, sea and river shells, and so on. Livestock became the commodity by which all other commodities were valued, and which was readily accepted everywhere and in exchange for them. In short, cattle acquired the function of money and served as money already at this stage. With such a need and speed, the need for a special commodity, money, developed even at the very emergence of commodity exchange. With the division of social production into two large main branches of agriculture and handicraft, commodity production appears, and with it trade. From now on, noble metals (they do not lend themselves to chemical action, and even relatively rarely found in nature) begin to become the predominant and universal commodity in money, but at this time they are not yet minted, but only exchanged simply by weight.

Coins began to be produced at the beginning of the 6th century BC in the territory of Lydia. There are several forms of manufacturing (issue) of metallic money: Monometallism. Occurs when coins are made from a single metal. For example, from copper (Ancient Rome), gold (Western European countries) or silver (Russia). Bimetallism. Under him there was a mixture of metals (not necessarily precious). This form is inherent in all countries at a later stage in the development of capitalist relations. Base metals, such as copper, very often served initially as money, and then were replaced by precious metals. Copper, and after the introduction of the gold currency and silver, ceased to be a measure of value, although copper and silver coins continue to function as a medium of circulation in the petty trade. They now correspond to certain weight parts of gold. The value they represent varied depending on the real value of gold and was not in the least dependent on fluctuations in the value of silver and copper.

The first paper money originated in medieval China. The first mention of paper money dates back to the 11th century. Paper money can replace gold money only as a medium of exchange, but not as a measure of value. They can only replace them insofar as they represent certain quantities of gold. Paper money can never be more valuable than metal money and represent more gold than that which can be absorbed by the circulation of commodities.

1.2. MONEY FUNCTIONS. Economists identify five main functions of money. 1. Measure of value: money measures the value of goods through prices, thereby comparing goods with qualitatively different consumer properties. In other words, money serves as a kind of "ruler" for measuring prices. This function is so important that money is most often defined as the universal equivalent. Fulfilling the role of a measure of value, money is needed as mentally represented money. For example, to assert that a kilogram of pears is twice as expensive as a kilogram of apples, the existence of prices is sufficient; money itself, in any material form, is not needed at all for this comparison.

2. Medium of circulation: money plays the role of intermediaries in the exchange of goods. Instead of directly exchanging one commodity for another, which is called barter, commodity producers receive money for the commodity they sell, for which they purchase other commodities they need. This function is described by the formula commodity-money-commodity. When money plays the role of an intermediary, the acts of purchase and sale do not coincide in time and space. A commodity producer gets the opportunity, for example, to sell one commodity today, and buy another one only a day, a week, a month, etc. Further, he can sell his product in one place, and buy the one he needs in a completely different place. Thus, money as a medium of exchange overcomes the temporal and spatial limitations of the relations of exchange.

3. Means of accumulation: with the help of money, a certain stock of wealth is created. We are talking about the usual accumulation of funds before buying any expensive product (or accumulation for other purposes). For example, to buy a car, you have to save money for a number of years until the required amount is accumulated. The chain breaks: instead of commodity-money-commodity, first commodity-money occurs, and only then, after a considerable period of time, money-commodity. Money is temporarily taken out of circulation and is "in the hands" of commodity producers; the sale of one product is not accompanied by the immediate purchase of another. For the effective performance of this function (as well as for the function of a measure of value), it is very important that money retains its value, that is, does not depreciate. 4. Means of payment: the movement of money "breaks away" from the movement of goods, lags behind in comparison with it. This happens during the development of the loan. So, a buyer can buy a car in installments, as a result of which he immediately becomes its owner, but for a long time he makes payments for it in installments. 5. World money: manifests itself in the free circulation of certain types of money outside their national borders. Today, this role is played by the most reliable national currencies. These are, first of all, the dollar and the euro.

2. BANKS. The emergence of banks. Bank operations. Already in distant antiquity, usury was widespread - the issuance of money at interest. The difference between the amount that was returned to the usurer and the one that was originally taken from him was called an excess. So, in Ancient Babylon it was already 20% or more! This meant that an artisan, who took 1000 monetary units from the usurer for a period of one year, returned to him after a year at least 1200 of the same units. It is known that in the XIV - XV centuries. in Western Europe, banks became widespread.

At that time, banks were called institutions that lent money to princes, merchants, artisans, financed long journeys, campaigns of conquest, etc. Of course, banks did not give money unselfishly: they charged a fee for using the money provided, just like usurers in ancient times. This payment was usually expressed in the form of interest to the amount of money issued in debt.

Those who borrow money from the bank are called borrowers, and a loan, i.e. the amount of money taken from the bank is called a loan. The main part of the money that banks give out to borrowers is money of depositors, which they deposit with the bank for safekeeping. Part of the profit that the bank will receive, it transfers to depositors in the form of payment for the use of their money. This fee is also usually expressed as a percentage of the amount of the contribution. Thus, the funds deposited in the bank, after a certain period of time, bring some income, equal to the amount of interest accrued for this period.

So, on the one hand, banks accept deposits and pay interest on these deposits to depositors, and on the other hand, they give loans to borrowers and receive interest from them for using this money. The difference between the amount that the bank receives from the borrowers for the loans provided, and the amount that it pays on deposits, is the bank's profit. Thus, the bank is a financial intermediary between depositors and borrowers.

One of the most common ways of attracting savings of citizens, firms, etc. to the bank. is the opening of a savings account by the depositor: the depositor can deposit additional amounts of money into his account, can withdraw a certain amount from the account, can close the account, completely withdrawing the money stored on it. At the same time, the depositor receives a payment from the bank in the form of interest for the use of money for issuing loans to entrepreneurs, firms, the state, other banks, etc.

3. CALCULATION PART. Consider the scheme for calculating the bank with depositors. Depending on the method of calculation, interest is divided into simple and complex. Simple interest: an increase in the So deposit according to the simple interest scheme is characterized by the fact that the amount of interest during the entire storage period is determined based only on the initial amount of the So deposit, regardless of the storage period and the amount of interest accrued.

Let the depositor open a savings account and put S o rubles on it. Let the bank undertake to pay the depositor at the end of each year p% of the initial amount S o. Then, after one year, the amount of accrued interest is S o p / 100 rubles and the value of the contribution will be S = S o (1 + p / 100); here p% is called the annual interest rate. If, after one year, the depositor withdraws the accrued interest S o p / 100 from the account, and leaves the amount So, the bank will again accrue So p / 100 rubles, and for two years 2 S o p / 100 rubles. After n years on the deposit according to the formula, just a percentage will be: S n = S o (1 + (pn): 100) (2)

Let's consider another way of settling a bank with a depositor. It is as follows: if the depositor does not withdraw the amount of accrued interest from the account, then this amount is added to the main deposit, and at the end of next year the bank will charge p% on a new, increased amount. This means that the bank will now begin to charge interest not only on the principal deposit, S o, but also on the interest that is relied on it. This method of calculating "interest on interest" is called compound interest. S n = S o (1 + p: 100), (2) where n is the term of the deposit = 1, 2, 3, ...

Example 1. The bank pays out to depositors every year 8% of the deposited amount. The client made a deposit in the amount of rubles. What amount will be on his account in 5 years, in 10 years? To solve this problem, we use the formula (1): 1) S = (1 + 85: 100) =, 4 = (rub.) - in 5 years; 2) S = (1 + 810: 100) =, 8 = (rub.) - in 10 years.

Example 2. A depositor opened a bank account by making 2000 rubles on a deposit, the annual income of which is 12%, and decided not to take interest charges for 6 years. What amount will be on his account in 6 years? Because the depositor does not take interest charges, then the amount of the deposit with interest will be calculated according to the formula (2), i.e.: S = 2000 (1 + 12/100), where n = 6; S = 20001, ~ 3947.65 (rub.)

Example 3. At what interest rate will a deposit in the amount of 500 rubles increase in 6 months to 650 rubles? Let the interest rate be x%. Then we will express it from the formula for calculating simple interest (1), substituting already known data: 500 (1 + 6x: 100) = 650; 5 (100 + 6x) = 650; X = 650; X = 5 (%).

Example 4. The bank provided the client with a loan in rubles. at 20% per annum for 3 months. What amount will the client have to return to the bank after the expiry of the specified period? Let's determine the monthly interest: P months = 20/12 = 1, And since the client took a loan for 3 months, then: P = 1, = 5. Let's find the refund amount according to the formula (1): S = 100000 (1 + 5: 100) = (rub.)

Example 5. Based on the data of the previous task, determine the real interest rate of the bank if it serves 3 more clients one after the other on the same terms, while issuing a loan in the amount of the returned amount with interest. 1) S 1 (example 4) = rubles. 2) S 2 =, 05 = (rubles) 3) S 3 =, 05 = 115,762.5 (rubles) 4) S 4 = 115,762.51.05 = 121,550.63 (rubles) The total amount of interest received is: p = , 63 = 52 563.13 Thus, the real interest rate is not 20%, but: P real = 52 563.13: ~ 52.56%.

Example 6. The bank issued a loan to a client on the following conditions: initial amount - rubles, interest rate - 170% per annum, loan term - 2 years. Determine how many times the amount owed by the end of the loan term will exceed the original amount owed. Using the formula (1), we determine the return amount: S = 200000 (1 + 2170: 100) = (rubles). The amount owed by the end of the loan term will exceed the original amount owed by:: 200,000 = 4.4 (times)

Example 7. The bank issued a loan in the amount of rubles for 3 years at 50% interest per annum on terms of simple interest with the requirement of equal monthly repayment of the debt during this period. How much should the customer return each month? Using formula (1), we find the amount of debt with interest for 3 years: S = 24000 (1 + 350: 100) = 60,000 Therefore, each month the client will have to return: 60,000: 3: 12 = 1666.67 (rubles)

Example 8. The client has deposited rubles in the bank. During the first year and a half, the interest rate on the deposit was 20% per annum, then the rate was raised to 40% - this rate was six months, after which it rose to 50%. What amount after four years will the bank have to return to the client? S 1 = 20,000 (1 + 1,520: 100) = 26,000 (rubles); S 2 = 26000 (1 + 0.540: 100) = 31200 (rubles); S 3 = 31200 (1 + 250: 100) = 62400 (rubles).

TO IDENTIFY THE ESSENCE OF THE CREDIT, LET'S CONSIDER THE FOLLOWING EXAMPLE. Example 9. A credit institution has provided natural person a special purpose loan in the amount of rubles for a period of 3 years at 25% per annum. It is necessary to calculate the client's payments to the bank on a monthly basis.

Solution. Loan term = 3 years = 36 months. Let's calculate the monthly repayment of the principal amount: RUB. : 36 months = 2 777.78 rubles. Those. the client must pay 2,777.78 rubles on a monthly basis. But this is an incomplete amount, because interest on the loan is not taken into account here. Let's calculate their amount for 1 month:, 25: 12 = 2083.33 (rub.). Thus, the client in the first month must pay the bank: 2777.33 = 4861.11 (rub.)

To calculate payments for 2 months, it is necessary to deduct from the amount of the loan received the monthly amount of the principal contribution, and then accrue interest on the amount received, i.e.: - 2777.78 = 97222.22 (rubles) 97222.22 0.25 : 12 = 2025.46 (rub.) Thus, the total amount of payments in 2 months will be: 2777.46 = 4803.24 (rub.)

To calculate payments for using a loan in 3 months, it is necessary to deduct the amount of the monthly installment from the amount of the principal debt received when calculating the contribution in month 2, and then calculate the interest: 97222.22 - 2777.78 = 944444.44 (rubles) 94444, 44 0.25: 12 = 1967.59 (rubles) Thus, the amount of payments by the client in 3 months: 2777.59 = 4745.37 (rubles) Payments for the remaining months are calculated in a similar way. We will draw up a payment schedule for the client.

Month Fee Interest Amount Balance 12777,782083,334861,782025,464803,781967,594745,781909,724687,781851,854629,781793,984571,781736,114513,781678,244456,781620,374943840,781562,742 , 781388,884166,781331,014108,781273,144050,781215,273993,58

Thus, the client pays the bank 38,541.5 rubles for using the loan. The total amount paid is:, 5 =, 5 (rub.)

CONCLUSION. The existence of mankind without money in a market economy is impossible, since they play a very large role, manifested in their main functions: means of circulation, means of payment, means of accumulation. The circulation of money is unthinkable without the participation of intermediaries - banks. They are in the center of economic life, serve the interests of producers, linking industry and trade, agriculture and the population with cash flow. All over the world, banks have significant power and influence, they dispose of huge money capital that flows to them from enterprises and firms, from merchants and farmers, from the state and individuals.

Banks have become part of our life. Although the role of banks has been so often ignored in Russia, their economic purpose has been diminished to such an extent that even now, when our country has begun to live by different economic laws, many people do not pay the attention of banks that it deserves. The question of what a bank is is not as simple as it seems at first glance. In everyday life, banks are depositories of money. At the same time, the everyday interpretation of the bank given and similar to it, not only does not reveal its essence, but also hides its true purpose in the national economy. Based on the examples given in the research work, it can be concluded that for bank clients, keeping money in the bank is not only reliable, but also profitable.

The banks themselves, being a mechanism for making a profit for their clients, also make a profit when performing transactions on the placement of funds attracted in deposits. Consequently, the cooperation of banks with their depositors is mutually beneficial, which is shown when solving problems in this research work.

LIST OF USED LITERATURE 1. Money. Credit. Banks. Ed. Prof. E.F. Zhukov. - M .: UNITI, Money, credit, banks: Textbook / ed. O.I. Lavrushin. Moscow: Finance and Statistics, 2007; 3.Zaichenko N.A. A primer for the Rockefellers. Tutorial. - SPb .: SMIO Press, Studenetskaya V.N., Sagatelova L.S. Mathematics: a collection of elective courses. - Volgograd: Teacher, 2007.

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1. Types of money and the law of monetary circulation.

Money is the universal abstract equivalent of all goods. The development of the economy is based on the division of labor and specialization, which necessitates the exchange of manufactured goods. Initially, the item was exchanged for the item at random. A simple form of value emerged. Then, with the development of the economy, there was a possibility of choice in the exchange. The owner of the goods could, during the exchange, choose from a number of offered goods. A complete or expanded form of value has emerged. The prototype of money was an equivalent commodity, for which other commodities were increasingly exchanged. In different localities, these were different goods: axes, sheep, furs, shells. This is how the universal form of value appeared. Then the monetary form of value appeared, since simple natural exchange was inconvenient and therefore ineffective. Metal money is being promoted to the role of the universal equivalent.

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At first, the bimetallic system functioned, when coins were made from both silver and gold. At the end of the nineteenth century, it was replaced by the monometallic system associated with the discovery of large deposits of gold in America. In the era of the formation and flourishing of commodity production and free competition, metallic money was freely minted. The amount of money in circulation was automatically regulated by the rise in the prices of goods. The disadvantages of metallic money were: cumbersome calculations when it came to large transactions. losses due to abrasion of coins per year, these losses amounted to three thousand kilograms. overhead costs of maintaining gold circulation. the use of gold money lacked the necessary elasticity with respect to the expansion and contraction of the process of producing goods. the money supply was difficult to regulate.

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The processes of demonetization of gold began. In this regard, gold ceased to be a monetary commodity, but remained a market commodity. Currently, gold is used for the needs of the electronics industry, for dental and medical purposes. The credit form of money is associated with the appearance of paper money. The predecessors of paper money were warehouse receipts, which were used by jewelers and bankers in ancient Rome. They were given over for storage of jewelry, and in return they issued receipts that could be transferred or paid with them. Then banknotes appeared - bankers' promissory notes to pay a certain amount of money, and they no longer had a private, but a public guarantee, i.e. had liquidity. Later, the state took over the issue of money, and treasury notes appeared. They represent a promise to pay, not the fee itself. When replacing banknotes by the state, the law of Copernicus - Gresham is in effect: "Inconvenient money drives convenient money out of the sphere of circulation."

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Currently, several types of money are used: Natural money, in their role is a commodity that has an intrinsic value. The concept of intrinsic value applies to money, which will have value even when it is not used as money. Includes all types of goods that were universal equivalents at the initial stages of the development of commodity circulation (cattle, grain, furs, shells, etc.), as well as money from precious metals. Paper (decreed, symbolic) money is money devoid of intrinsic value. The symbolic money includes paper and credit money. Bargaining chips Bank papers: deposits, checks, bills All of the above is money, because people accept them as payment, expecting, in turn, that they will accept money from them when buying products. The main reason people accept money is the government's ability to guarantee the stability of money.

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Money performs the following functions: Measure of value - in money, the cost of producing goods is recorded, prices for goods are measured. Means of circulation - money is an intermediary in the exchange of goods. Means of payment - this function is associated with the discontinuity in time of the movement of money and goods. An example is the provision of goods on credit (the movement of goods occurred, but there was no movement of money) or the moment the wages were received (only the movement of money occurred). Accumulator - this function does not work during inflation, the goods of inflationary demand are cars, real estate, jewelry. World money - when the national currency is used in international trade transactions. The main properties of money: Liquidity Variability Security Inflation

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All functions of money are described by the Fisher equation: MV = PQ M - the amount of money in circulation; V is the rate of circulation of the monetary unit per year; P is the price level of goods; Q is the level of real production (the amount of goods produced in the national economy for a certain period of time). The indicator of money supply M includes: M1, M2, M3, ... banknotes current (checking) accounts bank deposits of households bank deposits of enterprises purchase of bank certificates State debt bills M2 M3 M1 M4

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THE LAW OF MONEY CIRCULATION - the amount of money required for circulation depends on the sum of the prices of goods to be sold and the rate of turnover of money. RATE OF CIRCULATION OF MONEY is the number of turnovers of money supply per year. where each turnover serves the expenditure of income: V = (РхQ) / M Р - price level; О - the level of the real volume of production; M - the amount of money Money makes a turnover at an unequal rate, it depends on many factors, in particular, on the type of goods, the sale of which they serve, and in general, on the state of the economy. FACTORS AFFECTING THE RATE OF MONEY TURNOVER principles of the financial system. habits, opinions and views on the future of the population. distribution of the money supply between various types of organizations and layers of people with different incomes

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2. The structure of the monetary system.

The monetary system is a collection of credit and financial institutions, various forms and methods of lending. Credit relationships always arise there. where temporarily free funds are formed from some persons and a temporary need for additional monetary resources from others. Banks are intermediaries in credit relations. MONETARY SYSTEM includes: National (central) bank. Commercial banks. Specialized banking institutions (investment banks, foreign trade banks, mortgage banks). Non-bank financial institutions (insurance funds, pension funds, savings banks, investment funds).

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Private lending institutions include: Insurance companies engaged in insurance against commercial risk or health insurance. Investment companies that provide the initial issue of securities, investing in individual savings of citizens in securities and carrying out trading operations with them. Factoring companies are set up to meet payment deadlines and recover funds. Bank (from Italian banco - a bench, a table on which the money changers laid out coins) - a financial institution. Foreign banks based entirely on foreign capital can be created in the country. They specialize in international transactions. provide loans to local national companies. carry out transactions on the national market with securities. select potential trade partners for their national firms. provide economic information about the market characteristics of the host country.

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The functions of the National Bank are: monetary regulation of the money supply and the level of the interest rate. organization of interbank settlements and cash services for commercial banks. establishing, together with the Ministry of Finance, cash execution of the state budget through commercial banks. registration of commercial banks and control over their compliance with the established mandatory standards, the application of banking legislation and regulations issued by the National Bank. control over the opening of branches and representative offices of foreign banks in the country. organization of international settlements. regulation of foreign economic banking. streamlining the credit market. ensuring a uniform order accounting and reporting in the banking system. the exercise of the monopoly right to issue money. providing loans to commercial banks in case of difficulties. issue and redemption of government securities. national repository of wealth.

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3. The system of commercial banks and their functions.

The work of commercial banks is based on two postulates: risk and profit. The main sources of credit resources of commercial banks are: funds of the authorized fund, fixed-term deposits of the population and enterprises, demand deposits of the population and enterprises, the resulting profit.Commercial banks perform important functions in creating normal conditions for the development of the public economy: they are intermediaries in the accumulation and redistribution of monetary resources, act as the main creditors of entrepreneurial activity, including the state as a business entity, provide current settlement operations of clients, including check servicing of clients, place securities among investors, carry out foreign exchange operations, and carry out trust operations.

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There are the following TYPES OF LOANS: Short-term - a loan for up to 1 year provided for the formation of working capital serving the current economic turnover Medium-term - for a period of up to 5 years, necessary to expand and improve production. Long-term - for a period of up to 10 years, which is a source of capital investments in new construction, reconstruction. This loan is repaid in installments from the profit. Loan interest is the payment of the borrower for the use of funds. Loan interest rate = amount of loan interest / amount of loan capital The loan interest rate depends on the average rate of return in the country, usually it does not exceed the rate of return. Determined on the basis of the ratio between supply and demand in the financial market and the refinancing rate of the National Bank.

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Conditions for obtaining a loan: Providing a business plan. Provision of collateral: property pledge. pledge of securities. insurance in insurance companies of the risk of non-return. bank guarantees. Conditions for issuing loans: The urgency of the loan (the loan is issued for a specific period). Loan repayment. The targeted nature of the loan, i.e. a loan is issued by a bank for strictly agreed purposes. Loan security in the form of property pledge or securities or bank loan insurance. Loan repayment - for the use of bank money, a percentage of the company's profit is charged.

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There are the following FORMS OF LOANS: INVESTMENT LOAN is a loan taken to create or expand an enterprise. The borrowed funds are used as capital that brings profit. The resulting profit is split into entrepreneurial income, which remains with the borrower and the loan interest, which is returned to the lender. COMMERCIAL LOAN - this term is used in two cases: When a bank issues a loan to a trade organization for the implementation of any commercial commercial transaction, for example, the purchase of a large consignment of a profitable product. In the event of a deferred payment for a product or service provided to the buyer by the seller of the product.

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FINANCIAL LEASING is the provision of a loan for equipment rental. The leasing company buys equipment at the expense of its own and borrowed funds on behalf of the client. Simultaneously with the purchase of the equipment, the leasing company signs a lease agreement with the client. After the end of the contract, the equipment may become the property of the lessee. CONSUMER CREDIT is the sale of goods to the population on the basis of payment in installments within a certain period. A MORTGAGE LOAN is a loan issued against the security of property (house, car, cottage), which must be insured.

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Multiplicative expansion and contraction of deposits - the creation (withdrawal) of non-cash money, a fundamental property of the banking system to expand deposits in the process of lending by multiplying any additional resources coming from outside this system (mainly central bank by providing them with loans, buying securities, foreign currency), as well as reducing deposits while reducing these resources.

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4. Monetary and credit market.

In order to understand the mechanism of the functioning of the monetary market, it is necessary to consider the demand for money and their supply. DEMAND FOR MONEY is the money needed by households and businesses to complete sales and purchase transactions. FACTORS AFFECTING MONEY DEMAND: The number of goods, services and factors of production offered for sale. On the chart: r - interest rate. Dm is the demand for money for transactions. The graph shows us that the amount of money for making transactions does not depend on the interest rate, because people need food and clothing, and firms must pay wages, buy raw materials, pay for electricity.

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The graph shows that the demand for money is inversely proportional to the movement of interest rates, both in the case of a choice between purchasing bonds and placing money in a bank, and in the case of taking out a loan Movement of interest rates, the higher the rates, the lower the demand, the lower the rates, the higher the demand

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The level of prices for offered goods, services for factors of production. A higher price level requires more money. The amount of total income, which determines the amount of purchased goods. The rate of turnover of money - the higher it is, the less money is required. Let's summarize the above: "The higher the total income and prices, the lower the rate of turnover, the more money is needed to service the movement of goods, services of factors of production" Let's express this in the form of the formula: (PxY) / V + L (r) D - demand for money ... P - prices of goods. Y is the amount of total income. V is the rate of turnover of money. r is the level of interest rates.

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MONEY SUPPLY is organized by the state represented by the National Bank by issuing money and by managing commercial banks. MONEY ISSUE - issue of paper money by the National Bank. It is he who determines how many of them will be in circulation. Let's introduce such a concept as MONEY UNITS, i.e. combined MONEY OFFER. Let's clarify that aggregation is the combination of individual units or data into a single indicator. The M1 unit is an offer of money in the form of cash in circulation (paper and metal) and deposits in banks for which checks can be drawn. The emergence of bank deposits is related to that. that payment for the goods can be both cash - using paper money, and non-cash, by transferring the required amount from account to account. A non-cash form of payment is preferable, firstly, it is safer, and secondly, 80% of all cash payments do not bring profit. Unit M2 is an offer of money in cash and in the form of check deposits plus highly liquid financial assets. The MZ unit is a combination of the M2 unit and large time deposits (certificates of deposit of enterprises)

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It is believed that there are three main reasons why people prefer to keep their savings in cash and in checking accounts: Transactional motive - cash is easier to pay for a purchase when needed. Precautionary motive - it may be necessary to urgently pay for the purchase and the money should be at hand. Speculative motive - arises from a person's desire to avoid capital losses in the event of an unsuccessful investment in bonds, stocks or other securities. Keynes drew attention to the following tendency: the value of the demand for money gradually falls with a fall in the rate of interest on the securities market.

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CHANGE OF THE ACCOUNTING RATE The RATE is the percentage at which the National Bank provides loans to commercial banks. Commercial banks from time to time feel the need for financial resources. They act as borrowers and can apply to another commercial bank or the National Bank of the Republic. The National Bank, providing loans to commercial banks, can pursue a policy of "expensive" or "cheap" money. An increase in the discount rate reduces the willingness of banks to take out loans and thereby decreases the aggregate money supply. CHANGE IN THE RATE OF MANDATORY RESERVE MANDATORY RESERVE is a part of the credit funds of commercial banks, which must be transferred to a special reserve account with the National Bank. The norm of the required reserve is established by the National Bank of the Republic. Firstly, this is done in order to insure part of the deposits of the bank's clients if a commercial bank turns out to be insolvent. Secondly, by increasing the required reserve rate. The National Bank restricts the use of funds by the bank and thereby extinguishes the business activity of entrepreneurs. Conversely, decreasing the reserve rate. The National Bank facilitates the release of funds and thereby contributes to the increase in business activity. The National Bank regulates monetary circulation using the following measures:

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OPEN MARKET OPERATIONS This is the purchase or sale of government securities - government bonds, treasury bills for the purpose of regulating the money supply. This is a market-based measure that does not involve any coercion from the state. The government is always the initiator of operations on the open market. It operates through the National Bank. The second participant in the transactions are commercial banks or the population. Depending on the policy pursued by the state, economic actors act in the role of sellers, then in the role of buyers. CONDUCTING DENOMINATION DENOMINATION is the consolidation of a monetary unit in order to make the national currency more valuable. Denomination is carried out if, as a result of high inflation, money has greatly reduced its purchasing power.

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Consider EQUILIBRIUM IN THE MONEY MARKET: As in any market, monetary equilibrium is achieved at the point of intersection of the supply and demand graphs, which corresponds to a certain rate of interest. Achieving equilibrium means that the amount of money that business entities would like to receive at their disposal is equal to the amount of money that the monetary system offers by implementing a certain policy. The left graph characterizes monetary equilibrium when the National Bank pursues a policy of maintaining a constant level of money supply. The amount of money offered by the banking system remains constant regardless of changes in the rate of interest or the demand for money. If the National Bank pursues a policy of fixing the interest rate at a certain level by conducting operations on the open market, the money supply curve will run horizontally.

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Growth in national income shifts the money demand curve upward and right. The money supply remained the same. To replenish cash reserves, business entities will start selling securities and applying for loans. This will lead to the fact that the market price of the securities will decrease and the lending rate will rise. Consider deviations from equilibrium in the monetary market. They can arise both from changes in demand and from changes in the supply of money. First, suppose that the demand for money has changed due to a change in national income

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Now suppose that the money supply changed as a result of changes in the monetary policy of the National Bank. He sold securities on the open market, reducing the amount of money in circulation. This graph demonstrates a situation when, as a result of the sale of securities by the National Bank, the supply curve will shift to the left. Banks that bought securities at a favorable rate reduced their cash reserves. In order to replenish their bank reserves, they will have to resort to selling their securities and tighten the conditions for granting loans. At the new equilibrium point E2, the interest rate increased and the amount of money in circulation decreased.

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An increase in demand shifts the demand curve to the right and up. The money supply curve MS is fixed at 10%. The shift in demand tends to increase interest rates. The National Bank, not wanting to allow this, buys securities from banks. Banks' reserves are increasing, the supply of money is growing, the target has been achieved, rates have remained at the same level. Suppose that as a result of the increase in national income, demand has increased, and the supply of money is fixed.

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This is the famous Hicks-Hansen "ISLM" model. which is the abbreviation of the English terms “investment-savings-liquidity-money.” It describes the joint general equilibrium of the markets for goods and money, which is achieved at point T, which corresponds to the values of interest r and income Y. If we combine this equilibrium curve with the equilibrium curve of the money market (they are located in the same coordinates), then we note that both curves depend on the same values of interest and income.

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Using this model, one can study the interaction of markets for money and goods. One can find out how stable their joint equilibrium is, how long it lasts, and how certain options of government regulation will affect it. For example, the economy is stable, equilibrium has been established at point A. Optimistic entrepreneurs, focusing on the current rate of interest r1, increase capital investments using available savings. Then the state of the commodity markets will be described by the new curve IS2. Expansion of production will lead to an increase in income from level y1 to level y2. As incomes rise, the demand for money will increase. As a result, the interest rate will rise from r1 to r2. Producers, taking into account the declining profitability in conditions of expensive loans, will reduce investments. As a result, production and income will decrease and a new equilibrium will be established at point B.

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THE MECHANISM OF THE MONEY MARKET is as follows: If the interest rate exceeds the equilibrium level, then the speculative demand for money will decrease, since the owners of the savings will direct them to purchase securities. The demand for these securities will increase, and hence the prices for them, which will affect the rate of interest. It will begin to descend to the equilibrium mark. This is due to the fact that the situation on the securities market is associated with fluctuations in interest rates. If interest rates are high, then securities are relatively cheap (an alternative to placing savings). If the interest rate turns out to be below the equilibrium level, then the number of those who want to keep their savings in securities will decrease and the demand for them will fall. This will lead to an increase in the level of interest rates to equilibrium. This is because the owners of a certain amount of money feel that securities are too expensive at a low rate of interest. They refuse to purchase them, waiting for more favorable conditions.

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POSITIVE PARTIES OF CREDIT AND MONETARY POLICY:

You can quickly make a decision and put it into practice. Monetary policy is more flexible in the socio-political sense. The return on it is faster. If fiscal policy affects the commodity market, then monetary policy affects the financial market. If the demand for money has changed due to changes in the rate of turnover of money, then in this case it is necessary to separate the real economic processes and the consequences of changes in the rate of turnover of money. For this, the amount of money in circulation must change according to the speed of circulation of money, naturally, in the opposite direction. If a shift in the demand for money occurred due to changes in the volume of production due to a change in the phase of the economic cycle, then it is necessary, depending on the phase, either to increase interest rates (rise phase) or decrease (decline phase). If the demand for money is due to the rise in prices, then it is recommended to keep a constant amount of money in circulation by making the rate of interest free.

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Monetary Committee System and Estonian Monetary Policy.

The principle of monetary policy in Estonia since the introduction of the kroon is the currency committee, that is, the currency is pegged to the exchange rate of another currency and their rates simultaneously change relative to other currencies, remaining unchanged relative to each other. In the beginning it was 1 German mark = 8 kroons, now 1 euro = 15.65 kroons. The Estonian kroon is not quoted on the world market, therefore, the principle of the currency committee has a stabilizing significance for small countries. Eesti Pank has no right to issue additional money except for technical needs (replacement of worn-out banknotes). Estonia does not have a system of pegging to gold reserves. The Government and the Bank of Estonia remain fully committed to the currency board system and the current fixed ratio between the kroon and the euro. This is believed to provide a sufficient framework for participation in the European Monetary Union (ERM2).

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Money and banks

Economy

Money is a special commodity.

Without them, our life at the present time would be impossible.

Functions of money

First, they are a means of circulation, that is, they help to exchange goods, bypassing the difficulties of barter. Secondly, in money we measure the value of various goods. Third, money serves as a store of value.
First, they are a means of circulation, that is, they help to exchange goods, bypassing the difficulties of barter.
Secondly, in money we measure the value of various goods.
Third, money serves as a store of value.

Money has three main functions in the economy.

History of money

In the history of mankind, money was used for various goods: cattle, furs, shells, salt ... Then in most countries they decided to make money into precious metals - gold and silver, since these metals had certain properties that allowed them to perform the functions of money in the best way:

Good preservation so that they do not quickly deteriorate and wear out. Ability to split into smaller pieces to reflect small differences in value. Great value in a small volume to facilitate the storage and transportation of money.
Good preservation so that they do not quickly deteriorate and wear out.
Ability to split into smaller pieces to reflect small differences in value.
Great value in a small volume to facilitate the storage and transportation of money.

Money now

Currently, money is a special paper and coins (banknotes) issued by the central bank of each state. They have no independent value, unlike precious metals. They are given value only by the authority of the state that issues them.

Money market

Money (or rather, not money itself, but the ability to dispose of other people's money for some time) can also be bought and sold on the market, like any other commodity. The main sellers in this market are households, buyers and firms, and the intermediaries are banks.

Bank history

The first bankers in history were jewelers. Other people began to use this, they left some valuables for storage with the jewelers. Some clients did not always come for their goods, so jewelers gave away most of the gold at interest for a while. This is how the first bankers and banks appeared.

Banks currently

Currently, people who have invested money in a bank not only do not pay for storage, but also receive profit from the bank, because the bank is interested in attracting people's money.

Bank profit

Banks earn income due to the fact that the interest they receive from borrowers is greater than the interest they pay to depositors.

Interest rate and its types

Interest rate- the amount indicated as a percentage of the loan amount that the recipient of the loan pays for using it, calculated for a certain period. There are several types of interest rates.

Fixed and floating rates.
Decursive and anti-sipative rates.
Real and nominal rates.

Fixed and floating rates

Depending on whether the rate changes over time, there are fixed and floating interest rates.

Fixed interest rate - constant, established for a certain period and does not depend on any circumstances.

Floating interest rate subject to periodic review. The rate change is carried out on the basis of fluctuations of certain indicators.

Decursive and anti-sipative rates

There are two types of interest rates depending on the time of interest payment.

Decursive rate- the interest is paid at the end together with the principal amount of the loan.

Anti-sipation rate- interest is paid at the time of granting the loan (in advance) and is determined based on the final amount of the debt.

Real and nominal rates

Real interest rate is the interest rate adjusted for inflation.

Nominal interest rate- the percentage that does not take into account market inflation.

Banking classes

In addition to deposits and issuing loans, modern banks are engaged in other important matters. Almost all settlements between firms are carried out through them.

Banks also invest part of their money in securities.

Bank Reserves

Banks should always be ready to pay money back to the depositor. Therefore, they do not lend a certain part of their deposits, but keep them in the form of reserves.