Money Money is a special token of value that is used for certain functions. AT modern economy two types of money are used: 1. Cash (Paper and coin); 2. Non-cash money - money that is a record of balances on customer accounts in banks.
Properties of money Divisibility; Divisibility; Portability; Portability; Persistence; Persistence; Uniformity; Uniformity; Recognizability and difficulty of forgery; Recognizability and difficulty of forgery; Low manufacturing cost; Low manufacturing cost; Possibility to be released in quantities required for circulation; Possibility to be released in quantities required for circulation; The stability of the value of money. The stability of the value of money.
) Properties of money (continued) Divisibility: the property of exchange, money should not significantly change its properties if they are divided into small parts or combined into one large part. Portability: high cost in a small volume. Persistence: the property of money to be well stored, without changing its physical and chemical properties for a long time. Homogeneity: A monetary good should not be segregated into grades. Recognizability and difficulty of counterfeiting Low manufacturing cost Possibility to be produced in quantities required for circulation: property non-cash money. Stability of the value of money
Bank A bank is an institution that, along with its own capital, attracts external capital in the form of deposits (deposits) and receives income by providing a loan with interest. Types of banks: 1. Banks authorized by the state to issue cash and conduct public policy on the regulation of the monetary - credit system of the country; 2. Commercial banks serving individuals and firms.
Operations of banks Banking operations are the types of activities that are allowed only for organizations that have a license issued by central banks. The main types of banking operations: 1. Passive (To raise funds); 2. Active (by placement of funds). The resources of banks are formed at the expense of customer deposits, as well as at the expense of the founders and borrowed funds.
Types of accounts Interest rate is a fee that the bank sets as a percentage of the deposit amount and pays to the depositor. Types of deposits on the basis of urgency: 1. Demand accounts - cash deposits in a bank, placed for storage or settlement, which must be issued or transferred by the bank on demand without loss of any amount; 2. Term accounts - cash deposits in a bank placed for a certain period in order to receive income (interest).
Bank cards Electronic Bank card- a card issued by the bank and necessary for the disposal of funds in the account. Types bank cards: 1. Debit - with their help you can pay for goods and services only within the amount that is on the account; 2. Credit - if there are not enough funds in the account to pay for goods and services, the bank will provide the missing amount on credit.
Banking system The banking system is a combination of various types of national banks and credit institutions operating within the framework of the common monetary credit facility. Scheme banking system any country with a market economy Diagram of the banking system of any country with a market economy.
Banking system (continued) State Issuing Bank. It deals only with the state and commercial banks and does not serve firms and individuals. Types of operations: - Emission of banknotes; - Monetary - credit regulation economy; - Support for the exchange rate of the national currency; - Storage reserve fund other credit institutions; - Opening and maintaining accounts of the government and government departments; - Storage of free cash and commercial banks; - Storage of state gold and foreign exchange reserves. State Issuing Bank. It deals only with the state and commercial banks and does not serve firms and individuals. Types of operations: - Emission of banknotes; - Monetary - credit regulation of the economy; - Support for the exchange rate of the national currency; - Storage of the reserve fund of other credit institutions; - Opening and maintaining accounts of the government and government departments; - Storage of free cash and commercial banks; - Storage of state gold and foreign exchange reserves. commercial banks. Serves businesses and citizens. Types of operations: - Active (loans); - Passive (acceptance of deposits); - Opening and maintaining accounts of individuals and legal entities; - Carrying out cash payments and settlements; - Intermediary operations; - Implementation of operations with foreign currency and precious metals; - Issue bank guarantees; - Trust operations Commercial banks. Serves businesses and citizens. Types of operations: - Active (loans); - Passive (acceptance of deposits); - Opening and maintaining accounts of individuals and legal entities; - Carrying out cash payments and settlements; - Intermediary operations; - Implementation of operations with foreign currency and precious metals; - Issuance of bank guarantees; - Trust transactions More
Banking system (continued) Specialized credit and financial institutions. Serves businesses and citizens. Types of operations: - Specializes in certain operations and types of lending. Specialized credit - financial institutions. Serves businesses and citizens. Types of operations: - Specializes in certain operations and types of lending. international banks. Regulate currency and monetary - credit relations between countries. Types of operations: - Active (loans); - Passive (acceptance of deposits); - Opening and maintaining accounts of individuals and legal entities; - Carrying out cash payments and settlements; - Intermediary operations; - Implementation of operations with foreign currency and precious metals; - Issuance of bank guarantees; - Trust operations International banks. Regulate currency and monetary - credit relations between countries. Types of operations: - Active (loans); - Passive (acceptance of deposits); - Opening and maintaining accounts of individuals and legal entities; - Carrying out cash payments and settlements; - Intermediary operations; - Implementation of operations with foreign currency and precious metals; - Issuance of bank guarantees; - Trust operations
Monetary and credit policy of the state economic growth. 1. Object: supply and demand in the money market; 2. Subject: Central Bank
Methods of regulation Methods of regulation: Direct: represent instructions to banks that are subject to mandatory execution; Indirect: based on the possibility of the Central Bank's influence on the amount of excess reserves and on the desire of commercial banks to use excess reserves to issue loans in order to obtain additional profit.
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Even love has not driven as many people crazy as philosophizing about the essence of money. Gladson Prime Minister of Great Britain Money will not feed you, clothe you, shelter you or entertain you until you spend it or invest it. People will do almost everything for money, and money will do almost everything for people. Money is a captivating, repetitive, mask-shifting mystery. Inscription on the Federal Reserve Bank of Philadelphia (1957)
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Money, banks and monetary policy Money and money market Demand for money and equilibrium in the money market. The banking system and the money supply. Money-credit policy. Instruments of monetary policy. What is money? The history of the emergence of money - to consider independently.
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Money is a special commodity that serves as the only universal equivalent that expresses the value of all goods and is an intermediary in their exchange. Consider in detail on your own Functions of money: Measure of value Means of circulation Means of accumulation Means of payment World money
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The law of money circulation Fisher's theorem MV=PQ, hence M= PQ/ V, where M is the mass of money P is the sum of commodity prices Q is the quantity of goods V is the velocity of circulation of KD=Ʃ TP - CR + P - VP/ CO, where Ʃ TP - the sum of commodity prices KR - credit P - payments by terms VP - mutual payments SO - velocity of circulation
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A monetary aggregate is a measure of the amount of money or financial assets, classified as the money supply, their liquidity is close to unity). There are: 1. M0 - cash 2. M1 -M0 plus funds on settlement, current and special accounts of enterprises and organizations 3. M2-M1 plus term deposits population in Sberbank 4. M3-M2 plus certificates and government bonds They differ in composition money supply and liquidity. Liquidity decreases from M0 M1 M2 M3.
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The money market is a market in which the demand for money and its supply determine the level of interest rate, the "price" of money: it is a network of institutions that ensure the interaction of the demand and supply of money. In the money market, money is “not sold” and “not bought” – this is the specificity of the money market. They are exchanged for other liquid funds at an opportunity cost, measured in units of the nominal rate of interest.
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Money market Since the supply of money is determined not by their price, but is regulated by the state, it is completely inelastic. In reality, the money supply depends on the objectives of the monetary policy: Fixed interest rate (MS2). Constant price quantity level (MS1). Modification of points 1 and 2 (MS3). s D surplus % supply lack of supply Q MS1 MS3 MS2
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Details Banking system central bank- (state) Emission - has a monopoly right to issue money Commercial banks - collect money from depositors at% and issue loans to clients at%. The difference between % is bank profit Non-banking sector - bank-like organizations _ Pension Fund, Insurance companies BANKING SYSTEM Bank is a specialized financial institution Level 1 Level 2
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One of the main functions of a bank is to provide loans. A loan is a transaction between economic agents for the provision of money or goods on credit at an interest rate. Basic principles of lending: 1 - repayment (be sure to return what you took, but with%); 2 - urgency (return of money on time); 3 - security (a loan is issued under material support); 4 - payment (payment of% for the use of the loan).
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FORMS OF LOAN: Commercial Banking Consumer Mortgage State International Lombard
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Topic 5. Monetary system and monetary policy of the state 1. The concept and types of monetary systems. 2. Money market: demand, supply, balance. 3. The role of credit in modern market economy. 4. The structure of the credit system. 5. Commercial banks. Their main operations and role in the economy. 6. Central Bank and its functions. monetary policy and its types.
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The monetary system is a form of organization of monetary circulation that has historically developed in each country and is legally established by the state. Money circulation is the movement of money that mediates the circulation of goods and services. Essential Elements monetary system: - national currency unit(dollar, ruble, mark), in which the prices of goods and services are expressed; - system of credit and paper money, change coins, which are legal tender in cash; - the system of issuing money, i.e., the legally fixed procedure for issuing money into circulation; -institutions of the monetary system, i.e. state and non-state institutions that regulate money circulation.
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The money supply is the totality of cash and non-cash Money ensuring the circulation of goods and services in the national economy. Basic monetary aggregates Rule: Aggregate with more than a high degree liquidity included integral part in a complex with more low level liquidity. Liquidity: the ability to use cash (financial assets) as a means of payment
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The main monetary aggregates Aggregate M0 - cash, including balances in the cash desks of enterprises and organizations. It is defined only in Russia The M1 unit is “money for transactions”. It includes the most mobile money in the form of cash and money held on bank accounts on demand, other checking deposits and traveler's checks. The M2 aggregate is money in the broadest sense of the word, which includes all the components of M1 plus non-checkable savings and relatively small term deposits (in the US these are deposits up to $100,000). The M3 aggregate is formed from M2 by attaching large fixed-term savings deposits to it. Unit L (M4) is the most extensive monetary aggregate. In addition to funds included in M3, it includes various securities (savings bonds, treasury bills), funds in foreign currency belonging to the population, enterprises and organizations and banks
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Monetary base (money of increased power MB) - cash outside the banking system (C) and reserves of commercial banks stored in the central bank (R): The money market is a market in which the demand for money and their supply determine the level of interest " of money.
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Fisher's equation: where M is the amount of money in circulation; V is the velocity of money circulation; P is the price level; Y is the volume of output in real terms). Hence: Replacing M with the parameter DM (value of demand for money), we get the formula:
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"Cambridge equation": where k is the share of nominal cash balances in income, that is, the part of income that economic agents wish to keep in cash.
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Demand for money (Keynesian approach): 1. Transactional demand (MD1); 2. Speculative demand (MD2).
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Total demand (liquidity preference curve)
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Money supply Equilibrium in the money market
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Credit is a system economic relations arising from the mobilization of temporarily free funds and their provision on a loan on a repayment basis. Credit principles: - urgency: - repayment; - payment; - security (guarantee); - special purpose.
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Forms of credit: 1) a commercial loan is a loan provided by some functioning entrepreneurs to others in the form of the sale of goods with a deferred payment. It is drawn up by a bill; 2) a bank loan is a loan provided by financial institutions in the form of cash loans; 3) consumer credit- provided to individuals in the form of a commercial loan (when purchasing goods with a deferred payment) and bank loan(loans for consumer purposes); four) mortgage- long-term loans secured by real estate (land, buildings); 5) state credit - a system of credit relations in which the state and local authorities act as a borrower or creditor in relation to citizens and legal entities; 6) interbank credit - short-term lending by banks to each other; 7) international credit - the movement of loan capital in the sphere of international economic relations.
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Two-link (two-level) system: 1. Central Bank. 2. Commercial banks and specialized non-bank credit and financial institutions. Functions of commercial banks: - storage of money; - granting loans; - making calculations. Operations of commercial banks: - passive; - active; - commission-intermediary and trust.
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Leasing is the issuance of loans in the form of rental or rental of equipment. The use of this form provides businesses with a number of advantages. Factoring is the transfer by a company of management of its accounts receivable bank. Bank profit - the difference in percentage received from active operations and paid on passive. In addition, this includes income from the bank's own capital. All this forms the gross profit. Net profit - the difference between gross profit and implementation costs banking operations The bank profit margin is the ratio net profit to the bank's equity. Bank profit margin is the ratio of net profit to the bank's equity capital.
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Functions of the Central Bank: 1) emission center of the country; 2) maintenance of government operations (government banker); 3) storage of reserves of commercial banks; 4) regulation and supervision of the activities of commercial banks; 5) regulation exchange rate national currency; 6) regulation of the economy by monetary methods.
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Monetary policy instruments: 1) regulation of official reserve requirements; 2) operations on open market; 3) manipulation of the discount rate of interest.
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Required reserves are the part of bank assets held either in the form of cash or in the form of deposits in the accounts of the Central Bank. Required reserve ratio (reserve rate): Credit issue - the process of issuing means of payment within the system of commercial banks.
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The money supply multiplier is a numerical coefficient showing how many times the money supply will increase or decrease as a result of an increase or decrease in deposits in the monetary credit system per unit where M is a multiplier; rr is the required reserve ratio. The increase in the money supply is calculated: where D1 is the initial contribution.
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where M is a multiplier; rr is the required reserve ratio. The increase in the money supply is calculated: where D1 is the initial contribution.
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Open market operations are the buying and selling of government securities. valuable papers. Changing the discount rate (discount policy) The discount rate is the interest on loans provided by the Central Bank to commercial banks.
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Monetary policy Policy of cheap money: - lowering the discount rate; - purchase of government securities on the open market; - reduction of reserve requirements. Cheap money policy: - increase in the discount rate; - increase in the reserve norm; - sale of government securities on the open market.
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Monetary policy refers to a set of measures taken by the state to regulate the amount of money in the economy. To implement monetary policy, the state uses a combination of monetary instruments (money supply parameters, reserve ratios, interest rate, loan terms, refinancing rates, etc.) and institutions of monetary regulation (the Central Bank of the Russian Federation, the Treasury, the Ministry of Finance etc.).
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The objects of monetary policy are supply and demand in the money market. The subjects of monetary policy are banks, primarily the central bank in accordance with its inherent functions of conducting the monetary policy of the state and commercial banks.
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The main strategic goals of monetary policy are expressed in improving the welfare of the population and ensuring maximum employment. The ultimate goals of the monetary policy of the Bank of Russia are formulated in accordance with the goals adopted for the current year macroeconomic policy. The main task Bank of Russia in the medium term is a gradual decline in inflation.
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The main direction of the monetary policy of the Central Bank of the Russian Federation is to reduce the rate of inflation. In modern conditions, states with market models economies use one of two concepts of monetary policy: 1. policy of credit expansion, or "cheap" money (Credit expansion of the Central Bank increases the resources of commercial banks, which, as a result of loans issued, increase the total supply of money in circulation) 2. policy of credit restriction, or "expensive" money. (Credit restriction entails limiting the ability of commercial banks to issue loans and thereby saturate the economy with money)
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Monetary policy methods are a set of methods and operations through which the subjects of monetary policy - the Central Bank as government agency monetary regulation and commercial banks as "conductors" of monetary policy - affect the objects (demand for money and supply of money) to achieve their goals. The methods of conducting everyday monetary policy are also called tactical objectives of monetary policy.
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Classification of monetary policy methods: 1. Direct and indirect regulation of the monetary sphere Direct methods have the character of administrative measures in the form of various directives Central Bank concerning the volume of the money supply and the price of financial market. Indirect methods of regulation of the monetary sphere affect the motivation of the behavior of economic entities with the help of market mechanisms.
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2. General and selective methods of monetary regulation General methods are predominantly indirect, affecting the money market as a whole. Selective methods regulate specific types of credit and are mainly prescriptive.
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The impact of the subjects of monetary policy on its objects is carried out with the help of a set of specific tools. The instruments of monetary policy are understood as a means, a way of influencing the Central Bank as a body of monetary regulation on the objects of monetary policy.
