Course work
Discretionary monetary policy of the Central Bank and "policy by the rules"
In the XVIII century. A. Smith believed that the economy would govern itself, without state intervention, if it was directed by the "invisible hand" of personal gain. In such a system, the state was assigned the role of a “night watchman”. Much has changed since then, life has made its own adjustments, and today not only politicians, but also most economists believe that the state should be an active participant in economic activity.
There are three main ways in which the state influences the economy: direct intervention (for example, through the rationing of goods, regulation of prices and incomes); fiscal policy; monetary policy. Experience has shown that none of the countries that have tried to pursue a policy of direct state intervention has been able to achieve long-term success. Therefore, in market economies state regulation carried out through fiscal and monetary policy.
The relevance of this work lies in the fact that in the context of the consequences of the global economic crisis, it is especially important that the chosen monetary policy most effectively contribute to the achievement of the set goals - a sustainable and balanced economic growth and maintaining financial stability.
In this paper, the existing types of monetary policy of the state will be considered, theoretical justifications for each of the policies will be given, as well as their advantages and disadvantages will be assessed. Based on the studied data, an analysis and evaluation of the effectiveness of the monetary policy pursued by the Central Bank of the Russian Federation in last years, as well as the main directions of the monetary policy of the Central Bank for 2013-2015 will be assessed.
According to Samuelson's Dictionary of Terms, Nordhaus "credit - monetary policy - measures of the central bank in terms of control over the money supply, interest rates and credit conditions.
The task of monetary policy is to ensure that changes in the money supply are consistent with the main goals of economic development: increasing business activity, reducing inflation and maintaining the balance of payments.
Although monetary policy is determined by the government, its conductor is the Central Bank. It has a set of tools that are often referred to as monetary policy instruments. These instruments mainly affect either the quantity of money, mainly in the form of bank deposits, or interest rates.
Monetary policy instruments do not have to be used in isolation. On the contrary, two or more instruments are usually used at once, so that the corresponding effects mutually reinforce each other. Activities of this kind are often referred to as integrated policies.
Tools:
a) credit limits; direct regulation of the interest rate;
b) change in the required reserve ratio;
c) change in discount rate (refinancing rate);
d) operations on open market.
With the help of these tools, the Central Bank implements the goals of monetary policy. The goals of monetary policy can be grouped as follows:
Final Goals:
a) economic growth;
b) full employment;
c) price stability;
d) stable balance of payments.
Intermediate targets:
a) money supply;
b) the interest rate;
c) exchange rate.
The ultimate goals of monetary policy are being implemented as one of the directions economic policy in general, along with fiscal, currency, foreign trade, structural and other types of policy.
Often in the process of formation banking system in countries transitioning to market relations, the strengthening of the degree of independence of the Central Bank in conducting monetary policy is accompanied by the desire of the monetary authorities to achieve the final goal, while in reality they are able to control only certain intermediate nominal values.
Depending on the goals that the Central Bank implements, two types of monetary policy are distinguished: discretionary (flexible) monetary policy and monetary "policy by the rules" (rigid). There are also two types of discretionary monetary policy: stimulating and contracting.
Discretionary (flexible) policy- policy aimed at maintaining the interest rate at a certain level; can be graphically shown relative to a horizontal money supply curve at a given interest rate.
Discretionary monetary policy (flexible monetary policy)
According to the Keynesian concept, the choice of one or another type of discretionary monetary policy is determined by which of the two main reasons macroeconomic instability is most significant at the moment: an increase in inflation or an increase in unemployment. The conflict of macroeconomic goals (Phillips curve) determines the choice between a policy of expensive money and a policy of cheap money.
Phillips curve in the short run
where p is the inflation rate, U is the unemployment rate
Expensive money policy has as its main goal the limitation of aggregate demand and the reduction of inflation. This is achieved, among other measures, primarily by raising the discount rate. The policy of expensive money reduces the availability of credit and increases its costs, which leads to a reduction in the money supply, a reduction in the demand for investment, a reduction in income, and a decrease in demand-side inflation.
Politics cheap money aimed at increasing aggregate demand and reducing unemployment. Lowering the discount rate makes credit cheap and easily accessible, which ultimately increases the money supply, increases the demand for investment, increases employment, increases household incomes, and increases aggregate demand.
The stimulating monetary policy is carried out during a recession and is aimed at "invigorating" the economy, stimulating the growth of business activity in order to combat unemployment.
The stimulating monetary policy is to conduct central bank measures to increase the money supply. Her tools are:
) lowering the reserve requirements,
) a decrease in the discount rate of interest,
) purchase by the central bank of government valuable papers.
The mechanism by which a change in the money supply affects the economy is called the "money transmission mechanism" or "money transmission mechanism". The monetary transmission mechanism shows how a change in the money supply (a change in the situation on money market) affects the change in the real volume of output (the situation in the real market, i.e. the market for goods and services).
This mechanism can be represented by the following logical chain of events.
With a decrease in the discount rate (r), the demand of commercial banks for loans (Dm) increases, which they can use for lending, thereby increasing the money supply. An increase in the money supply (S m) leads to a decrease in the rate loan interest(%) (according to which commercial companies provide loans to entrepreneurs, the population). Credit becomes cheaper, which stimulates the development of production (Y).
Since the impact of stabilization policy occurs in the short term, the impact of stimulating monetary policy on the economy can be graphically depicted as follows:
Monetary transmission mechanism under stimulating monetary policy
The policy of cheap money is aimed at stimulating the growth rate of the real sector by providing cheap loans, but at the same time, an interest imbalance can lead to high inflation rates due to the appearance of excess unsecured money supply in circulation. It is this risk factor that is currently seriously threatening the United States, Western Europe, Japan and many other countries that used lower interest rates to avoid possible deflation at the peak of the financial crisis. The economies of these countries are over-pumped with unsecured liquidity, which may cause a new round of the crisis.
A contractionary monetary policy is carried out during a boom period and is aimed at reducing business activity in order to fight inflation. The contractionary monetary policy consists in the use by the central bank of measures to reduce the money supply. These include:
) increase in the norm of reserve requirements,
) an increase in the discount rate of interest,
) sale of government securities by the central bank.
This policy can be represented by the following chain of events:
With an increase in the discount rate, a process occurs that is the opposite of what we observe with a stimulating monetary policy. The increase leads to a reduction in the demand for Central Bank loans, which slows down the growth rate (or reduces) the money supply and raises the lending rate. Entrepreneurs take less "expensive" credit, which means less money is invested in the development of production.
The benefits of monetary policy include:
No internal lag.
The internal lag is the period of time between the moment of awareness economic situation in the country and the moment of taking measures to improve it. The decision to buy or sell government securities by the central bank is made quickly, and since these securities in developed countries are highly liquid, highly reliable and risk-free, there are no problems with their sale to the population and banks.
No crowding out effect.
The stimulating monetary policy (an increase in the money supply) causes a decrease in the interest rate, which leads not to crowding out, but to stimulation of investment.
Multiplier effect.
Monetary policy has a multiplier effect on the economy, and there are two multipliers. The deposit multiplier ensures the deposit expansion process, i.e. a multiplicative increase in the money supply, and an increase in autonomous spending as a result of a decrease in the interest rate in the face of an increase in the money supply multiplicatively increases the value of the total output.
The disadvantages of monetary policy are as follows:
1. Possibility of inflation.
Stimulating monetary policy, i.e. an increase in the money supply leads to inflation even in the short run, and even more so in the long run. Therefore, representatives of the Keynesian trend argue that monetary policy can only be used in case of overheating (inflationary gap) of the economy, i.e. consider the possibility of conducting only a contractionary monetary policy, and in a recession, in their opinion, stimulating fiscal rather than monetary policy should be used.
2. The presence of an external lag due to the complexity and possible failures in the mechanism of monetary transmission.
The external lag is the period of time from the moment when measures are taken to stabilize the economy (the central bank makes a decision to change the value of the money supply) until the result of their impact on the economy (which is expressed in a change in the value of output) appears. The purchase and sale of government securities by the central bank is fast; change rapidly credit opportunities commercial banks. However, the mechanism of monetary transmission is long and consists of several steps, each of which can fail.
· The reaction of the money market to the growth of supply depends on the type of demand curve for money. A serious drop in the interest rate will only occur if the demand curve for money is steep, i.e. if the sensitivity of the demand for money to changes in the interest rate is small. If the demand for money is very sensitive to changes in the interest rate (the money demand curve is flat), then an increase in the money supply will not lead to a significant decrease in the interest rate (graph a).
· A significant decrease in the interest rate as a result of an increase in the money supply may not lead to a serious increase in investment spending if their sensitivity to changes in the interest rate is low (investment curve is steep) (chart b).
· If investment demand is highly sensitive to interest rate movements and investment spending has increased as a result of falling interest rates, then an increase in aggregate spending may not lead to an increase in real output if the economy is at full employment (at the level of potential output), which corresponds to vertical aggregate supply curve (chart c).
Possible failures in the operation of the monetary transmission mechanism
a) money market b) investment market c) AD-AS model
Thus, a disruption in any link of the transmission mechanism can negate or significantly weaken the impact of monetary policy on the economy.
Moreover, even in the case when there are no failures in the functioning of the transmission mechanism, the presence of a significant external lag in monetary policy, i.e. lagging the impact of changes in the money supply on the economy can lead to destabilization of the economy. For example, a decision to increase the money supply, taken during a recession, may give its result when the economy has already reached a boom, which will cause an increase in inflationary processes. Conversely, the sale of government securities by the central bank to reduce business activity in an overheated economy can have an impact when the economy is in a deep recession, and this will only exacerbate the situation.
"Politics by the rules" or tight monetary policy- policy aimed at maintaining the money supply at a certain level; graphically, as an extreme case, it is presented relative to the vertical money supply curve at the level of a given indicator of the money supply.
Monetary "policy by the rules" (tight monetary policy)
Such a policy was proposed by monetarists headed by M. Friedman. For many years, Friedman argued that monetary policy should be conducted according to rules and this idea became important part monetarist doctrine.
Monetarists are convinced that monetary policy determines the level of economic activity in the country to a much greater extent than Keynesians believe. According to monetarists, the money supply is the only an important factor affecting the level of production, prices and employment.
Since the monetary velocity of money is stable in the sense that its fluctuations are small and it does not change in response to changes in the money supply, the money supply itself has a predictable effect on the level of aggregate demand.
From the point of view of the monetarists, the policy of expensive and cheap money proposed by the Keynesians is harmful and meaningless. The main cause of macroeconomic instability lies in the sphere monetary processes. Inflation, unemployment, decline in production are not typical for market system as such, but stem from the wrong monetary policy implemented by the state.
Conducting an effective financial policy in accordance with monetarist recommendations involves:
1. Rejection of arbitrary changes in tax or monetary policy for the sake of set economic and political goals. The economy, in their opinion, is an extremely complex and still insufficiently studied system, therefore government intervention aimed at eliminating various crisis phenomena causes the opposite effect, i.e. brings even more chaos;
Rejection budget policy in the Keynesian sense (as an instrument of counter-cyclical policy) and replacing it with another policy that assumes that the state will play the role of an "employee" who will plan expenses and taxes without the need to ensure economic stability;
The main tool for maintaining long-term stability should be a monetary policy based on long-term, stable growth in the money supply in accordance with the monetary rule.
Monetary rule means an annual expansion of the money supply at the same rate as the annual growth rate of real GDP. According to monetarists, the money supply should grow steadily within 3-5% per year (for the US);
Legislative establishment of a monetary rule, taking into account long-term trends in the dynamics of key economic indicators.
Friedman's defense rules can be broken down into a number of statements.
Statement 1. Monetary policy has a strong impact on the real economy in the short run. However, in the longer run, changes in the money supply affect primarily the price level.
Friedman and other monetarists believe that fluctuations in the money supply are historically one of the most important, if not the most important, sources of cyclical fluctuations in economic activity. With regard to long-term neutrality, Friedman was one of the first to argue that since prices eventually adjust to changes in the money supply, the effect of money on real variables can only be temporary.
Statement 2. Despite the strong short-term influence of money on the economy, there is little room for active use of monetary policy to try and smooth business cycles.
Friedman supported this assumption with several points.
First, it takes time for the central bank and other government agencies to collect and process information on the current state of the economy. These information lags can make it difficult for the central bank to determine whether the economy is truly in recession and whether a policy change is appropriate.
Second, there is considerable uncertainty about how strong the effect of a change in the money supply will be on the economy and how long it will take for it to occur. Friedman emphasized that there are long and variable lags between monetary policy actions and their economic results. That is, not only does monetary policy take a relatively long time to kick in, but the amount of time it takes to operate is unpredictable and may vary from case to case.
Third, price adjustments and wages happens quickly enough, though not instantaneously, that by the time the Fed realizes that the economy is in recession and increases the money supply, the economy may already be coming out of recession.
Statement 3. Even if there is some room to use monetary policy to smooth business cycles, the Fed cannot expect to do so effectively.
One of the reasons Friedman did not believe in the Fed's ability to effectively manage activist monetary policy was political. He believed that, despite its supposed independence, the Fed was under short-term political pressure from the president and members of his administration. For example, the Fed may be pressured to stimulate the economy during an election year. If a right timing, expanding the money supply in an election year can increase output and employment just before voters go to the polls.
Statement 4. The Fed must choose a certain monetary aggregate and commit itself to making it grow at a constant rate from year to year.
For Friedman, the crucial step in eliminating the Fed as a source of instability was getting it to abandon its activist, or discretionary, monetary policy and commit itself—publicly and upfront—to following that rule. . Although the exact choice of the rule is not decisive, Friedman believed that the constant money growth rate rule would be a good choice for two reasons. First, the Fed has considerable influence, some control over the rate of growth of the money supply. So if the money supply growth rate deviates significantly from its target, the Fed cannot easily blame it on forces outside its control. Second, Friedman argued that a gradual increase in the money supply would lead to less cyclical fluctuations than historically applied supposedly "counter-cyclical" monetary policy. He concluded that a constant rate of growth in the money supply would provide a "stable monetary base" that would allow economic growth to continue without worrying about monetary instability.
Friedman was not in favor of a sharp transition from discretionary monetary policy to a low, constant rate of money supply growth. Instead, it provided for some transitional period during which the Fed, through phased, pre-announced steps, would gradually reduce the growth rate of the money supply. In the end, the growth rate of the chosen monetary aggregate would correspond to an inflation rate close to zero. It is important that after reaching a constant rate of growth in the money supply, the Fed would stop responding to small economic downturns by increasing the growth rate of the money supply, and would continue to pursue a policy of maintaining a fixed rate of money supply growth. However, in some of his writings, Friedman left open the possibility that, in the face of major economic crises like the Depression, the monetary rule could be temporarily abandoned.
In 1975, the US Congress passed a special resolution in which it required the Federal Reserve System (FRS) to ensure long-term growth of monetary aggregates in accordance with the long-term potential of the economy to increase production. The Fed was charged with setting limits on the money supply for the coming period. In 1977, this provision was enshrined in law. And since then, the Fed has been publishing money supply targets and discount rates for the next 12 months, reviewing them every three months.
The choice of options for monetary policy depends largely on the causes of changes in the demand for money. For example, if the growth in the demand for money is associated with inflationary processes, then a strict policy of maintaining the money supply would be appropriate, which corresponds to a vertical or steep money supply curve. If it is necessary to isolate the dynamics of real variables from unexpected changes in the velocity of money, then a policy of maintaining the interest rate that is directly related to investment activity (horizontal or flat money supply curve) will probably be preferable.
Discussions between Keynesians and monetarists about the economic role of the state in market economy made it possible to rethink some of the most fundamental aspects of macro economic theory. Today, very few economists adhere to the extreme Keynesian view that "money doesn't matter" or the opposite monetarist extreme of "only money matters". Modern monetary policy uses everything positive that is in these two concepts.
Development of monetary policy as an integral part of the national macroeconomic policy carried out by the Bank of Russia. This process is organized as follows:
The Bank of Russia develops a draft MP and submits it for consideration to the National Banking Council;
National banking council gives a conclusion on the project;
By October 1, the Bank of Russia shall submit to the State Duma the draft Guidelines for the unified state monetary policy for the forthcoming fiscal year which must be approved by December 1st.
The main directions of the unified state monetary policy for the coming financial year contain an analysis of the state and forecast of the development of the Russian economy. The main guidelines, parameters and tools of the unified monetary policy, the implementation of the approved monetary policy is entrusted to the Bank of Russia.
credit money bank policy
In 2012, the Bank of Russia pursued its monetary policy in the context of continued uncertainty in the development of the external economic situation affecting the Russian economy, seeking to strike a balance between the risks of accelerating inflation and slowing economic growth.
In the conditions of formation budget surplus and increased exchange rate flexibility, the main source of the increase in the money supply in 2012 was the growth in refinancing of credit institutions by the Bank of Russia,
In February 2012, the Bank of Russia jointly with the Russian Ministry of Finance carried out a number of measures to liberalize the government securities market.
When making decisions on interest rate policy, the Bank of Russia was guided by medium-term assessments of inflationary risks, the dynamics of inflationary expectations, assessments of economic growth prospects, and also took into account changes in other factors. Based on the analysis of these and other factors, the Bank of Russia in January-August 2012 did not change the direction of monetary policy - the refinancing rate and interest rates were maintained at the level set from December 26, 2011.
However, in the 3rd quarter of 2012, against the background of rising inflation and inflationary expectations, the risks of exceeding the medium-term inflation targets of the Bank of Russia increased (Appendix A). Therefore, the Bank of Russia decided to increase the refinancing rate from September 14, 2012 and interest rates on its operations by 0.25 percentage points (Appendix B).
The International Monetary Fund also advised the Bank of Russia to raise the rate. IMF analysts believe that tightening monetary policy will help not only contain price increases, but also prevent possible overheating Russian economy. However, most Russian experts did not expect the Central Bank to change rates, because raising refinancing rates to curb non-monetary inflation is ineffective, plus there are risks of a slowdown in economic growth.
In June 2013, the four-year term expires, for which the current head of the Central Bank of the Russian Federation, Sergei Ignatiev, was approved. Who will lead the post of chairman of the Central Bank is not yet known. However, on March 12, 2013, Russian President Vladimir Putin officially announced his decision to propose to parliament that his adviser Elvira Nabiullina be appointed to the position.
Russian Finance Minister and head of the National Banking Council Anton Siluanov commented on this decision of the head of state. In his opinion, with the advent of Nabiullina, monetary policy will not soften. However, the independence of the Central Bank in conducting monetary policy will be preserved.
The most important trend in February was the continuation of the trend towards accelerating inflation. February inflation amounted to almost 0.6% at the end of the month (in February 2012 - 0.4%). Thus, although the acceleration rates were not as high as in January, when they were twice as high as last year, they remain sufficient; as a result, February inflation in annual terms reached 7.3%.
Meanwhile, it is a significant inflationary background that is the main argument of the Bank of Russia in the controversy around the easing of monetary policy. On February 12, the Bank of Russia announced that it had left the refinancing rate and interest rates on key operations unchanged.
In addition to keeping interest rates at the same level, the Central Bank of the Russian Federation also unified the required reserve ratio at the level of 4.25% from March 1, regardless of the type of obligations (before March 1, the following reserve requirements were in effect, established on April 1, 2011: non-residents in the currency of the Russian Federation and foreign currency in the amount of 5.5% and 4% on all other obligations). (Appendix B).
In January 2013, there was a seasonal contraction of the broad monetary base after its expansion at the end of the year. At the end of the month, it decreased by 14.5% to 8424.8 billion rubles. In January, only required reserves increased - by 3.6%. The decrease in the amount of cash in circulation and the simultaneous growth of required reserves in January led to a reduction in the monetary base in a narrow definition (cash plus required reserves) by 8.6% to 7454.5 billion rubles.
Dynamics of the monetary base (in a narrow definition) and gold and foreign exchange (international) reserves of the Russian Federation in 2007-2013
After a twofold increase in December 2012, the excess reserves of commercial banks 1 decreased in January 2013, returning to the level of November last year. Their volume at the end of the month amounted to 970.3 billion rubles.
In the next three years, the Bank of Russia will maintain the continuity of the implemented principles of monetary policy. When formulating the principles of monetary policy for the medium term, as in previous years, the intention of the Central Bank of the Russian Federation to focus on reducing inflation is fixed and the task is to reduce the inflation rate to 5-6% in 2013 and to 4-5% in 2014-2015. At the same time, the Bank of Russia plans to complete the transition to inflation targeting by 2015. Under this regime, the priority goal of monetary policy is to ensure price stability, that is, to maintain stable low rates of price growth.
Monetary policy aimed at controlling inflation will help achieve broader economic goals, such as creating conditions for sustainable and balanced economic growth and maintaining financial stability. The implementation of the monetary policy of the Bank of Russia involves setting a target value for the change in the index consumer prices. The main goal of the Bank of Russia's monetary policy is to reduce the growth rate of consumer prices in 2013 to 5-6%, in 2014 and 2015 to 4-5%.
Decisions in the area of monetary policy will continue to be made by the Bank of Russia, as a rule, on a monthly basis.
The Central Bank of Russia presented three options for monetary policy, depending on the possible price of oil. At the same time, the base scenario of the forecast is the second option, which is based on an oil price of 97 dollars per barrel. in 2013
According to the forecast of the Central Bank, the net outflow of private capital from the Russian Federation in 2013 in the amount of $35 billion, while the price of Urals oil is $73 per barrel. and 10 billion dollars at an oil price of 97 dollars per barrel. If the average annual oil price next year is $121/barrel, then, according to the forecast of the Central Bank of the Russian Federation, capital outflow in 2013 will be zero.
At the end of the current year, the Central Bank of the Russian Federation expects a net outflow of private capital from the country in the amount of $65 billion. 2012 amounted to 57.8 billion dollars.
In the medium term, an important strategic task will be to build a more effective monetary policy transmission mechanism, as well as to increase confidence in the Bank of Russia as the body responsible for price stability, which will create the basis for a better
management of inflationary expectations of economic entities.
In order to further increase the effectiveness of the interest rate policy, the Bank of Russia will continue to gradually increase the flexibility of the exchange rate mechanism in the coming three years, and by 2015 it plans to switch to a floating exchange rate, refusing to use operational benchmarks of the exchange rate policy related to the level of the exchange rate.
Ensuring financial stability will remain one of the main tasks of the Bank of Russia in the medium term.
In this paper, the main types of monetary policy were considered: discretionary monetary policy and "policy by the rules".
The choice of options for monetary policy depends largely on the causes of changes in the demand for money. For example, if the growth in demand for money is associated with inflationary processes, then a strict policy of maintaining the money supply at a certain level would be appropriate. If it is necessary to isolate the dynamics of real variables from unexpected changes in the velocity of money, then the policy of maintaining the interest rate at a certain level will be preferable.
Today, however, very few economists adhere to the concept of any of the policies in its purest form. Modern monetary policy uses everything positive that is in these two concepts.
As for the monetary policy of Russia, today, due to the increase in inflation rates, the Central Bank of the Russian Federation is focused on tightening the monetary policy by raising the refinancing rate to 8.25%, and we should not expect its softening. The main intention of the Central Bank of the Russian Federation is to focus on reducing inflation and by 2015 complete the transition to an inflation targeting regime. Under this regime, the priority goal is to ensure price stability, that is, to maintain consistently low rates of price growth.
1. Central Bank Russian Federation, official site://www.cbr.ru/
. "The main directions of the unified state monetary policy for 2013 and the period of 2014 and 2015", report of the Central Bank of the Russian Federation
http://www.cbr.ru/today/publications_reports/on_2013 (2014-2015).pdf
3. "The main directions of the unified state monetary policy for 2012 and the period of 2013 and 2014", report of the Central Bank of the Russian Federation
http://www.cbr.ru/today/publications_reports/on_2012 (2013-2014).pdf
4. E.T. Gaidar
Monthly Review "Economic Development of Russia", No. 3 2013://www.iep.ru/files/text/RED/Russian_Economic_Developments_03_2013.pdf
Center for Situational Analysis and Forecasting CEMI RAS
“Monitoring. Results of 2012. Monetary Policy Indicators of the Central Bank of the Russian Federation”://data.cemi.rssi.ru/GRAF/center/monitorings/monetary.htm
Abel E., Bernanke B. Macroeconomics, 2010
7. Samuelson P, Nordhaus V. "Dictionary of terms" Economics. M., 1999
Instruments of monetary policy pursued by the Central Bank of the country.
Goals and instruments of monetary policy.
Monetary policy of the state consists in changing the money supply (the amount of money in circulation) in order to change demand, the price level in the national economy, the volume of national production and employment.
The main objectives of monetary policy are:
1. + Stimulation of credit and money issues during economic stagnation (policy of cheap money);
2.– Credit containment and money issue with inflation (policy of dear money).
The change in the money supply is carried out mainly not by increasing or reducing the issue of cash, but by influencing the volume of commercial lending.
Monetary Policy carried out by regulating the money supply in circulation.
Operate three the main tools that allow the Central Bank to influence the money supply in the country:
1. Change in reserve norms: the bank keeps part of the money in the account of the Central Bank.
2. Carrying out operations of buying and selling government securities on the open market. The purchase of government securities by the Central Bank increases the money supply in the country, and the sale reduces it.
3. Setting the discount rate (refinancing rate). The rate at which the Central Bank lends to other banks. Such loans do not require mandatory reservations. The low rate allows the bank to lend to the people, also at low rates. And vice versa.
advantage efficiency of its impact on the economy.
disadvantages Ineffective during deep depression
Cheap money policy is carried out with a decrease in the value of real GDP and an increase in unemployment, it is aimed at increasing the level of economic activity and employment by expanding lending to business entities. This is possible with cheaper loans, i.е. lowering their interest rates
Expensive money policy The Central Bank sells government securities, increases reserve norms and refinancing rates. As a result of the reduction in the amount of money in economic turnover, interest rates on loans are rising, and the number of people who want to take out expensive loans will decrease significantly.
| Cheap money policy | Expensive money policy |
| Problem: recession, unemployment | Problem: inflation |
| The Central Bank should buy securities, lower the required reserve ratio or the discount rate | The Central Bank must sell securities, increase the reserve requirement or raise the discount rate |
| Money supply rises | The money supply is shrinking |
| Interest rate goes down | Interest rate rises |
| Investment costs rise | Investment costs are falling |
| Real NNP increases by an amount that is a multiple of the increase in investment | Real NNP is reduced by an amount that is a multiple of the decrease in investment |
| Unemployment is declining | Inflation is declining |
43. Commercial bank: concept, types, functions.
Bank- an economic institution involved in attracting and allocating financial resources. Commercial banks representative sob. main "nerve" centers monetary system. Modern commercial Bank yavl. credit and financial institution of a universal nature. In the early stages of the development of banking, commercial banks served mainly trade, credited transportation, storage and other operations related to Comrade. exchange.
Functions of commercial banks - it is first of all accumulation of termless deposits(maintenance of current accounts) and payment of checks issued to these banks, as well as lending entrepreneurs. These credit institutions also carry out settlements and organize the payment turnover on the scale of the entire national economy. On the basis of their operations, credit money arises (checks, bank bills). At the turn of the 80-90s. began the active introduction of commercial banks in different countries into the insurance business. As a result, customers of commercial banks can use the services of the widest range.
Commercial banks can be classified:
1. By form of ownership. Depending on the ownership of capital, there are:
State banks, if capital commercial bank belongs to the state. There are two types of state banks - central banks, which carry out their operations and policies in accordance with the requirements of the economy, not aiming to make a profit. State commercial banks provide services to sectors of the economy, lending to which is unprofitable for private capital, ensuring the implementation of the state policy in the field of lending to the economy, influencing investment, intermediary and settlement operations.
Joint stock banks- the most common form of ownership of banks at the moment. The equity capital of such banks is formed through the sale of shares. There are open joint stock companies (JSC) and closed joint stock companies (CJSC). In the first case, shares are sold to everyone, in the second case, they are distributed only among the founders or other, predetermined circle of persons. The main founding document of joint-stock banks is the Charter.
Cooperative (share) banks, the capital of which is formed through the sale of shares. Rarely seen in practice.
Municipal banks - formed at the expense of municipal property or under the management of the city.
Mixed banks, when the bank's equity pools different forms property.
joint banks, or banks with the participation of foreign capital, if their authorized capital is owned by foreign participants or branches of banks in other countries. For example, in Russia in 2008 there were 202 banks with foreign capital.
In accordance with federal law No. 395-1 "On Banks and Banking" banks in Russia can be created as a limited or additional liability company, a joint-stock company (open or closed).
2. By nature economic activity distinguish between issuing, commercial, specialized banking institutions. The issuing bank issues banknotes, respectively, the central bank of the country acts as the issuing bank. Commercial banks are credit organizations that provide credit and settlement services to industrial, commercial and other enterprises and organizations, the population. Specialized banking institutions are engaged in lending to a specific type of activity (for example, mortgage, investment, savings, industry and other banks).
3. According to the terms of loans issued, short-term banks - issue loans for up to three years, and long-term loans - issue long-term loans (over three years, for example, mortgages).
4. On an economic basis, they distinguish depending on the industry served - industrial, commercial, agricultural banks.
5. By territory, banks are divided into local (regional), federal, republican and international.
6. Large, medium and small banks are distinguished by size.
7. According to the volume and variety of operations, banks are divided into universal (perform all types of operations) and specialized (mortgage, investment, innovative, savings and other banks). The list of performed operations is determined by the license.
8. By the presence of a branch network, banks are distinguished with branches and without branches. For example, according to the results of 2008, there were 809 branches of the Savings Bank of Russia in the Russian Federation - an extensive branch network itself.
Despite the existing various types of commercial banks, they all have bodies that manage their activities.
Monetary policy is a set of measures of the central bank and the government in the field monetary circulation and credit.
The monetary policy of the central bank (monetary policy) is a set of government measures that regulate the activities of the monetary system, the loan capital market, the procedure for non-cash payments in order to achieve a number of general economic goals: stabilizing prices, economic growth rates, strengthening monetary unit.
Monetary policy is essential element macroeconomic policy.
All impacts are reflected in the value of the total social product and the national product.
The main objectives of the state monetary policy:
Monetary regulation of the economy is carried out on the basis of the principle of compensatory regulation, which implies the following:
The development and implementation of monetary policy is the most important function of the central bank. It has the ability to influence the volume of money supply in the country, which in turn allows you to regulate the level of production and employment.
The main tools of the central bank in the implementation of monetary policy:
Regulation of official reserve requirements is a powerful means of influencing the money supply. The amount of reserves (the part of banking assets that any commercial bank is required to keep in the accounts of the central bank) largely determines its lending capacity. Lending is possible if the bank has enough funds in excess of the reserve. Thus, by increasing or decreasing reserve requirements, the Central Bank can regulate the lending activity of banks and, accordingly, influence the money supply.
The main tool for regulating the money supply is the purchase and sale of government securities by the Central Bank. When selling and buying securities, the Central Bank tries to influence the volume of liquid funds of commercial banks by offering favorable interest. By buying securities on the open market, he increases the reserves of commercial banks, thereby contributing to an increase in lending and, accordingly, an increase in the money supply. The sale of securities by the Central Bank has the opposite effect.
Traditionally, the Central Bank provides loans to commercial banks. The rate of interest at which these loans are issued is called the discount rate of interest. By changing the discount rate of interest, the central bank affects the reserves of banks, expanding or reducing their ability to lend to the population and enterprises.
The factors that affect demand, supply, and interest rates can be grouped under the heading "monetary policy instruments".
The Central Bank sets minimum interest rates for its operations. The refinancing rate is the rate at which a loan is granted by commercial banks, or it is the rate at which the Central Bank rediscounts their bills.
The Bank of Russia may set one or more interest rates for various types of transactions or pursue an interest rate policy without fixing the interest rate. The Bank of Russia uses interest rate policy to influence market interest rates in order to strengthen the ruble.
The Bank of Russia regulates the total volume of loans issued by it in accordance with the accepted guidelines of the unified state monetary policy, using the discount rate as an instrument. Bank of Russia interest rates are the minimum rates at which the Bank of Russia carries out its operations.
The interest rate policy of credit institutions, being part of the national monetary policy, has a significant impact on the development of the national economy and its stability. Commercial banks are usually free to choose specific interest rates on loans and deposits and use some indicators reflecting the state of the short-term money market as benchmarks in the implementation of interest rate policy. On the other hand, the central bank, in the process of targeting, sets intermediate monetary policy goals that it can influence, as well as specific tools to achieve them. This may be the refinancing rate or interest rates on central bank operations, on the basis of which the short-term interbank lending rate is formed, etc.
The problems of identifying the factors influencing the interest rate policy of commercial banks have been of concern to specialists since the formation of economic theory. However, answers to many questions have not yet been found. Modern studies aimed at identifying the optimal rules for the implementation of national monetary policy are based to a greater extent on econometric models.
In theory and practice, methods of direct and indirect regulation of national monetary policy are considered. From the point of view of interest rate policy in the narrow sense (rates on credit and deposit operations, the spread between them) the instrument of its direct regulation is the establishment by the central bank of interest rates on loans and deposits of commercial banks, the instruments of indirect regulation are the establishment of the refinancing rate and the rate on the operations of the central bank in the money and open markets.
Interest rates on loans and deposits as instruments of direct regulation are not often used in world practice. For example, National Bank China sets such rates, which are considered indicative for the banking system. At the same time, the bank's policy is aimed at reducing the spread, which in the first half of 2006 was 3.65%, and by the end of 2009 - 3.06%, which indicates sufficient liquidity of the Chinese banking system.
In many countries, including Russia, the refinancing rate has become more of an indicative indicator, giving the economy only an approximate guide to the value of the national currency in the medium term, since it has been in an unchanged state for a long time, while real rates in the money market change every day.
According to existing legislation, commercial banks are required to allocate part of the funds raised to special accounts with the Central Bank.
Since January 2004, the Central Bank has established the following amounts of deductions to the mandatory reserve fund of the Bank of Russia: for accounts in rubles legal entities and foreign currency of citizens and legal entities, as well as on ruble accounts of citizens - 3.5%.
The maximum amount of deductions, i.e., the required reserve ratios, is 20% and cannot change by more than 5% at a time.
This ratio allows the Bank of Russia to regulate the liquidity of the banking sector.
Reserves serve as a current regulation of liquidity in the money market, on the one hand, and as a limiter on emission credit money-- with another.
In case of violation of the required reserve ratios, the Bank of Russia has the right to recover in an indisputable manner from the credit institution the amount of outstanding funds, as well as a fine in the established amount, but not more than the double refinancing rate.
Operations on the open market, which are understood as the purchase and sale by the Bank of Russia of government securities, corporate securities, short-term transactions with securities with the conclusion of a reverse transaction later. The limit of operations on the open market is approved by the board of directors.
In accordance with the Law of July 10, 2002 No. 86-FZ (as amended on October 27, 2008) “On the Central Bank of the Russian Federation (Bank of Russia)”, the Bank of Russia has the right to buy and sell bills of commodity origin with a maturity not more than 6 months, buy and sell bonds, certificates of deposit and other securities with a maturity of not more than 1 year.
Refinancing - lending by the Bank of Russia to banks, including accounting and rediscounting of bills. The forms, procedure and conditions for refinancing are established by the Bank of Russia.
Refinancing of banks is carried out by providing intraday loans, overnight loans and holding Lombard loan auctions for up to 7 calendar days.
Currency regulation should be considered from two sides. On the one hand, the Central Bank should monitor the legality of the currency transactions, on the other hand, after the change exchange rate national currency in relation to other currencies, without allowing significant fluctuations.
One of the methods of influencing the exchange rate is the conduct of foreign exchange interventions or motto policy by central banks.
Foreign exchange intervention is the sale or purchase by the Central Bank of foreign currency on foreign exchange market for the purpose of influencing the exchange rate and the total demand and supply of money. These, obviously, should also include transactions for the purchase and sale of precious metals on the domestic market of the Russian Federation, the procedure for which is regulated by the letter of the Central Bank of the Russian Federation dated December 30, 1996 No. 390.
The main task of the exchange rate policy in Russia is to strengthen confidence in national currency and replenishment of gold and foreign exchange reserves. At present, the monetary base is fully secured by gold and foreign exchange reserves.
Under the direct quantitative restrictions of the Bank of Russia, the establishment of limits on the refinancing of banks, the holding by credit institutions of certain banking operations. The Bank of Russia has the right to apply direct quantitative restrictions in exceptional cases for the purpose of pursuing a unified state monetary policy only after consultations with the government of the Russian Federation.
The Bank of Russia may set growth targets for one or more indicators of the money supply based on the main directions of the unified state monetary policy. In Russia, the main aggregate is the monetary aggregate.
To date, the monetary policy of central banks is guided by monetarist principles, where the Central Bank is tasked with tightly controlling the money supply, ensuring a stable, constant and long-term growth rate of the amount of money in the economy, equal to the GDP growth rate.
Other factors that affect demand, supply and interest rates include:
Politics of cheap and expensive money
Depending on the economic situation in the country, the central bank pursues a policy of cheap or expensive money.
Cheap money policy
Characteristic of a situation of economic recession and high unemployment. Its goal is to make credit money cheaper, thereby increasing aggregate spending, investment, production, and employment.
To implement a cheap money policy, the central bank may reduce the discount rate on loans to commercial banks or buy government securities on the open market or reduce the reserve requirement, which would increase the money supply multiplier.
Dear money policy is carried out in order to reduce the rate of inflation by reducing aggregate spending and limiting the money supply.
Includes the following activities:
All of the above instruments of monetary policy referred to indirect (economic) methods of influence. In addition to these general methods of monetary regulation, the whole bank also uses direct (administrative) methods designed to regulate specific types of credit. For example, a direct limitation on the size of bank loans for consumer needs.
Monetary policy has pros and cons. To strengths one can attribute speed and flexibility, less dependence on political pressure compared to fiscal policy. Problems in the implementation of monetary policy are created by cyclical asymmetry. The effectiveness of monetary policy can also be reduced as a result of an opposite change in the velocity of money.
The monetary policy of the Central Bank of the Russian Federation is a set of government measures that regulate the activities of the monetary system in order to regulate the economic situation and achieve a number of general economic goals: strengthening the monetary unit, stabilizing prices, restructuring the economy, stabilizing economic growth rates.
There are two main types of monetary policy:
Both types of monetary policy can be either total or selective. With a total policy, the measures of the Central Bank of the Russian Federation apply to all CBs, with a selective policy - to individual credit institutions. When using a selective policy, it is practiced to use the following set of instruments or their combinations: setting limits on accounting and re-registration operations (by industry, region, etc.), limiting certain types of CB operations, setting a margin when conducting various financial and credit operations, regulating the conditions for issuing certain types of loans to different categories of borrowers, setting credit ceilings, etc.
Selective politics are resorted to when development is weak financial markets when they are not able to provide a sufficiently effective redistribution of funds and investments in the right directions.
This policy contributes to a change in credit flows in certain sectors of the economy, on the other hand, it hinders the normal functioning of the credit and financial system in connection with the creation preferential terms lending to individual counterparties. Choosing a Specific Type of Monetary Policy
The Central Bank of the Russian Federation is carried out on the basis of the state of the economic situation. Currently, the Central Bank of the Russian Federation is pursuing a policy of a managed floating exchange rate of the ruble in relation to the main foreign currencies. This allows you to increase the saturation of the economy with money. In practice, the Central Bank of the Russian Federation combines both types of monetary policy, which allows creating conditions for a gradual reduction in inflation and ensuring sustainable economic growth.
The concept of the bank's credit policy includes a number of factors, actions and documents that determine the further development of the institution in the direction of providing attracted customers.
With the help of a credit policy, it is possible to more clearly organize the process of issuing loans, determine its basic principles, adopt the most effective methods and means of implementation, and identify key priorities and strategic objectives.
The credit policy regulates the functioning of the loan issuance system, helps to deal with the issues of processing and movement of documents faster and more professionally, and contributes to the correlation of the institution's lending activities with the overall strategy of professional activity.
Commercial banks have enough a large number of tools, the specifics of the functioning of which are determined by various factors. According to the terms of impact, the instruments are divided into long-term and short-term, according to the principle of regulation, qualitative and quantitative, according to the form indirect and direct, according to the objects of influence - supply and demand for financial resources.
All of the methods listed above actively interact with each other within the framework of use in a single system. In countries where the economy is high level development, central banks operate as fully independent structures. This independence is expressed in the ability to independently choose the types and methods of using tools that help implement monetary policy.
The credit policy of commercial banks is a more prosaic concept. Here we are talking about the development of specialized programs aimed at lending to individuals and legal entities. The basis of the credit policy commercial organizations, as a rule, is the optimal ratio of the level of profitability and potential risks that are found in the process of carrying out certain operations. The policy in the lending segment of large and experienced commercial banks differs significantly from their vision of the situation of younger competitors. For this reason, the market has financial institutions, which impose increased requirements on borrowers and vice versa, those that literally issue “left and right”.
A number of microeconomic and macroeconomic factors almost equally affect the credit policy of financial institutions.
The first group includes such indicators as the liquidity of assets in the context of a particular enterprise, the specialization of an individual banking institution, peculiarities client base, attracting additional funding and features of the resource base. The level of staff qualifications in some cases plays a decisive role, since not all specialists, for example, are able to work with unreliable borrowers.
Among the macroeconomic components, first of all, I would like to note the level of competition in the banking sector, the state of quotations of the national currency, interest rates, inflation, as well as the stage business cycle, on the passage of which the state is at the moment.
Legal issues should not be discounted, as they can influence the size of bank reserves, change or not change in interest rates, as well as other parameters of work by sending the administration of commercial banks the relevant directives.
Among the main directions of the credit policy of commercial banks, I would like to single out such a term as a developed policy. The process of its implementation consists in the development of documents and instructions that define the stages of interaction with customers and the criteria for their evaluation, the features of regulating the main operations, as well as others, at least important points. The main feature of the credit policy of any bank is rightly considered to be its fickle nature. The adopted provisions are subject to regular review and revision, depending on changes in the economic situation in the state.
Among the main risks of the credit policy of banks, errors in the process of implementing the adopted provisions are distinguished:
The main requirement of the credit policy of any commercial bank is the need for enhanced work on long-term relationships with legal entities acting as borrowers. This work is based on pre-approved criteria for selecting clients. As a rule, this refers to the possibility of securing a loan received, the availability of equity capital of an adequate size, successful financial and economic experience in the segment over a long period, the level of profitability and stability of the business, the transparency of the schemes on the basis of which the company's income and profit are formed.
In the framework of interaction with representatives of small businesses, the credit history, reputation and personality of the manager play a decisive role.
The main goal of the credit policy of any banking institution is rightly considered to be profit maximization against the background of minimizing potential risks. Relying on possible options the ratio of these components and the resources that are available at the moment, the current tasks of the credit institution are determined, including control over the lending process, technological features of operations, as well as the choice of one or more areas of lending.
The powers delegated to the bank for lending are strictly differentiated in rubles and in dollar terms. The management apparatus is responsible for organizing the functioning of the credit process credit operations. And the powers of bank employees depend directly on the experience and qualifications of the staff. The bank accepts the maximum risk on the borrower in the prescribed amount, which may be in the range of 100 thousand dollars. and more. The amount of lending depends on a number of factors, including previously overdue loans, the structure of the loan portfolio.
In practice, bank employees use a number of techniques that contribute to the organization credit management. Influencing factors: the creditworthiness of the person and the degree of risks taken. An employee of the bank considers the type of credit, the amount and time of repayment of previously accepted credit obligations, based on the studied data, offers individual or complex credit services. Responsibility for disbursed funds most often rests with the branch manager.
Organization of the credit process at various stages of implementation loan agreement depends on the credit policy of the organization carried out by bank employees: requirements, analysis, lending methods. It is represented by the stages of forming a list of applications, negotiating with potential borrowers, assessing the feasibility and degree of risk in connection with a positive decision to issue funds, the process of obtaining a loan, monitoring the execution of the agreement and the intended use of the funds received, closing the agreement for the return of the full amount and interest due for the use of the loan.
The guarantor of the successful functioning of the credit sector of each branch is the responsibility of bank employees for the full study of indicators financial stability client. Thus, the bank's successful credit policy consists in using the maximum possible credit funds by attracted clients with minimal risks.
The lending industry brings maximum profit to financial and credit organizations, provided that the bank maintains a policy of constant monitoring of each stage of the operation. Preliminary control of a credit transaction allows you to select the most creditworthy persons from the submitted applications. Current control is performed to check the credit history, information and documents provided by the borrower, risk analysis.
Subsequent banking control and management of the credit process is carried out after the client receives funds and is performed until the end of the contract. Includes steps to control the movement of credit funds and financial well-being client, for custody of collateral and timeliness of payments. Effective management of the credit process is to protect the loan portfolio.
The banking credit policy in working with legal entities implies fruitful long-term cooperation in connection with the formation of a good loan portfolio with minimal risks. Legal entities selected according to a number of criteria will be offered interesting terms of cooperation from the point of view of minimizing costs.
The assessment of the stability of a legal entity is subject to the factors of cleanliness of bookkeeping, business profitability and its strategic stability in difficult times of crisis, the availability of equity and property that can be offered as security for loan obligations.
Lending individuals all financial institutions that have received permission to perform lending operations are involved. Given the credit policy of a particular bank, financial analysts calculate income programs offered to clients as loan products. The credit policy for individuals includes specialized long-term offers ( , ), individual loans (targeted, concessional), opening short-term credit lines within the financial capabilities of clients ().
The credit policy imposes restrictions on borrowers by age, permanent income and work experience, and other criteria. When assessing the solvency factor, an analysis of the credit history is carried out, and the presence of cash balances on customer accounts at the end of the month.
The essence of the bank's credit policy is a set of measures aimed at creating such credit and investment proposals and products that will minimize the riskiness of operations and obtain a high share of profitability. Virtually complete risk-free lending secured by collateral issued in the national currency in the economic stability of the country.
However, it is always important to analyze external economic factors of influence, such as the instability of currencies, crisis factors leading to instability. Then it is advisable to introduce a policy of restricting lending. The purpose of the credit policy is to calculate the amount of funds and expenses that is desirable and effective for lending, which should be neglected.
The content of the bank's credit policy is an individual issue directly related to the goals set and the chosen credit policy. The strategy and tactics of banking decisions in the field of lending determine the essence of the policy of a particular institution. The primary strategic role here is played by the priority direction of development. A number of financial institutions prefer to develop in one direction, like car loans or lending to the agricultural sector, for example, others aim to provide services to the entire lending industry.
Tactics includes all the tools and methods for achieving the set goals, taking into account the formation of rules, rates, conditions. Important factors: the qualifications and diligence of the staff in order to avoid mistakes and make irrational decisions.
Advice from Sravni.ru: The bank's credit policy is a universal tool, the correct use of which determines the general financial results work of a particular institution. If in one of the banks you were issued a loan, despite the damaged credit history, then the policy of the institution provides for the possibility of taking such a risk. If a separate bank deals exclusively with long-term mortgage lending, which means that such provisions are formulated in the document on its credit policy. Unfortunately, the basic principles of the work of certain banks are hidden from individuals and legal entities with seven seals. Therefore, potential borrowers often have to independently determine what this or that credit institution is really capable of.
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37. and
38.Com banks. Essence, function, types.
History of the rise of the SNS.
SNA-a way to organize information about households. the action performed by the macroec. subjects. Purpose: to give a number of information about the emergence, distribution and nat. product. SNS was developed in the late 20s of the 20th century. a group of Amer. scientists under the guidance of S. Kuznets. The reason arose: the need for macroeconomic information for the development of economic policies, programs and measures to regulate the market economy. The first SNA was created for Polestina in 1936. Date of birth -I SNS-1952. The SNA is based on consolidated accounts of GDP, HF, income and expenses of households and government agencies, foreign economic operations, balance sheets. Principles: 1.double entry - each operation is reflected twice. 2.sequence (production in the image of income, distribution of income, use of income). 3.Balance sheet (registration of all eq flows in the form of balance sheets). not only to ensure the balance of m / y with the volume of resources and their use, but also for the characterization of the results of the process. 5. “T” forms: all accounts consist of 2 sections.
The structure of the SNS. The main types of SNS.
composed of
Demand for money
Demand for money MV = PQ, where M is the amount of money in circulation, V is the velocity of circulation of money, P is the level of prices in the community, Q is the real V national supply. According to the equation, the amount of money in circulation is directly proportional to the price level. The quantitative equation can be interpreted as an equation for the demand for money. portfolio theory Friedman's theory
Keynesian theory ( 3 motivesBaumol-Tobin model:
The concept of transfer e-ki.
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Introduction………………………………………………………………………………………………………………….
Chapter I. Credit Policy of the Bank…………………………………………………………….. 5
1.1 Essence and types of credit operations………………………………………………………………. 5
1.2. The need to manage credit operations……………………………………. 9
1.3. Stages of lending…………………………………………………………………………………………… 16
Chapter II. Analysis of the effectiveness of managing credit operations of a commercial bank (on the example of AB Capital)…………………………………. 32
2.1. Efficiency of loan operations management………………………………………… 32
2.2. Influence of interest rate policy on profitability of credit operations……………. 38
2.3. Analysis of the client's creditworthiness……………………………………………………………….. 53
Chapter III. Credit Operations Management……………………………….. 60
3.1. Forms and methods of managing credit operations of commercial banks 60
3.2. Credit risk management……………………………………………………………………… 73
Conclusion…………………………………………………………………………………………………………. 82
Bibliography…………………………………………………………………………………………. 85
Applications…………………………………………………………………………………………………………. 88
Introduction
Lending to production and turnover is the most important and distinctive feature of the activities of banks in comparison with other financial and non-financial organizations. But at the same time, in Russia, for a long time, the approach to lending to entrepreneurial activity was purely formal. This was also manifested in the fact that both the funds of banks and the funds of enterprises were the property of the state (if you look at the essence of this definition, then everything in the country “belonged to the people”, and the state “looked after” this property, that is, the property was practically a draw), and therefore the bank (at that time the State Bank of the USSR) could not pursue a full-fledged credit policy. Therefore, with increasing competition for potential borrowers, Russian commercial banks needed to plan their lending activities. They must learn how to manage their lending operations in such a way that they bring the highest possible return, but at the same time, banks must strive to reduce credit risks that are directly related to credit transactions.
Therefore, the purpose of this work was to study all aspects of the management of credit operations and analyze the effectiveness of credit operations of a commercial bank.
To achieve this goal, the following tasks were solved in the work:
— definition of the essence and characteristics of the types of credit operations;
— consideration of expediency of management of credit operations;
- evaluation of the effectiveness of various methods of managing credit operations;
- analysis of the management of credit operations on the example of a particular commercial bank;
— consideration of the risks associated with lending to enterprises and methods to reduce their impact on lending activity jar;
The paper uses theoretical, methodological works and developments of domestic and foreign authors on this issue, such as Rose P. S., Suskaya E. P., Usoskin V. M., Pomorina M. A., Lavrushin O. I. and others ., regulatory and reference material, materials of periodicals, as well as officially published reporting data of AB Capital for 1995-1996.
Chapter I. Credit Policy of the Bank
1.1 Essence and types of credit operations
In Soviet economic literature, a loan was understood as the movement of loan (ie money) capital provided on a loan on a repayment basis for a fee in the form of interest. This definition was based on the fact that capital is only alienated under the condition that it is not sold, but only loaned. In general, a loan literally means the disposal of a certain amount of money for a certain period of time, i.e. those who have a surplus of money can lend it to those who are short or need more money.
The role and significance of credit is very great, since it solves the problems facing the whole economic system. Thus, with the help of a loan, it is possible to overcome the difficulties associated with the fact that temporarily free cash, and on others there is a need for them. The loan accumulates the released capital, thereby servicing the influx of capital, which ensures a normal reproduction process. Also, the loan speeds up the process of money circulation, ensures the implementation of a number of relations: insurance, investment, plays an important role in the regulation of market relations.
The sources of loan capital are, firstly, the funds released from the circulation: funds intended for the restoration of fixed capital (ie, the depreciation fund); part of working capital released in cash due to the mismatch between the time of sale of goods and purchase of raw materials, fuel, materials; capital temporarily free in the period between the receipt of funds from the sale of goods and the payment of wages.
Another source of loan capital is cash income and savings in the personal sector. It should be noted that, starting from the 50-60s of our century, there is a tendency to increase the attraction of monetary savings of the population. This was facilitated, first of all, by the improvement of the socio-economic situation developed countries, changes in the structure of consumption.
The third source of loan capital is the state's cash savings, the size of which is determined by the scale state property and share of the gross national product.
Thus, we can conclude that temporarily free funds arising on the basis of the circulation of industrial and commercial capital, monetary accumulations of the personal sector and the state form sources of loan capital, which are accumulated within the framework of financial institutions.
The price of loan capital is interest. Unlike the price of ordinary goods and services, which are the monetary expression of value, interest is a payment for the use value of loan capital. The source of interest is the income received from the use of the loan.
A more accurate picture of the cost of a loan is given by the rate of interest, or interest rate. The rate of interest is the ratio of the annual income received on loan capital to the amount of the loan, multiplied by 100. The rate of interest depends on the profit, which is divided by interest and entrepreneurial income. The interest cannot exceed the rate of profit, since the price of loan capital does not express its value, its changes are not governed by the law of value.
The rate of interest depends on the ratio of supply and demand, which are determined by many factors. Among them: the scale of production; the amount of money savings and savings of the whole society; the ratio between the size of loans provided by the state and its debt; inflation rates; market conditions; state regulation of interest rates; competition between banks, etc.
In connection with the foregoing, it can be concluded that the change in the rate of interest is associated with market mechanism and also subject to government regulation.
Loan interest performs two functions: the redistribution of part of the profits of enterprises or the income of the private sector and the regulation of production through the rational allocation of loan capital.
The dynamics of credit during cyclical fluctuations is interesting. Loan capital serves mainly the circulation of functioning capital, the laws of its movement are due to cyclical fluctuations in production. During a period of revival of industrial growth, the increase in the volume of loan capital lags behind the expansion of production and commodity circulation, the demand for loan capital and the rate of interest increase. During crises, a reduction in production and an excess of real capital are combined with an acute shortage of loan capital and a sharp increase in the rate of interest. During a period of depression, when part of the productive capital takes the form of money, the accumulation of loan capital overtakes the accumulation of real capital, and the average profit and the rate of interest decrease.
A special place in modern conditions is occupied by commercial credit - the supply of goods by one company to another on terms of deferred payment, as well as leasing - the lease by an enterprise of machinery, equipment, transport with debt repayment over several years.
From the above, we can conclude that the very concept of "credit" is changing, it can no longer be revealed by the previous definition as a form of transfer of loan capital from the lender to the borrower. In modern conditions, a credit transaction can be called any economic or financial transaction leading to the indebtedness of one of the participants. Debt repayment is made by the debtor in cash at a time or in installments, and in total amount payment, in addition to the debt, a surcharge in the form of interest is included.
From all other forms of providing funds (subsidies, subventions, grants, etc.), credit as an economic category is distinguished by three fundamental principles - urgency, repayment and payment.
At the same time, urgency means predetermined terms for the return of borrowed funds to the lender; under repayment - the obligatory payment to the creditor of the amount of the principal debt on the agreed terms. Paid means that in this economic transaction, money is a specific product and, based on the law of value, its price is expressed as a percentage.
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The advantages of monetary policy include the following: No crowding out effect. Multiplier effect. Den credit policy has a multiplier effect on the bank account. Absence of internal lag. Internal lag is the time period between the moment of awareness of the situation in the country and the moment of taking measures to improve it. High probability of inflation. It should be noted that only stimulating monetary policy leads to inflation. Contradictory goals of monetary policy. The presence of an external lag due to the complexity and possible failures in the transmission den mechanism. The presence of side effects caused by changes in the supply of money also reduce the effectiveness of monetary policy. Loss of control over the supply of money by the Central Bank in the context of the dependence of the government's monetary policy on the fiscal one.
37. Measurement of den mass.Den aggreg. The most important indicator of the currency of circulation is the money mass, which is the total volume of purchase and payment funds serving the household turnover and owned by individuals, enterprises and the state. To analyze the number of changes in the currency of circulation for a specific date and for a specific period; to develop measures to regulate the growth rate and volume of den mass, various indicators are used - den aggregates. Den aggregate is any of several specific groupings of liquid assets that serve as alternative meters of den mass. and den wed-in, differing from each other in the degree of liquidity. Den aggregates are indicators of the structure of den mass. The composition of den aggregates is different by country. on demand; -M2-cash, checks, demand deposits and small time deposits; -MZ-cash, checks, deposits; -L-cash, checks, deposits, securities. In m / unar statistics in the volume of den mass, except for cash, deposit money is taken into account. The IMF calculates a common indicator for all countries, M1, and a broader indicator of "quasi-money" (terms and savings bank accountsand the most liquid financial instruments circulating on the market).
38.Com banks. Essence, function, types.
Com bank is a credit institution that organizes the movement of loan capital and regulates the payment turnover in order to make a profit. CB belongs to a special category of business enterprises called financial intermediaries. They attract capital, savings from the population and other money released in the course of business activities, and provide them for temporary use to other agents who need additional capital. Banks create new requirements and obligations, which become a commodity on the den market. So, by accepting customer deposits, the bank creates a new obligation-to-deposit, and by issuing a loan, a new requirement for the borrower. This process of creating new obligations is the essence of financial intermediation. This transformation makes it possible to overcome the difficulties of direct contact between savers and borrowers, which arises from the mismatch between the proposed and required amounts, their terms, profitability. The main operations of the bank include: accepting deposits; making payments and settlements; issuance of loans. The main f-mi KB yavl-Xia: 1 attraction of temporarily free money sr-in; 2 granting loans; 3 dens of settlements and payments in the household; 4 issuance of credit sr-in circulation; 5 consulting and provision of eq and financial information.
Transactions of commercial banks that create money. money multiplier
The transactions of money-creating CBs include: issuing loans to bank customers; buying CB government securities from the population. shows how many times the total value of the offer of non-cash money is greater than the amount of excess reserves. Den multiplier is calculated as the ratio of den mass to den base. m = Ms / MB; Ms = m * MB, where m is den multiplier; Ms- supply of money; MB-monetary base.
History of the rise of the SNS.
SNA-a way to organize information about households. the action performed by the macroec. subjects. Purpose: to give a number of information about the emergence, distribution and nat. product. SNS was developed in the late 20s of the 20th century.
a group of Amer. scientists under the guidance of S. Kuznets. The reason arose: the need for macroeconomic information for the development of economic policies, programs and measures to regulate the market economy. The first SNA was created for Polestina in 1936. Date of birth -I SNS-1952. The SNA is based on consolidated accounts of GDP, HF, income and expenses of households and government agencies, foreign economic operations, balance sheets. Principles: 1.double entry - each operation is reflected twice. 2.sequence (production in the image of income, distribution of income, use of income). 3.Balance sheet (registration of all eq flows in the form of balance sheets). not only to ensure the balance of m / y with the volume of resources and their use, but also for the characterization of the results of the process. 5. “T” forms: all accounts consist of 2 sections.
The structure of the SNS. The main types of SNS.
The national product is calculated according to the SNA, which represents the relationship between economic development indicators at the macro level. SNA is a description of the MEih indicators that characterize the results and proportions of the country's economic development to ensure complex analysis the process of creating a national product and national income. The SNA studies and records the process of creating, distributing and redistributing the national product and national income in the country. A feature of the SNS is its comprehensive character. The SNA studies operations m / y sub-ami nat ek-ki. To economic entities (agents) nat ek-ki here include household units that perform ek-s transactions with mothers or financial assets. Economy agents are grouped in 6 sectors: 1) non-financial enterprises; 2) financial institutions and org-ii; 3) state institutions, rendering services; 4) private non-commercial organizations; 5) household house; 6) abroad. Modern SNS composed of 3 interconnected blocks. The first allows you to compare investments and savings, to give a quantitative estimate of the creation, distribution and final use of national income. The second is designed to analyze the creation and distribution of the product m / y industries. The 3rd block is an account of fund flows and reflects the movement financial assets in the form of purchases and sales in the money market.
Demand for money
Demand for money- the total amount of money that households, entrepreneurs want to have at the moment. There are different concepts of demand for money. Quantitative theory of money by I. Fisher: MV = PQ, where M is the amount of money in circulation, V is the velocity of circulation of money, P is the level of prices in the community, Q is the real V national supply.
According to the equation, the amount of money in circulation is directly proportional to the price level. The quantitative equation can be interpreted as an equation for the demand for money. portfolio theory: Cambridge equation - M = kPQ. The coefficient k (liquidity indicator) is inversely proportional to the velocity of money circulation: the less cash, the greater the velocity of their circulation. Friedman's theory: money is one of the types of assets. He considered bonds, stocks, durables, etc. as alternative assets. One of his models: MD = f(P, rb, ra, P/P, Yn/r), where MD is the planned demand for nominal cash balances, rb, ra are the return on bonds and shares, respectively, P/P is the rate inflation, Yn / r - total property. Demand for money is directly proportional to income on bonds and shares and total im-wu, inversely proportional to the inflation rate. Keynesian theory (liquidity preference theory): the demand for money depends on how highly eq-ing subjects value the property of liquidity, and what proportion of their assets they prefer to have in the form of highly liquid money. Keynes highlights 3 motives, encouraging people to keep part of the money in the form of cash: transactional motive (the need for cash for trade transactions); precautionary motive (the possibility of unforeseen purchases, expenses); speculative motive (the intention to save some reserve in order to take advantage of better, compared to the market, knowledge of what the future will bring). The speculative demand for money is based on the inverse relationship between the m / y interest rate and the bond rate. According to Keynes, the demand for money is in direct dependence on ur national income and inversely on the interest rate. Baumol-Tobin model: transactional model, which considers that money is stored econ. subjects only as a medium of payment. Formula: , where Pb-nominal costs. The demand for money is directly dependent on nominal income Y and inversely on the level of interest rate i. All theories of demand for money distinguish 3 main factors that determine the value of the nominal demand for money: 1) it is directly dependent on the absolute level of prices; 2) it is directly proportional to the real volume of national pr-va (income); 3) it is inversely dependent on ur% rate.
The concept of transfer e-ki.
Transformation (transitional) ek-ka-ek-ka of countries transitioning from a centrally controlled system of economy to a system based on market principles. Transformation period-time, during the cat. society implements radical economic, watered and social transformations, and the country's economic system is moving into a new, qualitatively different state in connection with the reforms of the system's economic system. har-ny mixture, a combination of kondno-administrative. systems and modern markets eq. 2) a special initial state preceding the transition process is planned eq. 3) instability of the state. -Xia sots-ek costs: a decline in production, inflation processes, a decline in the life of the population. 6) there is a change in systemic connections and relationships.
