What is the monetary system and its elements? It might seem like an easy question, but finding the answer to it is quite difficult. What is their essence? What does the concept of the monetary system and its elements include? All these questions will be answered.
General theoretical information
First, you need to understand the terminology. What is a monetary system? In fact, this is a form of state organization of the circulation of finance. At the same time, the following basic elements of the monetary system can be distinguished: unit of account, types of money, their emission and price scale. Depending on the specific historical period, they were presented in various forms: piece, metal (mono and bi), fiat paper and credit.
It should be noted that the monetary system and its elements developed in different countries with their own specifics. Although sooner or later, this path was passed by every state.
What to eat now?
The modern monetary system is based on the circulation of fiat and defective credit and paper money. They replaced gold, which had been used as the main means of payment for two millennia. And the modern basic elements of the monetary system are:
- National unit used for price scale.
- Various banknotes (tickets and coins), as well as the order of their release into circulation (the process itself is called "issue").
- Procedure, restrictions and regulation of the turnover of funds.
- Methods of organizing a call.
About monetary units
It is established by law that a certain sign (in the form of a ticket or a coin) serves to express and compare the prices of the services and goods offered. At the same time, the question is which currency is used - national or international. In the first case, this means that it is used only in a certain country, while in the second it is used in their group. For the first case, you can bring rubles, while in the second - euros.
What about commensuration? This is not clear to many, so let's dwell on this in more detail. Here in the Russian Federation there is a banknote ruble / 100 kopecks. It is used to express price. And in order to measure the cost of goods for the dollar / 100 cent banknote, the cost of commensuration is applied. It is this essence and element of the monetary system that provides the foundation for everything else.
About price scale
In fact, it is used to express the value in the evaluation or sale of certain goods in the monetary units of a certain country. Price scale alsoseen as a way to measure the purchasing power or value of goods. That is, thanks to him, money manifests such a function as a measure of value.
Here it is necessary to make a small historical digression. Initially, as soon as money appeared, their content completely coincided with the scale of prices. But gradually there was a tendency to move away from the weight content of coins. This was due to their wear, deterioration and the transition to minting from much cheaper metals. After the exchange of credit money for gold ceased, the officially established price scale lost its economic meaning.
As a result of the Jamaica Agreement, the value of precious metals is now determined by the market. That is, the formation occurs spontaneously. You can do without this information, but then the characteristics of the elements of the monetary system will not be complete.
Types of funds
Now legal tender is credit and paper money plus change coins. At the same time, there is a rather significant bias in their use. So, in economically developed countries, paper money is either issued in limited quantities, or not printed at all. Whereas in the underdeveloped they are still in wide circulation.
When talking about types of money, they mean the denominations of coins and banknotes that are used in the financial system. Moreover, they are aimed at, as a rule, the convenience of exchange relations. In the Russian Federation, the Central Bank is responsible for issuing banknotes. Decision to issue new denominations or updated units of accountaccepted by its board of directors. He also approves their designs.
Speaking about the types of money, it should be noted that they are presented as non-cash/cash. In the first case, these are electronic means, as well as credit and payment cards. They are gradually gaining more and more popularity. Cash is the previously mentioned paper and credit money plus loose change.
Everything that exists now is the result of a certain historical development of systems in the specific national conditions of a country or group of them. Their nature, popularity and frequency of use are influenced by the development of trade, economic and a number of other relations. Under their influence, the monetary system and its elements develop. At the same time, cash is transferred to non-cash (to bank accounts) and vice versa.
Procedure for issuing funds into circulation
Speaking about the elements of the monetary system, we cannot avoid the issue of emission. In fact, this is a legally established procedure for the issuance and circulation of marks. This is done by the Central Bank and the Treasury. Let's look at the example of the Russian Federation and see how the monetary system and its elements work in this case:
- The Central Bank is monopoly engaged in the organization of cash circulation. To fulfill his duties, he implements the following activities: predicts, ensures the production and storage of cash and coins, and also creates reserve funds throughout the country; establishes rules for collection, transportation and storage forbanking institutions, signs of solvency, the procedure for replacing damaged units and their destruction.
- In the case of non-cash payments, the Central Bank acts a little limited. So, by law it is entrusted with regulation, licensing and coordination. The Central Bank also organizes settlement systems, establishes rules, terms, standards and forms of non-cash payments for organizations and, in particular, financial institutions.
Organizational moments
The entire state-credit apparatus establishes the order, regulation and restrictions of money circulation. That is, this is done by the Ministry of Finance, the Treasury, the Central Bank. They develop guidelines for the growth of the money supply in circulation and loans, which serves to control inflationary processes. The main task that pursues this:
- Establish appropriate fiscal policy.
- Control the money supply and the rate of lending.
About liquidity
This refers to the ability of money to be used at any time to purchase the necessary goods and services, as well as pay for work. At the same time, their various forms have different degrees of liquidity. But despite this, they form a kind of unity, with the help of which the functioning of economic ties is ensured.
In a market economy, this is realized in the form of cash flows. Liquidity itself may vary depending onwhere the elements of the country's monetary system are located. For example, in Brazil, Russian rubles are exotic, so before you buy something with them, you will need to find a place where you can exchange them for local currency. Whereas with dollars it is easier to do. The situation in Ukraine is quite different. There, rubles are traded on a par with dollars and euros: it is usually the exchange rates of these three currencies that are indicated in exchange offices.
About cash flows
They are the sum of economic benefits or obligations that move between different entities (products, repayment of debts, loans, etc.). Three characteristics are distinguished for them: time, amount, direction. All elements of the monetary system that operate within the framework of flows are subject to them.
And if why the amount and direction is taken into account is more or less clear, then time requires explanation. The fact is that the flow can be determined for various periods: a week, a month, a year. In this case, the longer the time interval, the higher the flow value. In order for it to function continuously, you should take care of a certain amount of money.
Each entity must always have a certain amount of funds at its disposal. All together they form a cash reserve. It is indicated not within a certain time interval, but on a specific date.
On the development and formation of the modern monetary system of the Russian Federation
Now let's look at the situation that has developed. How the elements of modern monetary systems were formed,which we are currently using?
The formation of what can be seen now began during the monetary reform of the 22-24s of the twentieth century. Then the main monetary unit was declared the chervonets, which was compared with 10 rubles. Its content was set at the level of the spool. This is now an outdated measure. And then she answered 78, 24 shares of pure gold. Why exactly so many? Pre-revolutionary ten-ruble gold coin contained exactly this amount of valuable metal.
In a decree of October 11, 1922, the monopoly right to issue them was transferred to the State Bank of the USSR. All the necessary conditions were created to maintain the currency. Chervonets could be exchanged for gold. Loans were issued only for easily realizable inventory items. It was allowed to exchange chervonets for a stable foreign currency. For the payment of government debts and payments, they were accepted at face value.
These banknotes were not only credit money in form, but also in their essence. After all, the issue was regulated not only by the needs of economic turnover, but also by the values that were on the balance sheet of the State Bank.
End of reform
But initially there were only partial measures. By the beginning of 1924, there were already prerequisites for the completion of the monetary reform. After all, the cost of funds was significantly undermined by the First World War, and then the Civil War. Because of this, the government actively used the printing press to cover the ever-emerging budget deficit with a natural result - the depreciation of money. Therefore, at the endall funds were exchanged. The rate was as follows: 1 ruble of a treasury bill was equal to 50 billion banknotes that were issued before 1922.
And then what?
After the monetary reforms of 22-24 years in the USSR there was a new system, which existed until 1990 with minor changes. What changed? During the monetary reform of 1947, the ruble became the monetary unit. It should be noted that the scale of prices and the procedure for its establishment has changed several times. The last change in the USSR took place on January 1, 1962. Then it was found that one ruble corresponds to 0.987412 g of gold. This scale of prices reflected the purchasing power of the monetary unit and was quite consistent with existing gold prices.
Modern parameters in the Russian Federation were established in the legislative act of March 1, 2002 under the number No. 86-FZ “On the Central Bank of the Russian Federation”. This law recognizes only the ruble and prohibits the circulation of other monetary units on the territory of the country, as well as the use of other surrogates. The Bank of Russia received the monopoly right to issue.
And before that there were the nineties. One can only recall those times and the inflation that had to be de alt with. But, despite seemingly significant changes, the 1998 denomination cannot be considered a monetary reform. Why? The fact is that the purpose of its implementation was to solve certain technical problems, such as: streamlining the circulation of funds, facilitating accounting and settlements, returning to the usual scalemoney.
Conclusion
So we have considered what elements of the monetary system are modern money. Of course, this knowledge is not enough to become a specialist, but it is quite possible to get a general idea.
It should be noted that the formation of the monetary system and its elements is still not completed. New forms, tools and much more are constantly emerging. An example is Bitcoin. This is a very popular, albeit very unusual currency, in the success and future of which few people believed ten years ago. At the same time, voices are heard that it is imperfect and that it needs to be improved. This gives reason to believe that this is far from the end.
