The emission mechanism is ... The monetary system: the order of issuance of money in circulation and their withdrawal from circulation

In the sphere of monetary regulation, priority is given to economic methods. They include a certain set of tools. One of them is the emission mechanism. This means of regulation is used according to strictly centralized rules. Let's consider its features in more detail.

General information

According to Art. 35 of Federal Law No. 86 regulating the functions of the Central Bank, the key economic methods for regulating the financial sphere are:

1. Rates on operations.
2. Mandatory reserve requirements.
3. Operations in open markets.
4. Placement of equity securities.
5. Refinancing of credit companies.
6. Currency interventions.
7. Quantitative direct restrictions.
8. Establishment of directions for increasing the money supply.

Financial regulation acts as a key tool for managing the economy. Violation of its mechanism negatively affects the state of the economic system. This is due, in particular, to the fact that, excessive release of money, for example, leads to inflation, a decrease in the purchasing power of funds, a depreciation of capital. The lack of finance, on the contrary, helps to limit the opportunities for economic growth, leading to a crisis of non-payments.

Organization of money turnover

It can be carried out using banknotes. In this case, there is a cash turnover of funds. Regulation of the process is carried out by the Central Bank. It is this structure that has the right to use the emission mechanism in its activity. This is fixed at the legislative level. At the same time, it has been established by norms that this monopoly is established exclusively with respect to banknotes and in certain cases - coins. The cash turnover accounts for a fairly small share even in the calculations carried out by the population. It is less than 5-10%. Planning turnover is not appropriate. This is due to the fact that cash is realized by banking structures through the branches of the Central Bank, depending on demand. They can not be used to cover the budget deficit. In this connection, the banknote emission mechanism is a rather flexible instrument. It is not tied to macroeconomic indicators and is not under strict control by the regulator.

Specificity of implementation

The issue of banknotes differs from the formation of government debt obligations in that the former, acting as demand bills, are used as legal tender. They do not imply an interest charge. Modern money has a credit character. In this regard, bank accounts are essentially the same as banknotes. They act as the main component of the mass of money in circulation. Central banks of developed countries often carry out not only the production and withdrawal of money from circulation. They can also design, protect banknotes from forgery. Old bills should be periodically eliminated. This is primarily due to the improvement of technology and technology. With the development of computer programs, it becomes easier for intruders to falsify banknotes. The central bank, acting as a state regulator, should timely react to such phenomena and prevent them. The Central Bank's functions may include solutions to other technical issues.

Security

On banknotes it is not indicated that they are under the protection of different assets. For example, they can be provided with precious metals, gold and so on. This is reflected in the published balances. As security the asset of the Central Bank acts. Its key articles, as a rule, are gold and foreign currency reserves, loans to bank structures on the security of shares or a portfolio of government bonds. In different countries, the issue of securing banknotes varies in different ways. However, in any case, it has a legal basis. It is often enough in legislation to determine the nature of security and, consequently, the indirect standards of banknote production.

Additionally

In the financial sphere, various calculation tools are used. As one of them is a freely convertible currency. It is a tool, the use of which is allowed not only in the countries that created them, but also outside them. A currency of this type is accepted in all states in which conversion into national finances is carried out. It can be used in a variety of calculations without any restrictions, except those established by the government to protect the country's own funds. The rate of such currency is established exclusively in the framework of open trades. The state has no right to artificially limit the value of national funds. One of the permissible options for intervention may be the currency intervention of the Central Bank. However, in this case, only market methods can be used, suggesting an increase in the supply of funds on the exchange, which reduces their cost.

Non-cash turnover

It is quite a specific problem. The central bank does not possess either an actual or a formal monopoly on the b / n emission mechanism. This is manifested in the following. The financial structures deposit the mandatory reserves in the Central Bank. This is a requirement of the government that carries out regulation. The smaller share of deposits is made up of funds used for clearing settlements. Their size, as a rule, is not more than 30-50% of the balance of the Central Bank, and sometimes less.

Non-cash emission is used not only by the state regulator. Other banks can also form a mass of financial resources in the same way as the Central Bank. However, the difference is that for commercial structures such an emission mechanism is a tool for developing their own operations. The central bank also uses it in the absence of funds to regulate the liquidity of the banking structure. By analyzing the balance sheets of the regulator, it becomes clear that the share of its b / n issue is insignificant in comparison with other financial institutions.

Practical implementation

Consider the placement of securities. According to the Civil Code, they are recognized as documents that certify property rights, the transfer or sale of which is allowed only upon their presentation. Securities must have a fixed form and mandatory requisites. The implementation of documents is carried out on primary trading floors. As key players in the market are investors and issuers. The latter determine the proposal, because they need financial resources. Investors, in turn, are looking for favorable conditions for the realization of their own capital. Accordingly, they form demand.

Primary market

It mobilizes free funds and invests them in the economy. However, it not only promotes expansion of accumulation on the scale of the national economic system. Within the primary market, distribution of funds is carried out in economic spheres and industries. As a criterion of placement is the profit that securities bring. This, in turn, means that the funds are channeled into the spheres, branches of the economy and to enterprises that maximize income. The primary market, thus, acts as the actual regulator of the national economic system. Issuers can be municipalities, government, companies. The role of each group is determined by the state of the economy and the general level of its development. Chronic budget deficit determines the priority position of the state in the market.

Promotions

The issue of these securities is carried out by enterprises in the process of their creation, with the increase in the value of their authorized capital or for attracting additional resources. The primary procedure is the sale of shares to investors - the first owners. Such emission is made at the time of establishment of the company or with an increase in its authorized capital. Financing of borrowed funds is carried out through the creation of bonds.

Basic methods

Primary emission is produced in the following forms:

1. Open (publicly). In this case, placement is carried out among an unlimited number of investors. The company publicly announces the upcoming event by conducting an advertising campaign and registering the prospectus.
2. Closed. Such an emission is called private. In this case, the company does not announce its intentions publicly. Accommodation is carried out among a limited number of investors (up to 500) or for an amount not exceeding 50 thousand minimum wages.

Creation of deposits

In practice, credit emission is often used. It represents an increase in the mass of financial resources by the bank due to the formation of new deposits for customers who have received a loan from it. The creation of such an emission mechanism was due to the understanding by credit institutions of the fact that there is no need to keep unnecessary reserves in safes. They can be turned into real finances. To do this, it is necessary to agree with borrowers that they can take money as those persons who at one time contributed them to the accounts. Due to this, citizens who have loans can get benefits, both for cash. To do this, the borrower must instruct the bank to pay them at the expense of the loan. Since deposits are suitable for payments for purchases, they are, in fact, no different from cash.

Classification of deposits

Modern banks provide for deposits:

1. Ownership of savings.
2. Created by a financial institution in the provision of borrowed funds.

As a basis for the latter, there are excessive reserves. After several banking crises, a serious financial problem arose. Its solution was the formation of a nationwide backup system. Its principles are laid in the basis of the structure of the banking sphere of many countries, including Russia. Such a system is based on the centralization of a certain proportion of the funds of commercial financial structures in special funds. The right to dispose of them belongs to the Central Bank. It establishes standards on mandatory deductions to the reserve. They are determined in% of the total amount of funds held by the banking organization on accounts of various types.

Conclusion

As one of the principal features of the system of circulation of money in the capitalist countries is the almost complete absence of the division of turnover into banknote and b / n. Means of both categories have equal purchasing power. The transition from a banknote form to a non-cash form is conditioned by the real needs of economic entities. As a result, the entire mass of funds is regulated, and not only its individual components. Due to the unity of circulation, interaction of the money, production and commodity markets, interest rates become a regulator of entrepreneurial activity. Accordingly, the state has an effective financial tool. The regulating monopoly belongs to the Central Bank. This is due to a number of factors. The main reasons for the existence of a monopoly in the Central Bank is the need to prevent abuses and promote the implementation of a unified financial and credit policy.