money supply- a set of consumer, payment and accumulated funds serving economic ties and owned by individuals and legal entities as well as the state.
The money supply is an important quantitative indicator of money and consists of two main components - active money used in cash and non-cash transactions and passive (savings and savings, reserves, account balances).
The money supply is affected by two factors:
- the amount of money in circulation;
- velocity of money.
Volume money supply determined by the state - the issuer of money, its legislature. The growth of emissions is due to the needs of the commodity turnover and the state.
In Ukraine, the main reasons for the growth of the money supply are: excessive deficit state budget and a significant reduction in the rate of production and turnover.
An indicator of the mass of money in circulation ( M) has several values (monetary aggregates). The NBU defines the following aggregates:
- М0= cash in circulation;
- M1 = М0+ leftovers cash deposits on bank accounts on demand;
- M2 = M1+ balances of cash deposits in bank term accounts;
- M3 = M2+ funds of clients on trust operations of banks.
In addition, the NBU determines an indicator called the monetary base. It includes the unit М0, cash at the cash desks of banks and reserves of commercial banks in their accounts with the NBU. This money does not participate in credit banking turnover and does not additionally increase the amount of money in circulation, but only serves as the basis for its growth.
Each unit has a specific purpose in the practice of money management, and together they give a complete picture of the structure and dynamics of the money supply and monetary circulation.
Velocity of circulation of money and its influence on the supply and stability of money
Velocity of money- represents the intensive movement of money when they perform the functions of circulation and payment.
The following methods are used to calculate this indicator:
- The speed of movement of money in the circulation of the value of a social product or the circulation of income is defined as the ratio of GNP or ND to the money supply (aggregates M1 or M2). This indicator testifies to the connection between money circulation and the processes of economic development.
- The turnover of money in the payment turnover is determined by the ratio of the amount of money in bank accounts to the average annual value of the money supply in circulation. This indicator indicates the speed of cashless payments.
In addition, general economic factors are used, i.e. cyclical development of production, its growth rate, price movements, as well as monetary (monetary) factors, i.e. structure of payment turnover (ratio of cash and non-cash money), development credit operations and mutual settlements, level interest rates on a loan for money market, as well as the introduction electronic systems for operations in credit institutions and the use electronic money in calculations.
In addition, the frequency and uniformity of income payments, the level of savings and savings have a significant impact on the velocity of money circulation.
The velocity of circulation of money is inversely proportional to the amount of money in circulation, so the acceleration of their turnover means an increase in the money supply. An increased money supply with a constant volume of goods and services on the market leads to a depreciation of money, that is, in the end it is one of the factors of the inflationary process.
The law of the amount of money needed for circulation, its essence, requirements and consequences of violation of requirements
To ensure the stability of money, it is necessary to maintain proportionality between the commodity mass and volume. money services population, on the one hand, and the money supply in circulation, on the other. The development of credit relations and banking contributed to a decrease in the need for cash banknotes. The amount of money required for circulation is determined by the formula:
Where KD- the amount of money in circulation;
DH- the sum of the prices of goods sold;
TO- the sum of the prices of goods sold on credit;
P- payments for which the due date has come;
VR- mutual settlements;
ABOUT- the number of revolutions of the same name monetary unit;
DR - cash reserve for the sphere of circulation.
The excess of the number of monetary units in circulation over the sum of commodity prices (and as a result, the appearance of monetary units that do not have a commodity cover) leads to inflation.
The problem of monetization of the gross domestic product
Performing the functions of a means of circulation and payment, money is constantly moving from one economic entity to another, thereby serving the sale and purchase of goods and services, that is, the implementation of GDP.
The process of movement of money that serves the implementation of GDP is called money circulation.
There is an internal connection between the process of realizing GDP and money circulation: the larger the nominal volume of realizing GDP, the greater will be the flow of money circulation, and vice versa.
Nominal GDP is determined by two factors: the physical volume of goods and services sold ( Q) and their price level ( P). And the amount of money is determined by the amount of money in circulation ( M), and the velocity of circulation of the monetary unit ( V).
The above quantities are taken into account in the exchange equation:
On its basis, it is possible to determine the patterns of change in the main market processes and indicators, in particular: the level of commodity prices, the velocity of money circulation, the mass of money in circulation.
The level of commodity prices is determined by the equation:
Velocity of money:
The amount of money in circulation is characterized by the equation:
This equation is often called the law of money circulation.
The issue of filling the economy with money is extremely important for Ukraine. It is believed that the low (compared to other states) degree of monetization is perhaps the main reason for the growth of debt and other numerous problems.
The degree (level) of monetization of the economy is calculated as the quotient of dividing the money in circulation by the volume of GDP. Both indicators are used in physical terms.
The growth of the money supply has its source in the growth of GDP. Increasing monetization means that a larger and larger share of GDP is kept in cash and vice versa.
Thus, an increase in the degree of monetization indicates an increase in the mobility of the economy, an increase in the potential flexibility of the behavior of economic entities.
The article presents the dynamics and structure of the money supply from 1993 to 2015. The indicators of money circulation in the Russian Federation from 2005 to 2015 are also presented. and an analysis of the relationship between the velocity of circulation of the money supply and various economic indicators was carried out.
Money supply is one of the main elements of any monetary system, therefore, we considered it relevant to conduct a statistical analysis of money circulation in the Russian Federation.
Consider the aggregated indicators of the structure of the money supply in the Russian Federation for 1993-2015, which are the main macroeconomic indicators, using the data in Table 1 as an example.
Table 1. Money supply and money supply structure in the Russian Federation for the period from 1993 to 2015
|
Monetary aggregate М0 |
Monetary aggregate M1 |
Monetary aggregate M2 |
Money supply in national definition |
|
Behind last years characteristics of the money supply have undergone significant changes. As can be seen from Table 1, the M0 monetary aggregate, which is cash in circulation, increased rapidly from 1993 to 2015, which meant an increase in the amount of money issued by the Central Bank of the Russian Federation.
How to determine the velocity of money
However, in the period from 2008 to 2009 and from 2014 to 2015, a slight decline was revealed this indicator by 5.1% and 1.9%, respectively.
Indicator M1 (aggregate M0 + funds of enterprises in banks, etc.) and M2 (aggregate M1 + deposits of the population in banks) tended to increase during the years under consideration, but from 2010 to 2011 decreased by 16.8 % and by 42.2%.
As for the money supply in the national definition, it, equivalent to M1 and M2, decreased by 31.3% in the period from 2010 to 2011, then the situation stabilized.
A sharp jump and fall in all indicators is associated not only with a decrease in the volume of cash in circulation, but also with a decrease in the volume of deposits of the population, enterprises and organizations in settlement accounts in banks. It should be noted that non-cash prevail among non-cash and cash money.
Considering the dynamics of monetary circulation, it would be appropriate to analyze the relationship between the velocity of circulation of the money supply and various economic indicators.
Table 2. Indicators of money circulation in the Russian Federation from 2005 to 2015
|
Monetary aggregate M2 |
Cash in circulation |
Velocity of money supply |
The rate of growth of the velocity of money |
||
Table 2 shows that over the period under review, the characteristic of the velocity of circulation of the money supply tended to a significant decline. Between 2005 and 2010 and from 2011 to 2015 it decreased by 63.5% and 69.6%, respectively. With regard to the growth rate of the velocity of money, from 2005 to 2009. the figures were intermittent, but since 2010 there has been a significant drop of 62.6%. Consequently, the dynamics of these indicators indicates a decrease in the turnover of monetary aggregates, i.e., a decrease in their liquidity.
A slight decrease in cash in circulation in the structure of the money supply indicates a slight decrease in inflationary pressure from aggregate demand. It can also be concluded that non-cash funds will exceed cash by 10-15%. Such an irrational ratio of these two areas negatively affects money circulation in general, because most of the cash is not involved in banking, in contrast to non-cash funds. This phenomenon undermines the stability banking system, therefore, there is a reduction in cash in the credit sector.
The money supply is understood as the totality of generally accepted means of payment in the economy, the amount of cash and non-cash Money.
To measure the money supply, monetary aggregates are used: MO, Ml, M2, MZ. Monetary aggregates are classified depending on the degree of liquidity of monetary assets.
A liquid asset is an asset that can be used as a means of payment or turned into a means of payment and has a fixed nominal value. The composition and number of monetary aggregates used vary by country.
To calculate the total money supply in the Russian Federation, the following monetary aggregates are provided:
- MO - cash;
- Ml is equal to the MO aggregate plus settlement, current and other accounts, deposits in commercial banks, demand deposits; indicator Ml is designed to measure the amount of actual circulation, so it refers to the money supply in the narrow sense of the word;
- M2 - consists of Ml plus term deposits. Using the indicator M2, they try to measure the stock of highly liquid property owned by the population and which, under certain conditions, can turn into money. Therefore, M2 is the money supply in the broadest sense;
- MOH includes M2 plus certificates of deposit and government bonds.
The velocity of money is the average annual number of revolutions made by money that is in circulation and used to buy money. finished goods and services.
What formula is used to calculate the velocity of circulation of money, its concept and essence
The velocity of circulation of money is equal to the ratio of the nominal gross national product to the mass of money in circulation:
where V is the velocity of money circulation;
U- nominal volume of GNP;
M is the amount of money in circulation.
The velocity of circulation of money in the short run is usually a constant value, and in the long run it changes, but only slightly. This speed is quite manageable and depends on the work of the country's banking system and on the level of technical equipment of institutions that participate in monetary transactions.
The higher the technical equipment of banks, the more widely they use modern computers and satellite communication lines, the faster the money turns around and the less money is needed for normal functioning economy.
The money supply required for exchange and payment transactions depends on the demand for money and on the supply of money by the banking sector.
"Money Supply. Velocity of Money" and other materials on the topic "Macroeconomics"
Turnover ratios (business activity) characterize:
- the level of solvency and financial stability of the enterprise;
- the dynamics of the development of the enterprise for the analyzed period;
- the rate of turnover of assets and liabilities.
The values of these coefficients are decisive for the bank in assessing the creditworthiness of an enterprise, which, consequently, affects the outcome of a loan to an enterprise.
The funds of the enterprise are highly liquid assets, the amount of which should be commensurate with covering the current expenses for the production activities of the organization.
The need to analyze the cash turnover ratio (hereinafter referred to as the ODS ratio) dictates:
- assessment of rationality in the management of monetary and financial resources, which are both in cash and on the settlement accounts of the organization;
- assessment of the performance of the organization for a certain period of time.
What is the cash turnover ratio
The ODS coefficient is the speed of turnover of the organization's funds, which are both in the organization's cash desk and on its settlement accounts (accounts 50, 51 accounting) for a given period.
The turnover rate is the sum of the turnovers that money makes in a certain period.
ODS coefficient characterizes:
- efficiency of financial resources management;
- financial and economic stability of the organization;
- sufficiency of financial resources to cover current liabilities.
Data is used as input balance sheet organizations for the analyzed period.
Calculation formula
The ODS coefficient is defined as the ratio of sales proceeds to the average cash balances that are both in cash and on current accounts for a certain period (accounts 50, 51 of accounting).
The calculation formula is as follows:
Cods \u003d Vr / DSsr Where,
Вр - proceeds from sales for the analyzed period;
DSav - the average balances of funds that are on hand and in bank accounts for the analyzed period.
At the same time, the average balances of funds that are in cash and in bank accounts for the analyzed period (Dav) is calculated as the arithmetic mean of the balances of funds in the cash desk of the organization and in bank accounts at the beginning and end of the analyzed period.
Calculation formula:
DSav = (DSnp+DSkp)/2, Where
DSNP - cash balances that are in the organization's cash desk and in bank accounts at the beginning of the period;
DSKp - cash balances that are in the organization's cash desk and bank accounts at the end of the period.
The formula for calculating the cash turnover period
The cash turnover period (hereinafter referred to as the ODS period) is the sum of days during which the cash makes one turnover.
The ODS period is determined by the formula:
Tods = 360/Cods
Calculation formula according to the balance sheet data (form No. 1 and 2):
Cods \u003d str. 10 f. No. 2 BB / (line 260 f. No. 1 BB at the beginning of the period + line 260 f. No. 2 BB at the end of the period) * 0.5
Meaning
The value plays a significant role in the analysis of the considered coefficient in dynamics.
The higher the value of the coefficient, that is, the more revolutions make financial resources, the more positively the solvency and economic stability of the organization, as well as the effectiveness of the management of monetary and financial resources are characterized.
A drop in the coefficient and an increase in the ODS period indicates a decrease in the rationality of their use, which can lead to failures in production activities enterprises due to lack of funding, and endangers financial stability enterprises.
With the negative dynamics of this coefficient, it is necessary to take measures to optimize it.
Calculation example
Initial data:
In 2013, Roga i Kopyta LLC received sales proceeds in the amount of RUB 3 million. At the same time, the balance of funds at the beginning of the year amounted to 100 thousand rubles, and at the end of the year - 240 thousand rubles. In 2014, sales revenue amounted to 3.5 million rubles, cash balances at the beginning of the year - 180 thousand rubles, at the end of the year - 270 thousand rubles.
Calculation:
DSav = (100,000 + 240,000) / 2 = 170,000 rubles;
Cods 2013 = 3,000,000/170,000 = 17.65 turnovers;
Tods 2013 = 360/17.65 = 20 days.
Thus, the cash turnover ratio for 2013 amounted to 17.65 turnover, the turnover period was 20 days.
DSav = (180,000 + 270,000) / 2 = 225,000 rubles;
Cods 2014 = 3,500,000/225,000 = 15.56 turnovers;
Tods 2014 = 360/15.56 = 23 days.
Thus, the cash turnover ratio for 2014 was 15.56 turnover, the turnover period was 23 days.
Despite the positive dynamics of revenue for the period of 2013-2014, there is a slowdown in cash turnover by 12%, which negatively characterizes business activity enterprises in efficient use of funds.
This dynamic may be due to:
- increase in the production cycle of products;
- increase in the cost of production;
- misuse of funds.
In this case, measures to accelerate the turnover of funds are necessary, since financial difficulties may arise at the enterprise, which will entail a number of negative consequences.
Summing up, it should be noted that the rapidity of cash turnover is influenced by both external and internal factors.
External factors include: 
- industry specifics:
- the impact of inflation;
- scope of the organization.
Internal factors include:
- pricing policy at the enterprise;
- asset management strategy;
- production nature of the activity.
Necessary Special attention pay attention to the dynamics of the cash turnover ratio, the negative result of which may entail the following measures to optimize this ratio:
- reducing the cost of production by optimizing current costs;
- reduction of the production cycle of products by optimizing production processes;
- increasing the efficiency of the use of funds due to strict adherence to the budget of the enterprise.
1.3 Velocity of money
Monetary units can be used over and over again in a circular income stream. The more often money is used for payments in a given period - the faster the money "turns around" - the smaller the required amount of money supply for a given amount of real income at a fixed price level. The rate of turnover of money stocks is called the rate of circulation of money income, since it equals the rate at which money is spent on goods and services within a given period of time. Hence, velocity of money is an indicator of the frequency with which the average unit of the national currency is used to perform transactions during a given period of time. The velocity of circulation of money mainly depends on the accepted customs of payment. In our society, for example, workers are paid weekly, every two weeks, or monthly rather than daily or once a year. The frequency of the receipt of wages and salaries appears to influence the amount of money which the workers withhold from one day of pay to the next; their average savings will decrease as wage frequency increases, and vice versa. This inverse relationship between average money savings and frequency of pay is also true for other sources of family income, as well as for the income of entrepreneurial firms.
Thus, for a given level of income, the lower the average money accumulation of different economic units of the economy, the greater will be the rate of money accumulation and vice versa. The average amount of cash savings, and, consequently, the rate of turnover of cash reserves is determined mainly by the generally accepted scheme of payments and payments. True, some other economic variables also have an undeniable influence on the average amount of cash in families and entrepreneurial firms. The income and wealth of economic units have the following effect: the stock of cash tends to increase with an increase in income and general wealth. Interest rates also affect the supply of money (and hence the velocity of money). The higher the interest rates, the more unused cash is generated, and vice versa. Thus, we can expect the velocity of circulation to increase (average holdings of cash will decrease) as interest rates rise, and to fall as interest rates fall. However, the value of the so-called elasticity of demand for money with respect to interest (the degree of sensitivity of the desired size of average money savings to changes in interest rates) is problematic. Another significant factor related to the choice of the population how much cash to hold on hand is the expectation of upcoming economic events. For example, if high inflation is expected, the population will hold less cash because their purchasing power decreases as prices rise. On the other hand, the expectation of lower prices and/or employment leads to a desire to increase savings. Expectations related to upcoming interest rates can also have an impact on the cash supply. When interest rates are expected to rise, the public may withhold deposits until higher rates are announced and therefore hold more cash.
Money is in constant motion between three entities: individuals, business entities and public authorities. The movement of money in the performance of their functions in cash and non-cash forms is a monetary circulation.
The social division of labor and the development of commodity production are the objective basis of money circulation. Money serves the exchange of the total social product, including the circulation of capital, the circulation of goods and the provision of services, the movement of loan and fictitious capital and the income of various social groups.
The beginning of the movement of money is preceded by their concentration in the subjects. They are concentrated in the wallets of the population, at the cash desks of legal entities, on accounts in credit institutions, in the state treasury. In order for the movement of money to arise, it is necessary that one of the two parties needs money. The demand for money arises in the implementation of transactions, money is needed for circulation, payments for goods and services. Their volume is determined by the nominal gross domestic product. The greater the total monetary value of goods and services, the more money is required to complete transactions. Demand for money is also presented for accumulation, which appears in various forms: deposits in credit institutions, securities, official state stocks.
The number of banknotes required for circulation is determined by the law of monetary circulation. All countries' money circulation is subject to this formula, also known as the equation of exchange. This equation expresses the rate of turnover of money:
M*V = P*Q V = (P*Q)/M
V- money turnover rate
M- amount of money
P– prices
Q- the value of all goods
The rate of circulation of money characterizes the speed with which money circulates in the economy, i.e. how many times in a certain period of time the ruble changes hands.
Suppose, for example, that this year 60 loaves of bread are sold at a price of 5 rubles per loaf. Then Q is equal to 60 loaves per year, and P is 5 rubles. The total number of rubles involved in transactions is equal to:
PQ = 5 rubles / per loaf * 60 loaves / per year = 300 rubles per year.
The calculation of the right side of the equation of the quantitative theory of money makes it possible to obtain a monetary expression for the sum of all transactions made during the year, equal to 300 rubles per year.
Suppose now that there are 100 rubles in circulation in the economy. In this case, we can calculate the velocity of money as follows:
V \u003d (P * Q) / M \u003d (300 rubles a year) / (100 rubles) \u003d 3 times a year.
This means that in order for transactions in the amount of 300 rubles to be made in a year in an economy where 100 rubles are in circulation, it is necessary that each ruble changes hands three times in a year.
General economic factors influence the velocity of money circulation, i.e. cyclical development of production, its growth rate, price movements, as well as monetary (monetary) factors, i.e. the structure of payment turnover (the ratio of cash and non-cash money), the development of credit operations and mutual settlements, the level of interest rates for loans in the money market, as well as the introduction of computers for operations in credit institutions and the use of electronic money in settlements. (non-cash circulation of money). In addition to these general factors, the velocity of money circulation depends on the frequency of income payments, the uniformity of spending by the population of their funds, the level of savings (the money lying at home cannot serve the circulation of consumers) and accumulation, etc.
Consider an example of the dependence of the rate of money turnover on the frequency (periodicity) of the payment of income (wages, rent, interest and profit): if wage, for example, 100 rubles a month is paid to employees once a month, then 100 rubles are needed to service this transaction. If you pay it twice a month (that is, in two installments) of 50 rubles, then for this you may need only 50 rubles - pay at the beginning of the month, and then the same 50 rubles (which the employee spends in a month) - in the middle of the month . Thus, the more often wages are paid, the less money may be required to secure this transaction.
Or, for example, on the rate of economic growth. The higher it is, the less money is required in quantitative terms. Suppose that you need to gradually spend 1000 rubles per month. Let spending be made twice a month and the velocity of circulation of the monetary unit will also be equal to the month. Thus, having spent 500 units at the beginning of the month, you will need another 500 units in the middle of the month to make the following expenses, since the 500 units spent earlier will not be returned until the next month. Thus, you need to have 1000 units. Now imagine that the velocity of circulation of money in the economy has increased and is half a month. Now, having spent 500 units at the beginning of the month, by the middle of the month you again get 500 units, which managed to turn around and returned to your system. You can make the second expense you planned for the same 500 units that you used to make the transaction at the beginning of the month. Thus, for the same amount of expenses, you no longer need 1000, but only 500 units.
Chapter 2. The concept of money supply
One of the main guidelines of monetary policy is the money supply. It is this parameter of monetary circulation that affects the economic growth, price dynamics, employment, uninterrupted functioning of the payment and settlement system.
money supply represents the total volume of cash and money of non-cash turnover.
The composition and structure of the money supply:
To measure the amount of money, special indicators are used - monetary aggregates, which are approved by law.
Monetary aggregate - specific grouping liquid assets serving as a measure of the money supply.
IN different countries various monetary aggregates are used - from the narrowest ("monetary base") in Switzerland to a broad measure of liquidity in the UK and "total credit" in Italy. Taking into account the experience of foreign countries, the Central Bank of the Russian Federation calculates the following monetary aggregates:
M0 - cash in circulation;
M1 = M0 + funds on settlement, current and special accounts of legal entities, funds of insurance companies, demand deposits of the population in banks;
M2 = M1 + time deposits of the population in Sberbank;
М3 = М2 + certificates and government bonds.
Equilibrium occurs at M 2 >M 1, strengthens at M 2 +M 3 >M 1.
The composition of the monetary aggregates of different countries is not the same. So, in France, 2 monetary aggregates are used, in the USA - 4, in Japan and Germany 3, and in England five monetary aggregates.
Currently, the monetary base indicator is used to characterize the money supply. It includes aggregate M0 + cash on hand at commercial banks, banks' required reserves with the Bank of Russia, and funds on correspondent accounts of commercial banks with the Bank of Russia, thus the monetary base is essentially equal to aggregate M2.
The money supply depends on two factors: the amount of money and the speed of its turnover.
The circulation of money does not occur spontaneously - it obeys certain laws. Knowing them allows you to quickly respond to or other changes, make appropriate corrective decisions and influence economic development in the most favorable way. These rules of circulation are called the laws of money circulation.
The basic law of money circulation, the formula of which was presented by K. Marx, connects prices, velocity of circulation and the amount of money.
Money supply and monetary base. One of the main quantitative indicators of money circulation is money supply- a set of purchasing, payment and accumulated funds serving various connections and owned by individuals and legal entities and the state.
With the development of forms of commodity exchange and payment and settlement relations, the composition and structure of the money supply underwent significant changes. At the beginning of the XX century. under gold circulation, the structure in developed countries was as follows: gold coins accounted for 40%, banknotes and other credit money - 50% and account balances in credit institutions - 10% on the eve of the First World War - respectively 15.22 and 63%;
The departure of gold money, first from internal and then from external circulation, had a serious impact on the structure of the money supply. Real money (gold) completely disappeared from circulation, fiat credit money (primarily banknotes), acting in cash and non-cash forms, occupied a dominant position.
In economically developed countries, and later in our country, in financial statistics, to analyze changes in the money supply on a certain date and for a certain period, they began to use monetary aggregates:
used to determine the money supply of a country. different amount units (USA - four, France - two). In Russia, three aggregates are used to calculate the total money supply - m O , M 1 , M 2 .
Currently, to characterize the money supply, the indicator is used monetary base. It includes the unit m O plus cash on hand at commercial banks, banks' required reserves with the Bank of Russia, and funds on correspondent accounts of commercial banks with the Bank of Russia, so that the monetary base essentially equates to the aggregate M 2 .
The money supply depends on two factors; 1) the amount of money and 2) the speed of their turnover.
The law of money circulation. The amount of money needed to carry out their functions is set economic law monetary circulation, discovered by K. Marx.
Law of currency determines: the amount of money for circulation is directly proportional to the number of goods and services sold on the market (direct relationship), as well as the level of prices of goods and tariffs (direct relationship) and inversely proportional to the velocity of money circulation (reverse relationship).
All factors are determined by the conditions of production. The more developed the social division of labor, the greater the volume of goods and services sold on the market; the higher the level of labor productivity, the lower the cost of goods and services, as well as prices.
With the advent and development of credit relations, the function of money as a means of payment arises, goods are sold on credit under debentures. Credit leads to a reduction in the total amount of money in circulation, since a certain part of the debt obligations is mutually repaid.
The law that determines the amount of money in circulation with a means of two functions - a means of circulation and a means of payment, is somewhat modified and takes the following form:
During the functioning of real money (gold), their quantity was maintained at the required level spontaneously, since the treasure function acted as a regulator. The ratio between the mass of goods and the mass of money was maintained relatively accurate. This ensured the stability of monetary circulation.
In the absence of a gold standard, the law of paper money circulation began to operate, according to which the number of signs of value was equated to the estimated amount of gold money required for circulation. In this situation, the stability of money was shaken, depreciation became possible.
Now, in the conditions of the demonetization of gold, i.e. the loss of his monetary functions, the law of monetary circulation has undergone a modification. Now it is no longer possible to estimate the amount of money from the point of view of even an approximate calculation of them through gold. It has gone out of circulation and does not function not only as a means of circulation and means of payment, but also as a measure of value.
A measure of the value of goods and services became money capital, measuring the value not in the market during exchange (as it was before), but in the process of production - commodity to commodity. Any commodity, being exchanged for fiat credit money, expresses its value by equating it to a multitude of commodities. In this regard, a commodity transaction valued at a certain amount of fiat credit money, must provide the entrepreneur with such an amount of use value that, after the use value has been realized, he will be able to start a new production cycle. Because of this, money acquires the ability of a universal equivalent. Although there is no spontaneous regulator of the total amount of money under the dominance of signs of value, this role of regulating money circulation passes to the state.
Irredeemable credit money, acquiring the features of paper money, is introduced by the state power, which endows them with a forced exchange rate. Their emission without taking into account the value of goods produced and services rendered in the country will inevitably cause their surplus and ultimately lead to depreciation.
In this regard, the question of the need to determine the required amount of money for circulation is of great importance. According to the classical theory A. Marshall And I. Fisher, the amount of money is determined by the dependence of the price level on the money supply:
From the formula, the amount of money needed to circulate a certain mass of goods is:
and the price of the goods
The price level changes in proportion to the change in the amount of money in circulation.
In Russia, the main reason for the increase in the money supply is a huge deficit federal budget, which for 2000 is provided in the amount of 57.87 billion rubles, or 1.08% of GDP. During the first half of the 1990s, it was repaid by the additional issue of money in circulation, while at the same time, the commodity turnover actually declined due to a reduction in production.
The growth of the money supply contributes money multiplier(from lat. multiplicator - multiplying), arising with the development credit system(in terms of two or more levels). Its essence is that the money supply in circulation increases as a result of the expansion of credit operations of banks with their customers by receiving funds from the centralized reserve of the Bank of Russia, formed from mandatory contributions banks. Theoretically, the multiplication factor is equal to the value of the reverse rate required reserves established by the Bank of Russia for the country's banks. It is calculated for a certain period of time, usually a year, and characterizes how much the money supply in circulation will increase over this period. The Bank of Russia, managing the money multiplier, carries out monetary regulation in the country.
Money turnover rate. This is the second factor in the change in the money supply. To calculate the velocity of circulation of money, i.e. their intensive movement when they perform the functions of circulation and payment, are used two indicator.
1. The speed of movement of money in the circulation of the value of a social product or the circulation of income:
This indicator testifies to the connection of monetary circulation with the processes of economic development.
2. Turnover of money in the payment turnover:
This indicator indicates the speed of cashless payments. Other indicators of the velocity of money turnover are also used. The velocity of money is affected by:
- 1) general economic factors - cyclical development of production; its growth rate; price movement.
- 2) monetary (monetary) factors - the structure of the payment turnover (ratio of cash and non-cash money); development of credit operations and mutual settlements; the level of interest rates for loans in the money market; introduction of computers for operations in credit institutions; use of electronic money in settlements
The rate varies depending on the frequency of income payments, the uniformity of spending by the population of their funds, the level of savings and accumulation.