Credit markets: history, principles, purpose

In order to understand what the credit markets are, let's turn to the basics of the economy.

Money is one of the most important inventions of mankind. In ancient times, money was replaced by various goods, which were used daily in everyday life. Some economists believe that in fact, everything can be money, if only their functions remain unchanged.

Functions of money:

• Medium of circulation ;
• The means of accumulation (that is, the preservation of wealth);
• measure of value.

If we consider these functions from the point of view of credit, then the second one is the most important. There is an interesting assumption associated with the emergence of the concept of "credit". It is believed that everything went from medieval jewelers: people brought them jewelry, and jewelers, in turn, wrote receipts. These receipts were readily accepted in all other shops for the payment of goods. It is believed that this is the earliest form of money. At first, their receipts had full liquidity, but over time, future bankers began to notice that the amount of money that people put in such images in their shop exceeded the amount withdrawn. It is believed that this was the beginning of lending.

Principles of lending

Credit - the provision of money (or goods) in debt with interest. Credit relations between the parties are based on the following principles:

• Obligation: the loan must be returned.
• Urgency: this should not be done at any convenient time, but at a certain and predetermined time.
• Warranty: The borrower must provide any guarantees that it is able to make payments on the loan. At present, as a guarantee, loans on bail have been used.
• Purpose: the loan must have a targeted nature.

Capital in the form of means of production can not move from one industry to another. This process, as a rule, is carried out in the form of the movement of money capital. The loan in this process acts as an elastic mechanism that controls the "overflow" of capital from the industry into the industry and equalizes the rates of profit. Credit markets are markets in which there is demand and supply for payment facilities. Credit institutions, as a rule, mediate transactions. Banks play the role of credit institutions. The financial and credit market provides funds to enterprises, thus moving them from sectors of the economy with their excessive content to sectors with a shortage of cash.

Let's turn to the history of the credit market in Russia. 1994 was the most controversial: the established tendencies were changing, new ones were planned, but, never getting stronger, they changed again. But some tendencies, which began to develop in previous years, found their logical conclusion precisely in 1994. For example, interest rates of branch and universal banks were leveled. Also, the rates of state and commercial lending to organizations have converged. The credit market of Russia underwent its first crisis in 1995. It was just a banking crisis, so the economic and political situation in the country was still strong enough.

Then, to quickly exit the crisis, the largest Russian banks created a "core", around which a new market began to form. Since these banks had enormous authority, they established broken links. Another crisis happened 3 years later. He taught big banks a good lesson: the most stable is not the market structure that is larger, but the one that has an adequate and competent level of management. To date, credit markets are the main segment of the financial market. They have the greatest potential and monetary volumes. It is credit markets and related relations that drive and accelerate the market economy as a whole.