Monetary mass - the concept, features and structure

Money supply is, in essence, a reserve of money in one country. Its structure includes banknotes and coins of various denominations, as well as non-cash funds in the bank accounts of the state itself and its residents - individuals and legal entities. At the same time, one should take into account the possibility of barter and a system of mutual settlements, as well as the issuance of loans, since these indicators lead to an increase or reduction in the amount of cash used in one state.

System of units

Since 1992, the money supply in Russia has been calculated with the help of aggregates, which include various types of payment instruments. Such indicators represent a special grouping of bank accounts, taking into account the conversion of non-cash resources placed on them into a liquid asset that can be quickly spent. The most often used unit M0, which includes all types of money, which have the highest degree of liquidity. If its structure is simplified to the maximum, allocate cash and checks of the established form, which can be exchanged in a bank for bills, or used as an independent means of payment.

The indicator M1 is more extended, and its structure includes both payment facilities typical for the M0 unit and non-cash money on current and settlement bank accounts. In this situation, liquidity becomes lower, as deposits of the population and legal entities can not be turned into cash.

The money supply is also estimated using the M2 unit, which includes paper money circulating in the country, as well as other payment and purchasing means, including bonds, bills of exchange and certificates of deposit. Non-cash form of this indicator includes time deposits that are in bank accounts until the expiry of the contract between the citizen and the financial institution.

In Russia, economists make use of the M3 aggregate when making estimates of the money supply, which includes securities. As a rule, these are bonds of state loans, which are not full-fledged means of payment. However, under certain conditions, they are transformed into real money, if such securities are sold on the open market.

Structure

It must be remembered that the structure of the money supply does not remain unchanged, it varies quite often. With a developed market economy, the number of bills in circulation practically does not increase, and the state, citizens and business entities use mostly cashless funds on plastic cards or bank accounts to make all kinds of payments. In Russia, the money supply and its structure is significantly different from the situation typical for Western countries.

So, in calculations of about 42-65% are cash bills, and only a small part is for non-cash funds, but every year, citizens are increasingly paying for the goods purchased credit or debit plastic card. And the money supply is associated with the ratio of all aggregates from M0 to M3, which is characteristic for a certain period. The change in its volume depends on the increase or decrease in the number of funds in circulation, as well as the increase or decrease in their turnover.

The structure of the money supply to leading economists has to be adjusted to avoid the risk of unforeseen inflation. The components of each of the units are evaluated, and, if necessary, measures are taken to increase the share of illiquid means of payment. For example, state securities are issued and sold to the public, programs are being developed to attract cash to citizens in banks through deposit programs.