The properties of money, their functions and types. Money supply

The money supply in circulation is presented in two forms. Coins and banknotes are called valid. For such money, the nominal value (indicated on them) corresponds to the real value . Let's consider in more detail the functions and properties of money.

Coins

The form of money of this kind was different. At first it was piece, then - weight. Coins of later periods possessed distinctive features established by law. The most convenient form of money from metal is round. Originally, silver and gold coins were used. The latter were transferred in the second half of the 19th century. The production of gold money was due to the characteristics of this metal. They allowed coins to match their purpose. The basic properties of money from metals consist in the fact that they have their own value and are not subject to depreciation. Gold coins are considered a fairly flexible financial instrument. They can adapt to existing conditions without prejudice to their owners. When there is a lot of gold money in the country, that is, their number exceeds the real need for them, they are sent to the reserve. In case of increased need for them, the coins are returned and again begin to be used. In such circumstances, it is not required to regulate the amount of money by any special measures, as is done with banknotes, for example. However, there are drawbacks. They are made up of the following factors:

1. Gold mining did not keep up with the release of goods. In this connection, the complete need for money was not provided.
2. Highly portable coins could not be used in shallow circulation.
3. Gold money is much more expensive than paper money.

Banknotes

Paper money in Russia appeared to replace gold coins. The difference between the nominal price and the value of the issue forms the issuing profit of the treasury. It acts as a significant element of state revenue. Banknotes were issued simultaneously with gold coins, gradually displacing the latter from circulation. With the emergence and development of budgetary emissions increased. Its value was determined by the state need for money. The issue of banknotes is not regulated by the needs of turnover. Automatic mechanism of their withdrawal into reserves is absent. In this regard, stability of money can not be ensured.

Depreciation

When there is a lot of paper money in the country, they can linger "on their hands" regardless of the turnover. As a result, they overflow the traffic channels and begin to depreciate. This happens for the following reasons:

1. Excess of state output.
2. Decreased confidence in the issuer.
3. Unfavorable ratio between exports and imports.

The basic property of banknotes is that they are signs of value and are issued by the state to close the deficit in the budget. As a rule, they are not exchanged for gold and are given a mandatory course.

Credit Signs

They appeared with the beginning of the development of commodity production, in conditions when the implementation was carried out with installments (on credit). Their emergence was conditioned by the realization of the function and quality of money as a means of payment. They act as an obligation to be repaid at a certain date. The economic purpose of banknotes is:

1. Reflecting the need for turnover in cash.
2. Savings of valid signs of value.
3. Promoting the development of cashless funds.

A banknote is a credit to Russia. They are issued by the Central Bank for the implementation of appropriate operations of loans and loans in various business processes. By providing a loan, a banking institution can allocate its own funds to the borrower. At the end of the period of use of the loan, they are refundable to pay off the debt.

Distinctive features

Paper money and classic banknotes are different:

1. By the method of emission. Issue of paper money is carried out by the Ministry of Finance, and banknotes - by the Central Bank.
2. The purpose of introduction into circulation. Paper money is intended to finance a budget deficit, banknotes - economic transactions.
3. Specific issue. Banknotes are put into circulation in connection with credit procedures that are performed in conjunction with actual production and sales processes, paper signs are sent into circulation without this binding.

In the event of a communication failure, credit funds lose their advantages and acquire the general properties of money. They turn in such cases into paper signs of value.

Properties of money

Signs of value act as a universal equivalent. They have a complex of three characteristics:

1. Direct exchangeability. This means that any product can be changed directly to finance.
2. The independent form of exchange value. The price of a variety of products acquires a uniform expression in a single commodity.
3. External property form of labor. All or part of the effort has a financial dimension.

Direct exchange

It is believed that this is the main property of money. It manifests itself in the process of commodity exchange or their realization. A part of the population's finances turns into different products, usually first-time essential goods for individual use. In this case, the funds that are intended to compensate for the costs of production and its expansion, can not be sent to purchase items that meet personal needs. Nevertheless, in both cases, the main property of money is manifested - a direct exchange for services and goods.

Exchange value

The manifestation of this property of money consists in the fact that in the production process the labor contained in the produce is equated with the comparison of its price with the signs of value. Goods are expressed through exchange rates (prices). In this case, money is the universal equivalent. They have a certain independence of movement. The funds can accumulate in savings, participate in the servicing of economic relations between specific individuals. Together with this, the properties of money do not allow them to become absolute wealth. This is due to the fact that the movement of labor costs does not in all cases act as a real product price. For example, taking into account the value of fixed capital, inflationary trends affecting the redistribution processes should be taken into account.

Social work

The external property form of labor consists in the fact that, when equated to money, the output expresses and measures the work enclosed in them in the value index. In traditional cases, this measure from the position of quality is the purchasing value of the goods. From the quantitative point of view, the volume of production is considered.

Appointment

The properties of money allow you to use them for:

1. Accounting for the expenditures of natural substantiated labor.
2. Comparison of public and individual production activities.
3. Comparison of planned and actual costs.

Summarizing these functions, we can say that money is used to ensure control over the measure of labor and consumption, assessing financial, production and economic activities in the enterprise, accounting, statistics, analysis. A specific feature of the performance of these tasks is the ideal use of funds.

Pricing

It is carried out in several directions. According to the main factors, cost and utility indicators play a decisive role in determining the price of products. Within the framework of this trend, the formation of value is realized as a result of equating it with money. The second direction was considered by Marx. He attached great importance to the function of money as a cost measure. Marx believed that signs are the equivalent of the price of products. The third direction involves the use of money in pricing because of their ability to be a means of payment.

Domestic concept

In Russia, the most common direction of development of the task of money as a cost measure is the following:

1. The formation of prices for goods without the use of financial means is not possible.
2. Price acts as a monetary expression of value - the value of products.
3. Market indicators have upper and lower limits of deviation. This can be represented as equalities: lower threshold = cost price + income, upper threshold = profit + demand.
4. Deviation allows to redistribute the national product between different spheres and layers of the population.
5. In the process of determining the price, the utility of the goods, the costs of production, the degree of effective demand and the cost of complementary and interrelated products are taken into account.

Specificity

The price scale is a special current element of the system. Within the framework of the gold coin standard, the cost of a certain weight unit of metal is formed. The prices of all products are tied to the gold content in the money symbol. The cost scale is based on the subsistence level. Together with this, an inverse relationship is established. Define the scale of prices exclusively consumer goods. In the transition economy, all these concepts are not interrelated and are multilevel.

Score

The use of money as a means of counting is characteristic of a developed market economy. In such conditions, established prices act like a mentally ideal operation based on traditions. Changes in the financial system in the form of monetary reform, economic restructuring, denomination do not change this function. In these cases, the price scale is adjusted.

Means of turnover

In conditions of circulation, money is considered to be an intermediary of exchange in the process of simultaneous movement of services and goods. This task is necessarily carried out by real signs, but not in all cases, full. The purpose of this function is as follows:

1. Elimination of the qualitative and quantitative limits characteristic of barter.
2. Ensuring the realization of financial income in accordance with labor costs.
3. Participation in the distribution and redistribution of GDP.

In the event of the appearance of negative phenomena, money that does not fulfill this function will activate the naturalization of the exchange. This, in turn, leads to the emergence of a shadow economy.

Problems

When there are violations in the financial system (for example, with hyperinflation, lack of signs "on hand"), there is a curtailment of the appointment of money, acting as a means of circulation. This, in turn, provokes the development of barter, netting. There are surrogates, pseudo-money, the shadow economy is growing. This situation leads to a reduction in budget payments, non-payment of transfers, a decrease in the solvency of citizens, aggregate demand and supply.

Means of accumulation

This function relates to the turnover of gold or banknotes with 100% collateral. Realizing this task, financial resources act as a factor of macroeconomic balance. In modern conditions, this function is associated with absolute liquidity of money. In contrast to another asset, the owner in any case is able to pay off their obligations. In addition, financial resources can save value. This property is manifested in the ability to use the corresponding price purchased today to pay for the products in the future.

Preconditions for accumulation

The growth of savings of citizens is due to:

1. Increased income of the population.
2. Changing the structure of consumer demand towards the goods of prolonged consumption.
3. Desire to create conditions for continuing normal life after disability.
4. Aspiration to liquidate the contradictions between consumption and income of youth (in this case, savings are directed to the maintenance of children).

Types of savings

Savings can be of a credit nature. In this case, the funds are stored in banking and other financial institutions. This type of savings is consistent with market conditions, as credit institutions accept free funds, redistributing them in economic interests. Tezavratsiya (savings in cash) does not have a social meaning. The development of this form provokes paradoxes of frugality. At the same time, the state loses control over the distribution of financial flows. Money, fulfilling the function of accumulation, affects solvent demand, changes its dynamics, affects its placement depending on the population groups and its volume.

Instrument of payment

When money serves as a means of circulation, their movement occurs simultaneously with the movement of products. If the task of the payment instrument is realized, a time gap is formed. The discrepancy between the movement of money and goods is considered a feature of this function. Its implementation is associated with various obligations and the need to repay them. Money as a means of payment is used for:

1. Payment of labor, calculation of pensions.
2. Repayment of loans and interest.
3. Implementation of tax, transfer payments.
4. Contribution of insurance premiums.
5. Implementation of judicial and administrative decisions.

Among the features of this function, it should be noted:

1. Independence of the movement of funds not associated with the movement of products.
2. Participation of various monetary forms - cash / non-cash - as real finance.
3. Possibility of participation of inferior means.
4. Non-fulfillment of the task may provoke the probability of an increase in the non-payment crisis.

World finance

Money is involved in international turnover. Their use by different states and foreign subjects (non-residents and residents) makes them a world-wide means. Finance, which serves international economic relations, is called currency. Money acts as a universal equivalent, with absolute liquidity. World funds are used to cover the deficit in the balance of payments in the framework of international exchange. Today, contracts on foreign markets are concluded in dollars. This currency is characterized by the highest liquidity and convertibility.

Conclusion

Today, both paper and metal money are used in circulation. The latter, however, are not fulfilled from gold. The face of the metal money is called the obverse, the reverse part is called the reverse. The edge of the coin is called the root. To prevent various kinds of damage, the brink of metal money was made rifling. In modern conditions, the central banks of states carry out the issue of banknotes of a certain dignity. In their essence, they act as a national currency, which operates on the territory of a particular country. Special paper is used for manufacturing. Protection is used to protect against falsification. Money with the development of market relations acquired the most important significance. The time when the goods were exchanged for the goods, has become a thing of the past. However, today there is a practice of barter transactions. Nevertheless, monetary circulation is considered to be a priority in economic transactions. Finance gives a lot of opportunities for both the population and organizations. The availability of funds acts as a mandatory condition for the registration of legal entities. This particularly applies to financial institutions. The volume of equity capital assesses the stability of the enterprise in the market, its solvency, willingness to pay off liabilities. Equally important is money for the population. Many citizens use their means to purchase certain products or services. Part of the population seeks to accumulate money to ensure financial independence in the coming periods. The priority of savings or spending is often established depending on the economic situation both within the country and in the world. Important in this case have courses of stable "tentative" currencies. They include, in particular, the euro and the dollar. Undoubted is the assertion that financial well-being, sufficient level of solvency of the population, enterprises, the state as a whole reflects the general well-being of citizens, the quality of life, working conditions in the country. The higher they are, the more opportunities the state has, the more stable the economy, it is easier to survive any negative impacts.