Indispensable money. Credit money
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Fiat money - money whose denomination is higher than their market value; paper money that is not backed by anything other than a belief in their universal acceptance, such as banknotes and check deposits.
What lies at the heart of fiat money.
The fiat money system is currently used in the United States. This, however, does not mean that other types of monetary systems should not be studied.
Many financial institutions in the United States have the right to issue fiduciary money is the form of opening current accounts; we call such financial institutions depository institutions. Depositors can write checks to pay for purchases of goods and services.
The history of money represents the movement from barter to commodity money such as gold and silver coins, and further from commodity money to the commodity standard, and then to fiat money.
As noted in Chapter 2, in a gold standard, the monetary base is the size of the gold reserve. In the fiat money system, however, gold loses its direct link with money. However, there is a monetary base, which is basically the amount of money issued by the government. In the United States, the monetary base includes cash in circulation plus reserves of depository institutions.
Currently, everyone in the United States accepts coins, Fed notes, and checks as payment for goods and services sold. The question arises: why do we willingly accept for payment that which has no value of its own. This means that the cost of payment rests on people's belief that they can exchange fiat money for goods and services.
Indispensable money is
The word fiduciary comes from the Latin fiducia, which means trust, faith. In other words, under the paper money standard, money, be it in the form of cash or check deposits, is not convertible into a strictly defined amount of gold, silver, or other valuable commodity. People cannot exchange paper money in their wallets and wallets, or checks for a certain amount of any particular product; paper money itself is just scraps of paper. Coins have a value indicated on them, which is usually higher than the value of the metal they contain. However, cash and check deposits are money because they are accepted for payment and their value is predictable.
Governments and central banks also issue fiat currency. There are still $ 350 million worth of such notes in circulation. The rest of the fiat money in use today is in the form of Federal Reserve notes. Chances are, all the paper cash in your wallet or purse is Fed banknotes.
There are two main types of money: commodity money and fiat money. In the system of commodity money, a real commodity is used as money. In this system, based on the commodity standard, both full-value money and representatives of full-value money are used as money. In contrast to this system, the fiduciary standard is at the heart of the fiduciary standard, according to which the value of money is related to people's belief that they will be accepted as payment for goods and services. Fictitious money can be issued by governments, central banks and / or depository institutions.
Since in the course of this evolution the waiting costs do not change, and the transaction costs decrease, then the minimum distribution costs also decrease. The time interval corresponding to the minimum distribution costs is also reduced. On the whole, evolution in the fiat money system leads both to a reduction in the cost of the exchange process and to a decrease in the time spent on it. Each individual and society as a whole wins. This reduction in costs explains the historically occurring transition to the system of fiat money, which exists at the present time.
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Lecture 6. Money and banking.
What is money? Money is something that can easily and without cost turns into any other goods, i.e. it is a highly liquid product. Modern economic theory, in contrast to earlier views and Marxist theory, distinguishes 3 functions of money:
1. Means of payment. Money is accepted as a means of payment, as it is assumed that this money will also be accepted by other people in subsequent payments. Money provides the convenience of exchanging one commodity for another, fulfilling the function of the universal equivalent of commodities, and makes it possible to abandon barter and the associated inconveniences.
2. Money is a means of accumulating wealth.
3. Are a counting unit or measure of the value of other goods.
Money as a national monetary unit must perform all three functions, only then money is money, financial system works efficiently and smoothly, the country's economy is stable.
Fisher's equation, discussed above, helps to calculate the required amount of money supply, but itself money supply consists of more than just cash. The payment function can be performed by three of its components:
1. Cash.
2. Funds on current deposits of the population and settlement accounts of enterprises.
3. Debt obligations. It is essential that these obligations are subject to all laws governing the securities market; the organization issuing them was registered and had the appropriate permission, otherwise, debentures turn into monetary surrogates and are not money as such. If monetary surrogates, i.e. debentures issued by those who did not have the right to do so are squeezed out of the channels money circulation real money, they say the financial system is messy and the economy is unstable.
Money is debt obligations of the state or banks. These obligations successfully fulfill the functions of money as long as they purchasing power relatively stable. The value of money is not determined by quantity precious metals, as it was before, but the quantity of goods and services that can be bought with them. Since money is a debt obligation of the state, it, in the person of the Central Bank, is responsible for stability monetary unit... This responsibility presupposes effective control over the amount of money in circulation. If the amount of money grows, then the stability of commodity-money flows is destroyed, inflation begins and money loses its purchasing power. Losing control over monetary instruments, we lose control over the economy as a whole, since money is the only control lever in the market economy. In the absence of other ways of managing the economy, stability of money, the amount of money supply, etc. becomes extremely important.
It is in the market economy that monetary statistics appear, which makes it possible to measure the money supply using special indicators. In Russia, these statistics were adjusted in 1992, when, with the arrival of Gaidar and the beginning of his reforms, it became necessary to track the amount of money in circulation. There are several indicators of the money supply - monetary aggregates:
1. М0 - all cash.
2. M1 = M0 + current deposits of the population and settlement accounts of enterprises, demand deposits. Thus, the monetary aggregate M1 includes, in addition to government obligations, also the obligations of commercial banks.
3. M2 = M1 + small term deposits set for a certain time.
4. М3 = М2 + large time deposits, characterized by less liquidity, since losses in case of violation of the terms of the deposit are very significant. Investments of this kind perform the function of accumulating wealth and savings.
Thus, the money supply is divided into aggregates according to the liquidity indicator, and, despite the fact that there are non-fundamental differences in the composition and number of monetary aggregates allocated in different countries, the division basis remains unchanged.
In the USSR, these statistics did not exist at all, and only cash was considered as the money supply, not taking into account the deposits of the population. In the event of an inflationary psychosis, people tried to withdraw money from their accounts, which led to a sharp increase in the money supply. To prevent this, restrictions were imposed on the size of a one-time withdrawal of money from the account, which led to huge queues at the Savings Banks and the further development of inflationary expectations. All this was due to the underestimation of the money supply, the growth of which at constant prices leads to a catastrophe.
Consider the need for the Central Bank to regulate commercial banks. Let's introduce the term “balance commercial bank"And consider it with an example. The balance of a commercial bank, like any balance sheet, consists of two parts - an asset and a liability. If a depositor deposits 100 rubles into his account, the balance of a commercial bank will look like this:
On the right side (liabilities) the bank's debt to the depositor is reflected, on the left side - the government's debt to the bank, since cash is a loan obligation of the state.
How are commercial banks regulated in Russia? Their activity is based on the so-called "partial reserves". The bank must have a reserve account with the Central Bank, and its size is determined by the reserve ratio established by the Central Bank. This rate is calculated as a share of the total amount of deposits. If in our example the reserve rate is set at 10%, then the bank needs to put 10 rubles on the reserve account. In fact, banks often have more than the required amount in the reserve account. There are three types of reserves
- Mandatory reserves - established by the norm necessary funds on the reserve account.
- Actual reserves are the amount that actually lies on the account.
- Surplus reserves - the difference between actual and required reserves.
Mandatory reserves are introduced to control the money supply, which is necessary for objective reasons - when issuing a loan, i.e. fulfillment of the main task of the bank, the money supply increases. Let's consider this in more detail with an example. With a reserve rate of 10%, the bank from the previous example places all the cash in a reserve account, thus receiving 90 rubles. excess reserves. With this money, he issues a loan to the enterprise, and as a result, we get a balance
At the time of issuing a loan, the money supply increases
As you can see, the money supply increased by 90 rubles. at the expense of current deposits. Moreover, this increase occurred without additional emission of money and, thus, commercial banks can increase the money supply. If a commercial bank received a deposit, then the size of the money supply would not change, only its structure would change. By issuing a loan, the bank expands the money supply, and the reserve rate here plays the role of a limiter. The bank cannot issue a loan in an amount exceeding its excess reserves, as this may lead to a violation of the law if the company uses a loan. Let's look at an example. Let the company transfer money from the account for the purchase of equipment.
Money is transferred from the company's account at the expense of reserves. If the originally issued loan exceeded the excess reserves, then the balance on the reserve account would be less than the norm.
The maximum credit that a commercial bank can issue is equal to the amount of excess reserves.
Consider a loan repayment case
The bank received cash to pay off the company's debt, and the money supply decreased by 90 rubles. by reducing cash in circulation.
The money supply at the time of loan repayment decreases
If the debt was repaid by a transfer from the current account, then
The money supply is reduced due to the size of the deposit, and the bank again has excess reserves in the amount of 9 rubles. for issuing a loan.
The examples we have considered related to one commercial bank that affects the money supply at the time of issuing a loan. The size of its impact is strictly limited by the amount of excess reserves. How does the network of banks affect the economy? In this case, the concept of a money multiplier appears - a multiple increase in the money supply.
Let's consider the mechanism of action of the money multiplier. Let the reserve rate R = 20%.
1. Bank A issues a loan for all excess reserves
2. The company transfers money to bank B
3. Bank B has excess reserves and issues a loan
4. New loan transferred to bank B
As a result, bank B also has surplus resources, etc.
Initial investment in a network of commercial banks 100 rubles. cash eventually increases the money supply manifold through the creation of checking accounts. Overall size the increase in the money supply will be 400 rubles. Thus, excess reserves allow the entire banking system to create 400 rubles using a system of loans. on current accounts. The money multiplier that occurs in this case shows how many times the increase in the money supply is greater than the initial increase in excess resources
The regulation of commercial banks, as you can see, is necessary, since the impact that they have on the money supply is very large. Banks can increase inflation, provoke investment crises and much more, but existence market economy it is impossible without them.
Indispensable (credit) money is called value signs, substitutes for natural (real) money. Non-exchangeable money includes paper, deposit and electronic money.
nominal value credit money much higher than the cost of the material from which they are made. For example, the highest value of ten paper rubles is precisely in their use as money, and not in any other capacity.
Indispensable money appeared in connection with the performance of money as a means of payment, when, with the development of commodity-money relations, purchase and sale began to be carried out with payment by installments (on credit). Initially economic importance fiat money was expressed:
In creating elasticity money turnover, the ability to expand and contract if necessary;
In saving cash (gold) money;
In the development of cashless payments.
The peculiarity of credit money is that its release into circulation is linked to the actual needs of the turnover. This involves the implementation credit operations in connection with the real processes of production and sales of products. At the same time, a link is achieved between the volume of means of payment provided to borrowers with the actual need for turnover in money. This is the most important advantage of fiat money.
Since the 30s of the XX century. in the capitalist world, a system of non-exchangeable credit money, which by its nature is close to paper money, has taken root. Providing modern banknotes are mainly government securities: gold security and the exchange of banknotes for gold have been abolished in virtually all countries of the capitalist world. The exchange of the US dollar for gold for foreign central banks was discontinued on August 16, 1971.
Qualitative shifts in the monetary system determined its instability in the context of the general crisis of capitalism. For modern monetary system capitalism is characterized by the following features:
1) weakening of the connection with gold as a result of its displacement from internal and external circulation;
2) the domination of credit money irredeemable for gold, approaching paper money;
3) the issue of money in the manner of lending to the economy, the state and against the growth of official gold and foreign exchange reserves;
4) broad development cashless turnover and a reduction in cash flow;
5) state-monopoly regulation of money circulation;
6) chronic inflation.
The origin and essence of paper money
The emergence paper money objectively due to the laws of metal circulation, the development of commodity exchange and the state's needs for funds to cover its costs. The emergence of paper money was the result of a long historical process of the gradual separation of the nominal value of money from the real one. The possibility of such a separation was associated with the fleeting nature of the functioning of money as a medium of circulation.
In the process of circulation, full-value coins are gradually erased, losing part of their value. For twenty years of the first third of the XIX century. in Europe completely disappeared as a result of the erasure of 19 of the 380 million pounds. Art., i.e. 5% of all gold.
Countries that had gold circulation in the 80s. XIX century. annually lost from wearing out of coins at least 700-800 kg of pure gold.
Despite the fact that the actual metal content of the coins ceases to correspond to their denomination, worn-out coins continue to function properly as a medium of circulation, like brand-new coins. Thus, the practice of circulating worn-out coins has created objective prerequisites for replacing high-grade money with their substitutes.
The next step on the centuries-old path to replacing full-fledged metallic money with their paper signs was the deliberate damage of coins by the state, i.e. issuance by the state of defective coins with a low content of gold (silver) in them, and then minting silver coins instead of gold, copper instead of silver. Damage to coins brought additional income to the state.
The final stage was the release by the state (treasury) of paper money (in some countries they were called "paper coins") with a compulsory rate to cover their costs (at the beginning of the 13th century - in China, in the 4th century - in Japan, in the 17th century - in Sweden). Initially, the state, as a rule, exchanged paper money (treasury bills, bank notes) for gold (silver) at the official rate, which gave rise to their public acceptance. However, the constant increase in the state's needs for money forced it to issue more and more paper money and refuse to exchange it for a noble metal. Initially, paper money (along with deposit money) circulated in parallel with gold (silver), then completely replaced the latter. In the end, all connection between paper money and gold was lost, their general circulation was ensured exclusively by the power of the issuing state. Paper banknotes are not full-fledged money, but only their signs. This and the fact that paper money is more convenient in circulation explains the fact of the transition from metallic money to paper money. The possibility of such a transition lies in the function of money as a medium of circulation. The use of this opportunity for the practical implementation of the issue of paper money into circulation presupposes the presence of two conditions: relatively developed commodity-money relations and the presence of trust in paper money.
They were first issued in the 7th century in China in high denomination bills to replace inconvenient high-grade copper money. And while the bills could be freely exchanged for full-value money, they were successfully circulated. Later, in the XIII century, paper money was issued in Persia, and in the XIV century - in Japan.
Relying on the strength of state power, it becomes possible to replace gold and silver in circulation, first within a given state, and then in world trade in signs of value. Initially, these tokens at any time could be exchanged for precious metals at face value, which allowed them to circulate in circulation as substitutes for precious metal money.
Paper money emerges and operates alongside gold money, gradually gaining strength and displacing gold money.
In the XII-XV centuries. For the convenience of trade, merchants create banks to replace cash payments through them with non-cash, more convenient and secure ones.
In pre-capitalist times, paper money existed only as long as it was freely exchanged for full value. With the rise of capitalism in the person of the bourgeois government, at last there was someone whom people could trust. Only capitalism with its developed credit system creates broad opportunities for the development of paper money.
Paper money (treasury bills) are paper tokens of value issued by the state (represented by the Treasury or the Ministry of Finance) to cover the budget deficit, not exchangeable for gold and endowed with a compulsory exchange rate.
It is necessary to pay attention to the fact that at present such money is practically not issued.
Paper money had two characteristics.
The first feature was that they had no intrinsic value of their own. They were inferior money - signs of value, had a representative value that determined their purchasing power.
The second feature is associated with the nature of circulation: paper money was unstable by nature, i.e. they tended to be depreciated. This was due to two reasons:
1) paper money was issued to cover the budget deficit, i.e. without taking into account (more precisely, in excess of the needs of turnover in money);
2) paper money was not exchanged for gold, and therefore the mechanism for withdrawing the surplus of paper money from circulation did not work, therefore, paper money issued in excess of the needs of commodity circulation "got stuck" in the circulation channels and depreciated.
Thus, paper money is banknotes that cannot be exchanged for full value money, issued to cover a deficit. state budget... The difference between the nominal value of the money issued and the cost of their issue (paper, printing costs) form the share premium of the treasury, which is an essential element of government revenues. Issuance of paper money should be limited to the amount of full-value money required for circulation in this period in other words, the amount of gold money that they replace in circulation.
However, the appearance, and then the growth of the state budget deficit, caused an expansion of the issue of paper money, the amount of which depended on the state's need for financial resources... The issue (issue) of paper money is determined not by the need for commodity circulation, but by the deficit of the state budget. But no matter how much paper money the state issues, they will only represent the amount of full-value money that they replace in circulation. This is the essence of inflation, that is, a decrease in the purchasing power of paper money. But the depreciation of money can also occur for other reasons: a decline in confidence in the government, a passive balance of payments.
Paper money has two functions: a medium of circulation and a means of payment. The economic nature of paper money excludes the possibility of stability of paper money circulation, because their release is not regulated by the needs of commodity circulation, and there is no mechanism for automatic withdrawal of surplus paper money from circulation. As a result, paper money stuck in circulation regardless of the turnover overflows circulation channels and becomes devalued.
The depreciation of money is a decrease in the purchasing power of a monetary unit. Let us consider the mechanism for the depreciation of paper money as a result of their issuance in excess of the needs of commodity circulation in money. For example, the demand for commodity circulation in money (at a given price level, the amount of goods sold and the velocity of money circulation) is $ 2,000 billion.If the nominal value of the paper money supply in circulation is $ 2,000 billion, then the representative value and purchasing power of the entire money supply will amount to 2,000 billion dollars, and the representative value and purchasing power of one currency is 1 dollar (2000: 2000), i.e. equal to its face value.
If the nominal value of the money supply is equal to $ 4,000 billion, then the representative value and, therefore, the purchasing power of the entire money supply will be $ 2,000 billion (since the demand for commodity circulation in money is $ 2,000 billion), and the representative value and purchasing power of each monetary unit will be below par - $ 0.5 (2000: 4000). In other words, the money supply will be exchanged for the same mass of goods, but at new prices - twice as high. An increase in prices will lead to an increase in the demand for commodity circulation in money: it will rise to 4000 billion dollars. As a result, the amount of money in circulation will become equal to the demand in commodity circulation in money (at a new, higher price level).
The depreciation of money manifests itself in two forms:
In internal depreciation - in relation to goods on the domestic market, i.e. in the rise in prices for goods;
In external depreciation - in relation to foreign currency, i.e. in a decrease in the exchange rate of the national currency.
Reasons for depreciation:
Excessive issuance of paper money by the state;
Decline in confidence in the issuer;
The unfavorable ratio of the country's exports and imports.
The inevitable companion of paper money is inflation. It arises from the impossibility of spontaneous adaptation of paper money to the needs of trade and the use of emission by governments to cover the budget deficit.
Paper banknotes are of two types: state, issued by the treasury (treasury notes) and banks (bank notes or banknotes - bank notes). Treasury bills are usually called simply paper money, in contrast to banknotes, which are credit money by their nature. Historically, paper money appeared before credit money. Banknotes appear with the development of credit relations.
So, the essence of paper money lies in the fact that they act as signs of value issued by the state to cover the budget deficit, usually they cannot be exchanged for gold and are endowed by the state with a compulsory exchange rate.
Indispensable money is a currency that replaces high-grade money in circulation and acts as credit signs. There are three main forms of fiat money: paper money (cash) issued by the government, deposit money issued by depository institutions, and electronic money issued by specialized financial institutions.
Cash and electronic money are issued for consumer needs. The issue of deposits is of a different nature: deposit money is given for a while for production needs.
Reasons for the wide circulation of fiat money:
First, fiat money is money because people recognize it as a medium of exchange for goods and services. This public recognition is based on trust in issuers based on long-term business accounting experience.
Second, fiat money has a predictable purchase value that can be estimated based on inflation rates.
Third, cash is legal tender, i.e. the obligation of the state, and deposit and electronic money are the promissory note of their issuer.
All forms of non-exchangeable money provide for legal liability for refusal to fulfill assumed monetary obligations.
Non-changeable money is divided into: paper money, deposit money (bills of exchange, checks, plastic cards, electronic wholesale payment systems, online payment systems), electronic money.
The classification of fiat money is shown in Fig. 3.3.
Fig. 3.3. Classification of frivolous money
Paper money. The first paper money appeared in China during the reign of Emperor Hien Tsung in 806-821. AD Modern paper money is characterized by three signs: irreducibility, the presence of a compulsory course and interest-free. Currently, a significant part of fiat money in developed countries ah is issued in the form of cash. About 95-97% of the total is paper money issued by governments or central banks. The rest - 3-5% of the total volume - is produced as bargaining chips usually on behalf of the Treasury.
During the second half of the XX century. the importance of paper money as a means of payment in developed countries has been steadily declining. This was due to the widespread substitution of deposit money in the payment turnover of cash. At the same time, the state income from the issue of cash was decreasing.
At present, along with the active development of the deposit activities of various financial institutions, as well as with the advent of electronic money, a further reduction in the need for paper money is expected.
DEPOSIT MONEY. The emergence of deposit money is historically associated with the development of the banking system and the implementation of banking transactions for the accounting of bills. They are numeric records of a certain sum of money on clients' bank accounts. Initially, deposit money appeared when the owners of the bill of exchange presented it to the bank for accounting, as a result of which the bank, instead of paying the amount of debt in banknotes, opened an account to the owner of the bill. The amount of money due was recorded on such an account, and payments were made from this account by debiting them. Nowadays, deposit money most often appears by depositing cash at the bank's cash desk and opening current bank accounts.
Today, a number of financial institutions have the right to issue non-exchangeable money in the form of opening transaction (current, checking, card) accounts, which are called deposit money. Banks, savings and loan associations, credit unions in most developed countries provide clients with the opportunity to open current accounts.
Bills. Bills of exchange occupy a special place in fiduciary money systems. A bill of exchange is an unconditional written obligation of the debtor to pay the amount indicated on it within the specified period.
As a credit and settlement instrument, a bill of exchange acts as a kind of prototype of banknotes, and later - of paper money. However, in modern economic theory, bills of exchange are considered to a greater extent as securities that act as an instrument of commercial lending, rather than money. At the same time, the value of financial bills in the money circulation of Russia and other developing countries as a means of payment is quite high. The first mentions of bills date back to 1160-1200. n. e.
A bill as a type of debt obligations has specific features: a) abstractness (the bill does not indicate the specific type of transaction, and with it the source of the debt); b) indisputability (unconditional payment of the debt, including coercive measures after the notary draws up an act of protest); c) negotiability (used instead of cash as a means of payment when transferring a bill to other persons with a transfer inscription on its back). This creates the possibility of mutual offset of promissory notes.
By the nature of the emergence of bills are commercial and financial. A commercial bill is based on real trade transactions and is the basis for the development of a commercial form of lending. A bill of exchange has no real basis and is often viewed as a cash surrogate. It is used when lending money. One of the varieties of financial bills are treasury bills issued by the state to cover budgetary expenses.
By its nature, a bill of exchange can be simple and transferable... A promissory note is the obligation of the drawer to pay the drawer a specified amount at a specified time. A bill of exchange (draft) is an order of the holder of a bill (drawee), addressed to the payer (drawee), to pay the specified amount to a third party (remitter).
A promissory note as a cash instrument is an object of collateral for lending.
The circulation of bills has its own borders. First, the bill has a limited circulation period. Secondly, the bill cannot be used to pay wages and other regular income, as well as payments to the budget. Third, a bill of exchange cannot be used in multiple payment transactions. Fourthly, the promissory note serves only the wholesale trade. Fifth, a limited number of persons are involved in the circulation of promissory notes. The above-mentioned boundaries of the circulation of exchange do not allow the bill of exchange to fulfill the main monetary functions and therefore considered as money.
Checks. A check is a monetary document of the established form, containing an unconditional order of the drawer to a credit institution to pay the holder of the check the amount specified in it. Checks are used by individuals and legal entities for mutual settlements. The first mention of them dates back to 1659, when a check was written in London in the name of Mr. Delboe. However, checks became widespread only at the end of the 19th century. with the active development of deposit operations by banks in developed countries. By 1890, in the United States, about 90% of all transactions were carried out with the help of checking accounts.
As a rule, the payer for the check is the bank or other credit institution where the payer's account is located.
Can be distinguished three main functions of a check: is he
a) serves as a means of receiving money in the bank from the current account;
b) acts as a means of circulation and payment when purchasing goods and paying off debts in mutual settlements between legal entities and individuals;
c) is a tool for non-cash payments, significantly reducing the amount of cash in circulation.
The peculiarity of a check as a payment instrument is that it must be physically presented to the bank for payment.
Checks are called personal, if they were discharged by individuals. Checks are called commercial if they were discharged by commercial enterprises. Checks are called government if discharged by federal and local authorities.
Checks have two main advantages before cash. First, checks can be written for any amount (i.e., up to a bank balance or credit limit). Secondly, checks are easy to use, and if lost, they can be restored. In addition, unlike plastic cards or electronic money to service checks, it is not required to use an electronic identification network, including a system of authorization centers, ATMs, electronic finals, etc.
Checks can be divided into: registered(issued to a specific person without the right to transfer to another), orders e (drawn up to a specific person, but with the right to transfer to another person by endorsement) and bearer(written out without specifying the recipient, and the amount indicated in them must be paid to the bearer of the check).
In some cases, checks can be accepted to confirm the drawer's solvency, i.e. the bank, using a special inscription, certifies the client's signature and guarantees the payment of the amount indicated in the check. Such checks are called accepted or certified. There are other ways to confirm the creditworthiness of the customer who wrote the check. For example, in Europe, euro checks have become widespread, which are standardized checks issued by banks - members of the international organization of euro checks and accompanied by a special guaranteed card - the euro card. Such a card guarantees payment of a check within the established limit, and can also be used to withdraw cash from ATMs. The most widespread today are order accepted checks.
Despite the noted advantages, check circulation is characterized by a number of disadvantages. In particular, the widespread use of checks as a means of circulation and payment has created great difficulties in their processing (verification of the authenticity of checks, signatures on them, etc.). In addition, the increase in the volume of transactions associated with the collection of checks requires a significant number of qualified bank employees, which increases the cost of processing checks.
A special kind of checks are traveler's checks. Traveler's checks are a standardized piece of money written in local foreign currency, usually used when traveling abroad to pay for goods and services or receive cash. Traveler's checks are usually collected for more than favorable rate than the exchange of cash takes place. Travelers checks are, by their very nature, prepaid financial products. At all agencies of the company that issued the traveler's check, they are cashed commission-free. Their peculiarity lies in the fact that they are nominal and require personal confirmation of authenticity in the calculations. When the holder of a traveler's check pays it or exchanges it for cash, he makes a control signature in the presence of the cashier. The main issuers of traveller's checks are the largest international credit companies American Express, VISA, Thomas Cook, etc.
Plastic cards. With the development in the second half of the XX century. payment systems that allow making retail payments in electronic form, a new payment instrument appears - a plastic card. A plastic card is a registered monetary document issued by a bank or other specialized organization, which certifies that the owner of the plastic card has an account with the relevant institution and gives the right to purchase goods and services by bank transfer.
Bank cards appeared in the early 50s. XX century Currently, over 2.7 billion rubles are in circulation. bank cards, which are issued mainly by international payment systems or credit companies. The largest international card payment systems are VISA International (over 21 thousand banks) and Europay International (over 28 thousand banks). They account for about 80% of all bank cards. A special type of payment cards are tourism and entertainment cards issued by credit companies such as American Express, Diners Club, etc. As a rule, this type of card is intended for wealthy citizens and provides its holders, in addition to payment options, increased credit limits, additional benefits and discounts when booking air tickets, hotels, etc. Currently, the share of card payments in the United States accounts for about 26% of the total volume of non-cash payments and only 0.2% of their value.
There are three main plastic card functions: 1) is a tool for non-cash payments, significantly reducing the amount of cash in circulation; 2) acts as a means of payment when purchasing goods and paying off debts in mutual settlements between legal entities and individuals; 3) serves as a tool for receiving money from the current account almost at any time.
Electronic systems of wholesale payments. These systems are used to conduct transactions for large amounts. Electronic bulk payment systems are payment systems that allow high-value electronic payment transactions between banks, commercial companies and government agencies. Wholesale systems operate with deposit money. Electronic wholesale payment systems emerged in the late 1960s. and became widespread in the 1970s-1980s.
Their main elements are:
1) clearing settlement systems that settle the accounts of their clients (netting) at a certain point in time, as a rule, at the end of the working day. Such systems can be bilateral or multilateral. The main disadvantages of such systems are insufficient efficiency in making payments, as well as the presence of liquidity risk;
2) gross settlement systems in real time. These systems have now replaced netting in many countries. With their appearance, the liquidity risk and systemic risk of the banking sector have significantly decreased. In the European Union, there are two regional supersystems, TARGET and Euro I. In some countries, primarily in the United States, where the CHIPS clearing system operates, netting systems are being transformed into hybrid ones that carry out netting with a short cycle (at short intervals).
Can be distinguished three main advantages electronic systems of wholesale payments: increasing the speed of mutual settlements; reducing the cost of payment transactions; simplification of the processing of bank correspondence.
Online payment systems. Currently, in connection with the active development of the electronic economy, online payment systems (online banking systems) are becoming more widespread. Online payment systems are new electronic payment systems that allow direct payments in real time from the payer's account and crediting funds to the beneficiary's account. Online payment systems can be used to carry out payments both in the framework of the traditional and in the framework of electronic payment.
Electronic money. The last years of the XX century. were marked by a new stage in the development of commodity-money relations: the emergence of a new form: money - electronic money (e-money).
Prerequisites for the emergence and evolution of electronic money. The active evolution of monetary forms has been observed over the past forty years.
1960s to 2000s the monetary sphere has gone through two stages of electronization. The first stage (1960-1980) consisted in the transfer of wholesale payments to an electronic basis. It was characterized by the emergence of clearing settlement systems, automated clearing houses, and the widespread use of electronic transfer systems. The first stage of electronicization made it possible to rationalize the payment management system, reduce credit and settlement risks at the level of wholesale payments, stimulate the emergence of new financial products, and diversify the means of access to them. The widespread use of electronic transfer systems has become the basis for the introduction into circulation of retail electronic means of payment, such as credit and debit cards.
The emergence of electronic account access systems in the mid-1990s. and the emergence of electronic money in the second half of the 1990s. symbolize the beginning of the second stage of electronization.
There are several major electronic access systems: calculations debit cards to the Internet using various security protocols; settlements using electronic checks; settlements using online banking systems that provide direct access to customers' bank accounts. Electronic account access systems operate with clients' deposit money placed on current accounts with credit institutions.
Definition of electronic money. Formal characteristics. There are several main approaches to defining electronic money. They can be conditionally divided into European, American and Asian.
Within the framework of European approach electronic money viewed as new form money, which requires a special regime for regulating their emission and circulation. According to the definition of the European Central Bank, electronic money is a monetary value stored electronically on a technical device, which can be widely used to make payments to third parties without the need to involve bank accounts in transactions and which functions as a prepaid financial product.
Within the framework of the American approach, electronic money is not considered as a new form of money, but is interpreted as a new type of financial services provided by credit institutions. As defined by the US Congressional Budget Committee, the term “electronic money” can be used to refer to a wide range of new payments instruments created to enable consumers to make current payments electronically. In the United States, electronic money is most often likened to other prepaid financial products such as traveler's checks. In this regard, according to the Budget Committee of the US Congress, the issue and circulation of electronic money should be subject to traditional banking legislation. Therefore, in the United States at present there are no special regulations governing the procedure for the emission and circulation of electronic money.
In Japan and a number of other Asian countries, there is currently no unambiguous approach to the issue of the interpretation of electronic money. In this regard, the Bank of Japan deliberately combined the two most common interpretations in the definition of electronic money. According to this definition, electronic money is an electronic means of payment that stores a monetary value in electronic form (or a right to claim a monetary value). Currently, issues related to the issuance of electronic money related to the issuance of prepaid financial products are regulated in Japan by the Prepaid Card Law.
It should be highlighted four important characteristics of electronic money: 1) the monetary value is directly recorded on the information carrier (there is no link to any account in credit institutions); 2) the payment with electronic money is final (the recipient of the electronic money is considered to have paid finally, that is, it no longer has any claims against third parties); 3) the emission of electronic money is a special type of financial activity (issuers of electronic money are special institutions, to which a special procedure for regulation and control over their activities should be applied); 4) electronic money is an interest-free obligation of its issuer (like cash issued by central banks, electronic money does not imply interest payments to its holders).
Electronic money simultaneously embodies important advantages of both cash and deposit money. Electronic money inherited the property of anonymity and unconditional disposition of funds from cash, as well as low transaction costs, from deposit money - a dematerialized form that makes settlements convenient and low circulation costs.
Thus, the main the advantages of electronic money are: 1) flexibility in payments. Electronic money can mediate both payments in the traditional economy and micropayments in the electronic economy; 2) low cost of transactions. The cost of a transaction using "network money", their processing and accounting is much cheaper than the cost of payments using cash, checks and credit cards; 3) a high level of anonymity. Electronic money, in contrast to checks and credit cards, allows maintaining a high level of anonymity of transactions, since when using them, it does not require an authentication of the payer's identity and verification of his creditworthiness; 4) the possibility of direct disposal of their funds. Unlike cash, payment using electronic money does not require the presence of the payer and the recipient in one place, and unlike deposit money, the intervention of a third party in the course of the transaction.
Electronic money systems.
Currently it is possible to distinguish three main types of electronic money systems:
Based on multipurpose prepaid cards (card-based systems);
Based on prepaid software / network products (software-based / network-based systems);
Based on prepaid value stored in virtual wallets on the issuer's remote servers (server-based systems).
First type e-money systems are based on stored-value cards or electronic purses or e-purses. Such cards have a built-in microprocessor with a cash equivalent recorded on it as a result of prepayment.
It is worth noting that only multipurpose or universal prepaid cards (i.e. those in which the monetary value can be used for payments in favor of third parties) belong to electronic money. The single-purpose prepaid cards, which have become widespread in telephony and transportation services around the world, do not belong to electronic money. The information on such cards is not monetary in nature, but represents a prepaid number of units of consumption of a particular service.
Second type e-money systems are based on prepaid network money, also called digital cash. In this case, the monetary value is stored in the memory of computers on hard disks and, with the help of special software, it is transferred via electronic communication networks, including the Internet. Like multipurpose prepaid cards, only multipurpose network money systems are considered electronic money.
Third type electronic money systems uses virtual wallets (v-wallets) located on the issuer's server as a storage device for electronic money, access to which is provided by entering a personal code remotely. In such systems, in order to transfer the value, the holder of electronic money needs to get remote access to the server, and only after that, using the issuer's software and hardware, the electronic money can be transferred via communication networks, such as the Internet, etc.
Properties of electronic money. The main obstacle to the widespread adoption of electronic money is the relatively low degree of compliance of electronic money with desirable monetary properties. The evolution of money has clearly shown that money must have a number of properties that make it the most suitable among other goods for use in this capacity. Desired properties electronic money are fundamental to satisfy two essential characteristics of money:
firstly, to be a highly liquid asset and, secondly, to have stable purchasing power. It is possible to distinguish at least twelve desirable properties of electronic money:
1) convenience. Electronic money should be easy to use in both directions - both when it is received and when it is spent;
2) safety. In other words, both the protection of the integrity of the information and protection from its unauthorized reproduction must be ensured. For example, the payer should be able to transfer electronic money to the recipient without fear that it will be altered or copied;
3) anonymity(privacy). The requirement for transactional anonymity is an essential condition for electronic transactions. Anonymity guarantees the secrecy of transactions at several levels. The payer and recipient of electronic money should have the right to remain completely invisible when making a payment directly (although the latter will certainly attract criticism from law enforcement agencies);
4) versatility(widely accepted). Electronic money must be well known and accepted in a wider commercial area. This characteristic implies recognition of the issuer and trust in him on the part of buyers and sellers;
5) offline compatibility... The exchange of electronic money between the two parties should provide for the possibility of working offline. This means that the holder of electronic money does not need a direct connection to the communication line to make a payment. The payer should be able to freely transfer the monetary value to the recipient at any time without third party authentication;
6) support for micropayments... The electronic payment system must technically support the ability to make low-denomination payments (we are talking about payment transactions in the amount of $ 0.001 to $ 10), but also ensure the profitability of such payments;
7) bilateral. It should be possible to transfer electronic money to other users. Bilateral payments should be made without the participation of a third party authorizing the transaction, as is the case with plastic card payment systems;
8) portability. The use of electronic money should not depend on the physical location of its holders. They must move not only over computer networks, but also from computer networks to other storage devices of monetary value (for example, an electronic wallet). Holders of electronic money should be able to carry it with them and use it, if necessary, in other networks and using other means of access;
9) divisibility. Electronic money should be divided into parts. Their holders should be able to contact the issuer or an electronic change office to exchange higher denomination electronic money for lower denomination electronic money;
10) durability. Electronic money should not have an expiration date. They must maintain their value unchanged and be protected from impairment or destruction. There must be a guarantee that the issuer will not reduce the value of electronic money (will not devalue it) or withdraw it from circulation;
11) variability. At the initial stage of development, electronic money must necessarily be converted into cash issued by the Central Bank;
12) free unit of value. Electronic money should provide for the possibility of denomination in non-government currency. Issuers should be allowed to issue and users should be allowed to use electronic money denominated in any new currency that will compete with government-issued electronic money.
It should be noted that currently none of the existing electronic money systems satisfies all of the above properties.
Typically, these commitments are backed up by securities, which are temporarily transferred to the disposal of the credit institution.
History of development
The first mentions of credit funds date back to the XII century. At this time, the first promissory notes were drawn up in Italy. They were used as a way to transfer money and, in addition, were a means of payment.
In Russia, the bill of exchange was drawn up and approved in 1729. Lending developed intensively, and was only temporarily frozen after the October Revolution (from 1917 to 1921). Throughout the years of the existence of Soviet power, bills of exchange were not used very actively. After Perestroika, when the spontaneous market gave freedom to individual entrepreneurs, credit money again began to be actively used and since then their popularity has been constantly growing.
Specific traits
“Money makes money” is one of the main hallmarks of a developed economy. Each person can borrow funds for business development or for other purposes. The amount that the lender is willing to lend depends on several factors:
- wage;
- property to secure a loan;
- credit history.
Classification
Promissory note
Document describing financial liabilities one side in relation to the other. Has the following features:
- the document does not explain under what conditions the debt obligations arose;
- the loan must be repaid within the specified period;
- a bill of exchange can be used to pay for goods and services.
Bank note
The type of credit money, the issue and collateral of which is regulated banking system... An important difference between a banknote and a bill of exchange is that it can be used for an unlimited period of time. Features:
- they are stable in circulation;
- their value depends on the domestic public debt;
- can be used to form financial capital.
Receipt
A document serving as a confirmation for the transfer of funds from the bank account to the bearer's hands. The check circulation provides for the preparation of a bilateral agreement. Checks are:
- registered - cashed only upon presentation of an identity card;
- order - also cashed by a specific person, but can be deposited on an account or transferred to a third party;
- bearer - funds are issued upon delivery to any recipient.
Deposit money
They differ from banknotes in that their value is expressed in the form of numerical entries in a bank account, and not in paper equivalent. Features:
- account opening procedures are regulated by banks;
- used for non-cash payments;
- provided with a public guarantee.
Functions
Due to credit money, the loan capital is in constant motion. These funds are used for the following purposes:
- expanding the scale of production;
- an increase in the speed of "transferring" funds and, as a result, an improvement in the economic climate;
- concentration of capital in the private sector to support individual entrepreneurs in a competitive environment.
Credit acts as a spontaneous regulator. Thanks to loans, there is a constant redistribution of funds between various industries. Most companies are forced to take out loans due to low capitalization, making up for the missing part of the budget.
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