Central banks and the basics of their activities. The concept and forms of central bank independence
The main link banking system any state is the central bank of the country. In different states, such banks are called differently: people's, state, emission, reserve, the Federal Reserve System (USA), the Bank of England, the Bank of Japan, the Bank of Italy, etc.
Central banks emerged as commercial banks entitled to issues and banknotes. Despite the fact that the first bank to issue was the Bank of Stockholm (in 1650 it issued certificates of deposit for gold coins, which were issued to the bearer and circulated on an equal basis with other types of money throughout the kingdom of Sweden), the first issuing bank is considered to be created in 1694 the Bank of England, as it began to issue banknotes and discount commercial bills. Subsequently, in addition to issuing banknotes, the role of the state treasurer, intermediary between the state and commercial banks, and the conductor of the state's monetary policy was assigned to the central banks. Being commercial, central banks have been nationalized, and now the capital of central banks is wholly or partly owned by the state.
The creation of a central bank of issue was due to the processes of concentration and centralization of capital, the transition to a single national monetary systems.
In all developed countries ah, there are several laws that formulate and fix the tasks and functions of the central bank, as well as define the tools and methods for their implementation. In some states, the main task of the central bank is set out in the constitution. As a rule, the main legal act regulating the activities of the national bank, is the law on the central bank of the country; it establishes the organizational and legal status of the latter, the procedure for appointing or electing its leadership, the status in relations with the state and the national banking system. This law establishes the powers of the central bank as the issuing center of the country.
Along with the law on the central bank, interactions between the central bank and the banking system are regulated by the law on banking. Such a law defines the basic rights and obligations of credit institutions in relation to the central bank.
The central banks of developed countries are classified according to the degree of their independence in dealing with monetary policy issues using various objective and subjective factors.
Subjective factors include the established relationship between the country's central bank and the government, taking into account informal contacts between leaders.
Among the many objective factors in assessing the independence of central banks, five most important ones can be distinguished:
State participation in the capital of the central bank and in the distribution of profits;
The procedure for appointing (selecting) the bank's management;
The degree of reflection in the legislation of the goals and objectives of the central bank;
The right of the state to intervene in monetary policy;
Rules governing the possibility of direct and indirect financing of public expenditures by the country's central bank.
Central banks are the regulatory link in the banking system, therefore their activities are related to strengthening monetary circulation, protecting and ensuring the stability of the national currency and its exchange rate against foreign currencies, developing and strengthening the country's banking system, ensuring efficient and uninterrupted settlements.
Traditionally, the central bank has five main tasks. The Central Bank is intended to be:
The emission center of the country, i.е. enjoy the monopoly right to issue banknotes;
Bank of banks, i.e. transact not with commercial and industrial clients, but primarily with the banks of a given country: keep their cash reserves, the amount of which is established by law, provide them with loans (lender of last resort), exercise supervision, maintaining the necessary level of standardization and professionalism in the national credit system;
Government banker, for this he must support government economic programs and place government securities; provide loans and settlement operations for the government, hold (official) gold and foreign exchange reserves;
The main settlement center of the country, acting as an intermediary between other banks of the country when performing non-cash payments based on the offset of mutual claims and obligations (clearings);
Economy Regulator monetary methods. In a number of countries, these tasks of central banks are enshrined in legislation. Thus, the monopoly on the issue of the national currency makes it possible for the central bank to control the liquidity of credit institutions.
When solving five tasks, the central bank performs three main functions: regulatory, supervisory, and information and research.
Regulatory functions include the regulation of the money supply in circulation. This is achieved by reducing or expanding cash and non-cash issuance and pursuing a discount policy, a policy of minimum reserves, an open market, and a foreign exchange policy.
The controlling function is closely related to the regulatory function. The central bank obtains extensive information about the state of a particular bank when implementing, for example, a policy of minimum reserves or rediscounting. The controlling function includes determining compliance with the requirements for the qualitative composition of the banking system, i.e. the procedure for admitting credit institutions to the national banking market. In addition, this includes the development of a set of economic coefficients and norms necessary for credit institutions and control over them.
All central banks have an information and research function, i.e. the function of a research, information and statistical center. However, in many countries this function is marked by law. Thus, the German Federal Bank is obliged to give recommendations to the federal government, if necessary, and also to supply it with information on the development of the credit system.
The activities of the Central Bank of Russia are regulated by Federal Law No. 86-FZ dated June 27, 2002 “On the Central Bank Russian Federation(Bank of Russia)"
The Central Bank of the Russian Federation is ordered to perform the following functions:
In cooperation with the Government of the Russian Federation, develop and implement a unified state monetary policy aimed at protecting and ensuring the stability of the ruble;
To monopolize the issue of cash and organize their circulation;
Be a lender of last resort for credit institutions, organize a refinancing system;
Establish the rules for making settlements in the Russian Federation;
Establish rules for conducting banking operations, accounting and reporting for the banking system;
Carry out state registration of credit institutions, issue and revoke licenses of credit institutions involved in their audit;
Supervise the activities of credit institutions;
Register the issue of securities of credit institutions in accordance with federal laws;
Perform independently or on behalf of the Government of the Russian Federation all types of banking operations necessary to solve the main tasks of the Bank of Russia;
Regulate the passage of currency, including transactions for the purchase and sale of foreign currency; determine the procedure for settlements with foreign states;
Organize and carry out currency control both directly and through authorized banks in accordance with the legislation of the Russian Federation;
To take part in the development of the forecast of the balance of payments of the Russian Federation and organize the compilation of the balance of payments of the Russian Federation;
In order to carry out the above functions, analyze and forecast the state of the economy of the Russian Federation as a whole and by region, primarily monetary, monetary, financial and price relations; publish relevant materials and statistical data;
Perform other functions in accordance with federal laws.
The Central Bank is an issuing bank that performs regulatory functions in a market economy. Making a profit is not the purpose of its activity, that is, it is not a commercial bank. The basics of its activities: include: maintaining the stability of the exchange rate and the solvency of the national monetary unit within the country and on world markets, strengthening the banking system, ensuring the smooth functioning of the country's payment turnover. The Central Bank of the Russian Federation has a monopoly right to issue cash and organizes money circulation, is a banking regulation and supervision body, a currency regulation and control body, participates in the development and implementation of the state monetary policy.
The regulation of the activities of commercial banks by the Bank of Russia is carried out both by direct, administrative, and indirect, economic methods. The first is licensing. banking, the establishment of regulatory standards, limits and quotas, rules for conducting banking operations, forms and deadlines for reporting. The second can be attributed to methods that regulate the supply and demand of funds in the financial market: the establishment of an official discount rate Central Bank, reserve requirements, refinancing of commercial banks, operations of the Bank of Russia on open market. Students should be well versed in the variety of applied methods of regulation and understand the mechanism of their impact on the activities of commercial banks.
More on the topic Topic 13. Central banks, their functions and basics of activity:
- 10.1. Organizational and legal forms and structure of commercial banks
- 1.2. PRINCIPLES OF ACTIVITY AND FUNCTIONS OF A COMMERCIAL BANK
- TOPIC 3.3. CENTRAL BANKS, THEIR FUNCTIONS AND THE BASIS OF ACTIVITY.
- § 1. Problems of the legal status of the Bank of Russia as a body of banking regulation and supervision
- § 2. The specifics of the management system in the state regulation of banking. Types of state regulation of banking activities.
- § 3. The activities of Russian courts in the field of administration of justice in relation to minors
- Copyright - Advocacy - Administrative law - Administrative process - Antimonopoly and competition law - Arbitration (economic) process - Audit - Banking system - Banking law - Business - Accounting - Property law - State law and management - Civil law and procedure - Monetary circulation, finance and credit - Money - Diplomatic and consular law - Contract law - Housing law - Land law - Suffrage law - Investment law - Information law -
The main link in the banking system of any state is the central bank of the country. In different states, these banks are called differently: state, people's, emission, reserve. Central banks emerged as commercial banks with the right to issue banknotes.
IN late XIX- early XX century. in most countries, the issue of all banknotes was concentrated in one issuing bank, which became known as the central issuing bank, and then simply the central bank. The name itself reflects the role of the bank in the credit system of any country: the central bank becomes the center of the banking system. The creation of a central bank of issue was due to the processes of concentration and centralization of capital, the transition to a single national monetary system. The primary duty of a central bank in a market economy is to protect purchasing power national currency and help the smooth functioning of financial markets.
The property of the central bank is most often state-owned. Carrying out its activities at the macro level, it reflects the national interest, pursues a policy not in the interests of a particular region, a particular group of sectors of the economy or enterprises, but in the interests of the state as a whole. At the same time, the central bank does not aim to make a profit.
The Central Bank is accountable directly to the parliament or to a special banking commission formed by the latter. The Central Bank Governor is not part of the government, and his appointment does not coincide with the formation of a new cabinet. The appointment can be made by the monarch, the president, the parliament, but the government, based on a parliamentary majority, can usually carry out its candidacy (often it officially proposes it). The top management of the Central Bank may not be limited in terms of tenure (in Denmark, Finland, Norway) or be appointed for a long term, for example, for 7 years - in Ireland, Australia, Canada, the Netherlands, for 8 years - in Germany.
The degree of independence of the Central Bank is due to its tasks which in any country are usually defined as the maintenance of monetary and foreign exchange stability in order to ensure anti-inflationary economic growth. The government is primarily concerned about short-term and medium-term goals, the upcoming elections, and this may conflict with the long-term interests of the entire state. A relatively independent Central Bank in such a situation should act as a kind of counterbalance.
On the other hand, the independence of the Central Bank has objective limits, since fundamental contradictions with the government could nullify the effectiveness of the latter's economic policy. Therefore, there is a tendency to increase the influence of the government represented, first of all, by the Minister of Finance. In many countries, the supreme powers of the government and the ministry of finance in relation to the Central Bank are enshrined in law.
At the same time, central banks have an official right to express their own opinion, have a number of advantages, and the right of direct orders by the Ministry of Finance is extremely rarely used. Whatever functions are assigned to the Central Bank, it is always a regulatory body that combines the features of a bank and a government department.
Of fundamental importance is the limitation of the government's ability to use the funds of the Central Bank. In many countries, direct government lending is practically absent (in the USA, Canada, Japan, Great Britain, Sweden, Switzerland) or legally limited (in Germany, France, the Netherlands).
Traditionally, the central bank does four main functions: carries out a monopoly issue of banknotes, is a bank of banks, a government banker, conducts monetary regulation and banking supervision.
Methods monetary policy of the central bank varied. Most widely used:
- - change in interest rates at which the central bank provides loans to commercial banks (official discount rate, refinancing rate, lombard rate);
- - change in norms of obligatory reserves of banks;
- - operations on the open market, i.e., operations for the sale and purchase of government bonds, bills of exchange and other securities;
- - politics currency intervention, i.e., the purchase and sale of foreign currency.
These methods of monetary regulation can be called general, since they affect the operations of all commercial banks and the loan capital market as a whole.
In addition, it can also be used selective (selective) methods aimed at regulating certain forms of credit (for example, consumer credit) or lending to various industries (housing construction, export trade). Selective methods include:
- - direct size limitation bank loans for individual banks or loans (so-called "credit ceilings");
- - regulation of the conditions for issuing specific types of loans, in particular the establishment of a margin, i.e. the difference between the amount of security and the size of the loan, the difference between deposit rates and loan rates.
The Central Bank performs the functions of the main regulatory body payment system country. It organizes interbank settlements, coordinates and regulates the organization of settlement (including clearing) systems, and serves as the settlement center of the banking system.
The main areas of supervision and control of the central bank over commercial activities include: issuing licenses for banking activities, for conducting certain types operations (currency, securities, with precious metals); verification and analysis of financial statements provided by banks, audits on the ground; establishment of systems of economic standards, control over their observance.
The Central Bank is the body currency control, the conductor of the state monetary policy. It defines the mode exchange rate the national currency and regulates it, conducts operations to manage official gold and foreign exchange reserves, regulates international settlements, the balance of payments, controls the movement of the currency both within the country and abroad, takes part in the development of the forecast and organizes the preparation of the balance of payments. The Central Bank participates in the preparation of international agreements on relevant issues, cooperates with the central banks of other countries, as well as with international and regional monetary credit institutions, represents the country in these organizations.
All functions of the central bank are interconnected. By lending to commercial banks, it simultaneously creates credit instruments of circulation; by issuing and repaying government obligations, it affects the level of loan interest. This determines the special position that the central bank occupies in the banking system, and creates objective prerequisites for it to perform its most important function - the function of monetary regulation.
The status, goals, functions, powers and principles of organization and activities of the Central Bank of the Russian Federation are legally determined by the Constitution of the Russian Federation, the Law on the Central Bank and other federal laws.
According to the Constitution of the Russian Federation, the main task of the Bank of Russia is to protect and ensure the stability of the ruble.
In accordance with Art. 3 of the Law on the Central Bank, the main objectives of the Bank of Russia are:
- - protection and stability of the ruble;
- - development and strengthening of the banking system of the Russian Federation;
- - ensuring efficient and uninterrupted functioning of the payment system.
The implementation of these goals is carried out by the Bank of Russia, regardless of state authorities (Article 75 of the Constitution of the Russian Federation, Article 5 of the Law on the Central Bank). Making a profit is not included in the goals of the Bank of Russia.
The principle of independence - a key element of the status of the Central Bank of the Russian Federation - is manifested primarily in the fact that the Bank of Russia is not included in the structure of federal government bodies and acts as a special institution with the exclusive right to issue money and organize money circulation. The independence of the status of the Bank of Russia is reflected in Art. 1, 2 and 5 of the Law on the Central Bank. The Bank of Russia is a legal entity and acts as a subject of public law. The authorized capital and other property of the Bank of Russia are federal property. The powers to own, use and dispose of the property of the Bank of Russia are exercised by the Bank of Russia itself; seizure and encumbrance of property of the Bank of Russia without its consent are not allowed. The financial independence of the Central Bank of the Russian Federation is also expressed in the fact that it carries out its expenses at the expense of its own income and is not registered with the tax authorities.
The state is not responsible for the obligations of the Bank of Russia, just like the Bank of Russia - for the obligations of the state, if they have not assumed such obligations. In accordance with Art. 5 of the Law on the Central Bank, federal state authorities, state authorities of the constituent entities of the Russian Federation and local governments do not have the right to interfere in the activities of the Bank of Russia. In cases of such interference, the Bank of Russia informs the State Duma of the Russian Federation and the President of the Russian Federation about it. In addition, the Bank of Russia has the right to defend its status and powers in court.
The Bank of Russia is accountable to the State Duma of the Russian Federation, which appoints and dismisses the Chairman of the Bank of Russia (on the proposal of the President of the Russian Federation) and members of the Board of Directors of the Bank of Russia, and also appoints the auditor of the Bank of Russia and approves the annual report of the Central Bank of the Russian Federation and the auditor's report.
The Central Bank of the Russian Federation is a single centralized system with a vertical management structure. The system includes: the central office, territorial offices, cash settlement centers, computer centers, field institutions and educational institutions, storage facilities, as well as other enterprises, institutions and organizations, including security units, necessary for the successful operation of the Bank.
The national banks of the republics that are part of the Russian Federation are territorial institutions of the Bank of Russia. They do not have the status of a legal entity and do not have the right to make decisions of a regulatory nature, as well as issue guarantees and sureties, promissory notes and other obligations without the permission of the Board of Directors of the Bank of Russia. The tasks and functions of the territorial institutions of the Bank of Russia are determined by the Regulations on these institutions approved by the Board of Directors.
The supreme body of the Bank of Russia is the Board of Directors. This is a collegial body that determines the main areas of activity of the Bank of Russia and manages it. The Board of Directors includes the Chairman of the Bank of Russia and 12 members of the Board, who are approved by the State Duma of the Russian Federation on the proposal of the Chairman of the Bank. He is also Chairman of the Board of Directors.
The Board of Directors organizes the work of the Bank of Russia and regulates the activities of the country's commercial banks. He approves the structure and staffing of the central office of the Bank of Russia, as well as the charters of its structural divisions.
The powers of the Board of Directors include changing rates on centralized loans, reserve requirements, economic standards; determining the conditions for admission of foreign capital to the banking system of the Russian Federation; other decisions on issues of great importance both for the Bank of Russia and for the banking system and the country's economy as a whole.
Along with the Board of Directors, the National Banking Council functions. It includes representatives of the Administration of the President of the Russian Federation, representatives of the highest bodies of legislative and executive power, and experts. The total number of the Council does not exceed 15 people. Council members are approved by the State Duma of the Russian Federation on the proposal of the Chairman of the Bank of Russia.
The Council regularly, at least once a quarter, discusses the concept of development of the banking system and issues of a unified state monetary policy, including the regulation of monetary resources. The recommendations of the Council are taken into account when the Federal Assembly of the Russian Federation considers legislative acts on banking issues, and is also taken into account when preparing decisions of the Board of Directors of the Bank of Russia.
Monetary circulation is regulated by the Central Bank in the process of implementing monetary policy, expressed in credit expansion or credit restriction.
The credit expansion of the Central Bank of the Russian Federation increases the resources of commercial banks, which, by issuing loans, increase the total amount of money in circulation. Credit restriction entails limiting the ability of commercial banks to issue loans and thereby saturate the economy with money.
The instruments of credit expansion or restriction are the discount rate of the Central Bank of the Russian Federation and some non-economic measures. The official discount rate (refinancing rate) is the interest on loans used by the Central Bank of the Russian Federation when lending to commercial banks.
Determining the size of the discount rate is one of the most important aspects monetary policy, and the change in the discount rate is an indicator of changes in the field of monetary regulation. The size of the discount rate usually depends on the level of expected inflation and at the same time has a great influence on inflation. When the Central Bank of the Russian Federation intends to ease or tighten monetary policy, it lowers or raises the discount (interest) rate.
During 1991-1997. the discount rate has been repeatedly revised in the range from 10 to 200% per annum, depending on the economic situation in the country.
Commercial banks receive loans from the Central Bank of the Russian Federation in the order of refinancing and rediscounting bills. The Bank of Russia regulates the total volume of loans issued by it in accordance with the accepted guidelines of the unified state monetary policy, using the discount rate as an instrument. Since January 21, 2000, the discount rate has been 45%. Over the period from 2000 to 2011, it decreased more than 20 times, and since May 2011 it has been 8.25%.
An increase in official rates reduces the ability of commercial banks to obtain resources for lending. This has the effect of reducing the money supply. Reducing the official discount rate works in the opposite direction.
The Bank of the Russian Federation may set one or more interest rates for various types of transactions or pursue an interest rate policy without fixing the interest rate. The interest rates of the Central Bank of the Russian Federation represent the minimum rates at which it carries out its operations. The Central Bank of the Russian Federation uses interest rate policy to influence market interest rates in order to strengthen the ruble.
The main functions of the Bank of Russia are enshrined in the Law on the Central Bank (Article 4). Bank of Russia:
- - in cooperation with the Government of the Russian Federation develops and implements a unified state monetary policy;
- - monopoly issues cash and organizes cash circulation;
- - is a lender of last resort for credit institutions, organizes the system of their financing;
- - establishes the rules for making settlements in the Russian Federation;
- - establishes the rules for conducting banking operations;
- - maintains accounts of budgets of all levels of the budgetary system of the Russian Federation and state social non-budgetary funds;
- - carries out efficient management of the gold and foreign exchange reserves of the Bank of Russia;
- - decides on state registration credit institutions, issues licenses to credit institutions to carry out banking activities, suspends their validity and revokes them;
- - supervises the activities of credit institutions;
- - registers the issue of securities by credit institutions in accordance with federal laws;
- - carries out independently or on behalf of the Government of the Russian Federation all types of banking operations necessary to perform the functions of the Bank of Russia;
- - organizes and carries out currency regulation and currency control in accordance with the legislation of the Russian Federation;
- - determines the procedure for making settlements with international organizations, foreign states, as well as with legal entities and individuals;
- - establishes the rules for accounting and reporting for the banking system of the Russian Federation;
- - establishes and publishes the official exchange rates of foreign currencies against the ruble;
- - takes part in the development of the forecast of the balance of payments of the Russian Federation and organizes the compilation of the balance of payments of the Russian Federation;
- - establishes the procedure and conditions for the implementation by currency exchanges of activities to organize operations for the purchase and sale of foreign currency, issues, suspends and revokes permits for currency exchanges to organize operations for the purchase and sale of foreign currency;
- - analyzes and forecasts the state of the economy of the Russian Federation as a whole and by region, primarily monetary, monetary, financial and price relations; publishes relevant materials and statistical data, and also performs other functions in accordance with federal laws.
In order to successfully implement monetary policy, the Central Bank of the Russian Federation uses the following tools and methods:
1. Ratios of required reserves deposited with the Bank of Russia. Required reserves (reserve requirements) are the most liquid assets that credit institutions are required to have, as a rule, either in the form of cash on hand in banks, or in the form of deposits with the Central Bank of the Russian Federation, or in other highly liquid forms determined by the Central Bank of the Russian Federation.
The reserve requirements ratio is the percentage ratio of the amount of minimum reserves established by law to the absolute (volumetric) or relative (increment) indicators of passive operations (deposits) or active operations (credit investments). The use of standards can have both a total impact - the establishment of the entire amount of obligations or loans, and selective - to a certain part of them.
2. Operations on the open market.
In carrying out these operations, the Central Bank of the Russian Federation not only implements the directions of its monetary policy, but also assists commercial banks in maintaining their liquidity at the required level, i.e., the ability to timely fulfill their obligations to customers - both legal entities and individuals.
Open market operations mean the sale and purchase by the Central Bank of treasury bills, government securities, bonds of the Bank of Russia. The issuer of government securities is the Government of the Russian Federation represented by the Ministry of Finance of Russia.
The Central Bank of the Russian Federation acts as the main dealer and service agent public debt. Operations with securities are carried out by more than 50 official dealers, which are commercial banks.
3. Refinancing of credit institutions.
Bank refinancing refers to the provision by the Central Bank of the Russian Federation of loans to commercial banks. The forms, procedure and conditions for refinancing are established by the Bank of Russia. Refinancing can be carried out by providing a pawnshop loan, a loan secured by bills of exchange and other types of loans.
central bank- the main state bank of the first level, the main issuing, monetary institution of any country, regardless of whether it is customary to call it state, people's or national.
Central banks occupy a special place, acting as the main coordinating and regulating body of the entire credit system of the country, they act as state bodies of economic management.
Based on this, central banks perform the following main functions:
monopoly issue banknotes;
are a bank of banks; supervise the activities of banks;
government banker;
carry out monetary regulation;
implementation of calculations.
The issuing function of the central bank is the oldest and one of the most important functions. Central banks, as a representative of the state, are legally assigned an emission monopoly only in relation to banknotes, that is, nationwide credit money, which are generally recognized as the final means of repaying debt obligations. The monopoly on the issue of the national currency enables the central bank to control the liquidity of credit institutions.
The main clientele of the central bank are commercial banks, acting as intermediaries between the economy and the central bank. The Central Bank keeps the free cash of commercial banks, that is, their cash reserves. Historically, these reserves have been placed by commercial banks with the central bank as a guarantee fund to pay off deposits.
The central bank exercises oversight by maintaining the required level of standardization and professionalism in the national credit system.
As the government's bank, the central bank must support the government's economic programs and place government securities, provide loans, and carry out settlement transactions for the government.
On behalf of the government, the central bank regulates foreign exchange and gold reserves and is the traditional custodian of government gold and foreign exchange reserves. It regulates international settlements, balances of payments, participates in the operations of the world market for loan capital and gold. The Central Bank, as a rule, represents its country in international and regional monetary organizations.
All functions of the central bank are closely interrelated. By lending to the state and banks, the central bank simultaneously creates credit instruments of circulation, by issuing and repaying government obligations, and affects the level of loan interest.
These functions of the central bank can be reduced to the following main functions: regulatory, supervisory, and information and research.
Regulatory functions include: regulation of the money supply in circulation. This is achieved by reducing or expanding cash and non-cash issuance and pursuing a discount policy, a policy of minimum reserves, an open market, and a foreign exchange policy.
Controlling function closely related to regulation. The central bank obtains extensive information about the state of a particular bank when implementing, for example, a policy of minimum reserves or rediscounting. The controlling function includes certain requirements for the qualitative composition of the banking system, that is, the procedure for admitting credit institutions to the national banking market. This also includes the development of a set of economic coefficients and norms necessary for credit institutions and control over them.
All central banks have information and research function, that is, the function of a research, information and statistical center. In many countries, this feature is marked by law.
The central bank performs its functions through banking operations - passive and active.
Operations are called passive., with the help of which banking resources are formed, active- operations for the placement of banking resources.
Passive operations:
emission;
· storage of cash reserves of credit institutions;
storage of official gold and foreign exchange reserves of the country;
Required reserves of commercial banks;
maintaining accounts of state bodies and the budget;
accounts in settlements;
accounts of foreign banks;
bank capital and reserves.
Active operations:
· purchase precious metals and foreign currency;
funds on accounts, in deposits of foreign banks;
cash on hand;
Issuance of loans to commercial banks;
government loans;
purchase of government securities;
state funding;
bank funds.
Central banks and the basics of their activities. - concept and types. Classification and features of the category "Central banks and the basics of their activities." 2017, 2018.
In each state, there is a Central Bank - a body of state monetary regulation of the economy, endowed with the right to monopoly issue banknotes, regulate money circulation, control the activities of credit institutions, and store official gold and foreign exchange reserves.
IN different countries Central banks can be called differently: state, national, popular, etc. In a number of countries, such banks report directly to parliament, or to a special banking commission formed by the country's legislature.
This body should be independent, sometimes acting as a certain counterbalance to the actions of the government, but the independence of the Central Bank should also have its objective limits, since the deepening of fundamental contradictions with the governing system of society can make it difficult to govern the country.
In Western literature, the contradictions surrounding the activities of the Central Bank have been called the magic quadrangle. The angles are: economic growth, the problem of employment, the value of money and the balance of the country's balance of payments.
Central banks, as a rule, are legally independent and should not be completely subordinate to the state, although their activities partially affect the interests of the state itself and economic sectors. The issues of independence of the Central Bank are of fundamental importance in connection with the need to distinguish between public finances and banking resources, i.e. limiting the rights of governments to use the funds of these banks. To carry out their functions, the Central Banks use a wide range of economic instruments through which monetary policy is carried out.
Basic provisions on the organization of the monetary system modern Russia formulated in the Constitution of the Russian Federation. The legislation of the Russian Federation provides that the Central Bank of the Russian Federation is a legal entity, a subject of federal property with a special status. This is an economically independent institution that exists on its own income. The Bank of Russia is not liable for the obligations of the state, just as the state is not liable for the obligations of the bank. The Central Bank of the Russian Federation performs the following functions:
1. Develops and implements a unified state and monetary policy.
2. Regulates money circulation.
3. Is a monopolist in the issue of cash.
4. Organizes credit relations.
5. The Central Bank of the Russian Federation is the settlement center of the country.
6. The Central Bank of the Russian Federation is a currency regulation body.
7. The Central Bank of the Russian Federation establishes the rules of accounting and priority, the procedure for conducting operations for all banks and credit institutions. It licenses the activities of banks, credit institutions and audit organizations involved in the audit of the bank, registers the issue of securities of banks and credit institutions, maintains a register of securities issued by them.
The Bank of Russia uses the following tools and methods:
1. Determination of interest rates for ongoing transactions.
2. Establishment of reserve requirements for depositing funds of credit institutions.
3. Carrying out operations on the open market.
4. Refinancing banks and providing loans.
5. Implementation of foreign exchange investments.
6. Setting price targets.
7. Introduction of credit restrictions.
The Central Bank of the Russian Federation may establish one or more official interest rates, taking into account the characteristics of various types of transactions, or pursue an interest rate policy without fixing the official interest rate.
The refinancing system consists of lending to Russian banks and other credit institutions in deadlines and within the limits allocated by the limit.
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HUMANITARIAN UNIVERSITY
Topic: Central banks and the basics of their activities
Subject: Money, credit, banks.
Ekaterinburg
Introduction
Conclusion
Introduction
The Central Bank is the main state bank of the first level, the main issuing, monetary institution of any country, regardless of whether it is called state, people's or national. central bank discount rate
Central banks occupy a special place, playing the role of the main coordinating and regulating body of the entire credit system of the country, they act as state bodies of economic management.
Central banks are the regulatory link in the banking system, therefore their activities are related to strengthening monetary circulation, protecting and ensuring the stability of the national currency and its exchange rate against foreign currencies: developing and strengthening the country's banking system: ensuring efficient and uninterrupted settlements.
Traditionally, the central bank has five main tasks. The Central Bank is intended to be:
* the emission center of the country, i.е. enjoy the monopoly right to issue banknotes;
* bank of banks, i.e. transact not with commercial and industrial clients, but primarily with the banks of a given country: keep their cash reserves, the amount of which is established by law, provide them with loans (lender of last resort), exercise supervision, maintaining the necessary level of standardization and professionalism in the national credit system;
* a government banker, for this he must support state economic programs and place government securities; provide loans and settlement operations for the government, hold (official) gold and foreign exchange reserves;
* the main settlement center of the country, acting as an intermediary between other banks in the country when performing non-cash payments based on the offset of mutual claims and obligations (clearings);
* the body regulating the economy by monetary methods.
An important role in the functioning of the country's banking system is played by the nature of the implementation of supervision by the central bank.
When solving five tasks, the central bank performs three main functions: regulatory, supervisory, and information and research.
The effective functioning of the banking system is a necessary condition for the development of market relations, which objectively determines the key role of the central bank in regulating banking activities. The search for effective forms and methods of monetary regulation of the economy involves the study and generalization of the experience of countries with market economy. The monetary policy pursued in these countries is one of the components of economic policy and makes it possible to combine macroeconomic impact with the rapid adjustment of regulatory measures, providing them with prompt and flexible support.
1. Essence and functions of central banks
1.1 The nature of central banks
In the early stages of the development of capitalism, there was no clear distinction between central (issuing) and commercial banks. Central banks in their modern form are relatively recent. Commercial banks actively resorted to issuing banknotes to accumulate capital. As the credit system developed, there was a process of centralization of bank emission in a few large commercial banks. The result of this process was the consolidation of a monopoly right to issue banknotes for one bank. At first, such a bank was called an issuing or national bank, and later - a central one, which corresponded to its dominant position in the credit system.
The first central bank - the Swedish "Riksbank" - was created in 1668, at the turn of the transition from feudalism to capitalism; in 1694, the Bank of England was established. However, they did not have the exclusive right to issue banknotes and their functions differed from the functions of modern central banks - for example, the Bank of England was initially supposed to finance trade and industry, and the Bank of the Netherlands - domestic and foreign trade. Central banks in their modern form arose in the 19th century. Currently, almost all countries of the world have central banks, but there are significant differences between them due to the peculiarities of the political and financial and economic development of the home countries.
Central banks are legal entities having a special status, the distinguishing feature of which is the isolation of the property of the bank from the property of the state. Although formally this property is located, as a rule, in state property, the central bank has the right to dispose of it as the owner. This is different from the central bank state bank whose property is fully controlled by the state.
The legal status of the central banks of developed countries is enshrined in legal acts: laws on central banks and their charters, laws on banking and lending activities, in the currency legislation. As a rule, the main legal act regulating the activities of the central bank is the Law on the Central Bank, which determines its organizational and legal status, functions, procedure for appointing senior management, relations with the state and the national banking system. This law establishes the powers of the central bank as the issuing institution of the country.
The central bank combines the individual features of a commercial banking institution and a government agency, with some power in the regulation of the credit system.
The central bank is usually set up in the form joint-stock company. As a rule, its capital belongs to the state (France, Great Britain, Germany, the Netherlands and Spain). If the state owns only part of the capital (Belgium, Japan) or the shareholders of the central bank are commercial banks (for example, in the USA) and other financial institutions (Italy), the state nevertheless plays a leading role in the formation of the central bank's governing bodies.
the central bank acts as an agent of the Ministry of Finance and the conductor of its monetary policy;
the central bank is independent of the government, which ensures its independence in conducting monetary policy without pressure from government bodies.
However, in reality, these models do not work in their pure form. In most countries, there is an intermediate model that uses the principles of interaction between the executive branch and the central bank, with a certain degree of its independence.
The legislation of only 5 countries - the USA, Germany, Switzerland, Sweden and Holland - provides for direct subordination of central banks to parliaments. In most states, central banks report to the treasury or the ministry of finance.
In the UK, France, Italy, Japan and some other developed countries, ministries of finance are authorized to issue instructions to central banks, but in practice such cases are quite rare. As a rule, consensus is reached at meetings of the government, unions of entrepreneurs and bankers and is reflected in the signing of joint statements by representatives of the Ministry of Finance and the Central Bank.
In case of disagreements between the Ministry of Finance and the Central Bank, only the administrative way of resolving them in the form of a parliamentary resolution or a government decision is possible. In countries where central banks are directly subordinate to parliaments, through legislative procedures, it is possible to make decisions obliging the executive bodies to assist central banks in achieving a particular monetary policy goal.
The legislation of a number of countries provides for the reporting of central banks to parliaments. Thus, the US Federal Reserve System (FRS) submits to the US Congress a report on its activities 2 times a year, and the central banks of Germany and Japan send reports to the parliaments of their countries annually.
1.2 Independence of central banks from the executive branch
Fulfillment of the main goal of its activities legally assigned to the central bank - ensuring price stability - presupposes the existence of a certain degree of its independence from the executive branch. Moreover, the independence of the central bank from the government implies its two forms: political and economic.
Political independence - this is the autonomy (independence) of the central bank in setting targets for the money supply;
Economic independence - independence of the central bank in the choice of monetary policy instruments.
The conditions for the political independence of the central bank are the determination of the procedure for appointing members of its governing body or the manager (president), the approval of the decision taken by the bank by the government and (or) parliament. Economic independence is expressed in the fact that the central bank is not obliged to automatically issue funds to the government to finance public spending and give preference to it in providing loans. In addition, for the economic independence of the central bank, the nature of its control over the credit system is important: the use of administrative (direct) non-market methods of control, involving government intervention in decision-making by the bank, infringes on the autonomy of the latter. Of course, in practice it is very difficult to determine the degree of political independence of a given central bank. However, with the help of some objective indicators of independence, such as the existence of formal organizational links between the central bank and the government (rules obliging the central bank to maintain fiscal policy), you can try to do this. One recent study of central bank independence using these indicators suggests a strong relationship between central bank political independence and low inflation.
The results of studies of this kind suggest that the independence of the central bank as a whole is determined by the following factors:
Independence from government bodies. This condition is mandatory. If the central bank is obliged to follow the instructions of government bodies, then it will not be able to maintain price stability, since it will be under pressure from the government;
Personal independence of members of the governing bodies of the central bank. The independence of the governing bodies of the central bank will be ensured if they are appointed for a sufficiently long term. If they are reappointed, there is a danger of diminishing their degree of personal independence;
The legal status of the bank, which is determined, in particular, by the possibility of amending the charter (law) of the central bank. The more difficult it is to amend the charter, the more securely the independence of the central bank is ensured.
An important factor determining the ability of the central bank to maintain price stability is the established relationship with government authorities. Regular contacts between representatives of the central bank and government authorities increase the degree of confidence of the latter in the actions of the central bank and contribute to the achievement of its main goal - ensuring price stability. Thus, this task can be facilitated by periodic reports of the central bank on its activities to parliament.
The degree of independence of the central bank from the executive branch varies from country to country. It is believed that the German central bank Bundesbank, whose independence is provided for in the Bundesbank Act (1957), has the greatest independence in conducting monetary policy. In carrying out its tasks, the Bundesbank is obliged to support the economic policy of the government, but does not depend on its instructions. The Bundesbank is obliged to act as an adviser to the government on the most important issues of monetary policy and provide it with the necessary information. At the same time, members of the government have the right to participate in the work of the Central Board of the Bundesbank, its collective governing body. They do not have the right to vote, but may propose issues for discussion in the Council and make proposals; at their request, the decision of the Council may be postponed for 2 weeks. The President of the Bundesbank may, if necessary, be summoned to meetings of the federal government.
When making decisions on monetary policy, the Bundesbank has full autonomy, which is possible as long as its actions do not run counter to the direction of the government's monetary policy.
The US Federal Reserve has a rather high degree of independence from the executive branch - its decisions are not subject to ratification by the president or government agencies. At the same time, the Fed is responsible to the US Congress for its monetary policy. All appointments to the Board of Governors of the Fed, including appointments of the chairman and vice chairman from among the members of the Board, are made by the president with the consent of the Senate. With this in mind, and also taking into account the coordination of the policies pursued by the Fed and the government, this system can be characterized as "independent within the government."
One of the least independent central banks is the Bank of England. Relations between it and the state are regulated by the Law on the Bank of England (1946), on the basis of which the Bank became state. In accordance with this Act, the Treasury has the right to significantly influence the activities of the Bank of England. In the field of monetary policy, the Bank of England has only an advisory function. The task of the governing body - the Board of the Bank of England - is to coordinate monetary policy issues with the Ministry of Finance (Treasury), the head of which is formally responsible for making decisions in this area and is accountable to Parliament. Thus, the Bank of England is under the control of the Treasury, which is authorized to make recommendations to the central bank after prior consultations with it. This is the peculiarity of the relationship between the Treasury and the central bank.
Like the Bank of England, the Bank of Italy is quite dependent on the government for monetary policy. Administratively, it is subordinate to the Treasury and must follow the recommendations of the Inter-Ministerial Committee on Credits and Savings created under the latter. The Bank of Italy acts as a government consultant.
Thus, in countries traditionally characterized by centralism and strong political power, the central bank is usually more legally dependent on the government.
In federal states, the central bank enjoys much greater independence. Besides, in federal states there is a clear desire to properly represent the interests of the regions in the governing bodies of the central bank.
Of course, ideally, the central bank should be a sufficiently independent and influential institution, which, on the one hand, carries out monetary regulation on the basis of its powers enshrined in law, and on the other hand, ensures the reliability and stable functioning of the credit and banking system. However, in real conditions, the independence of many central banks turns out to be limited - in particular, as a result of conflicts arising from contradictions between the goals of economic policy declared by the government and the need to maintain the stability of the national currency, which the central bank is called upon to provide.
1.3 Functions of central banks
Among the diverse functions of central banks, it is necessary to single out the main ones, without which it is impossible to fulfill the main task of the central bank - maintaining the stability of the national monetary unit - and additional ones that correspond to the solution of this task.
The main functions performed by all central banks without exception are divided into regulatory, control and servicing.
TO regulatory functions relate:
management of total cash flow;
regulation of the monetary sphere;
regulation of supply and demand for credit.
Control functions include:
control over the functioning of the credit and banking system;
carrying out currency control.
Service functions consist in:
organization of payment and settlement relations of commercial banks;
lending banking institutions and governments;
the role of the central bank as the financial agent of the government.
The most important regulatory function inherent in all central banks without exception is development and implementation of monetary policyaboutlitiki.
The nature of the monetary policy pursued by the central bank largely depends on the degree of its independence from the government, which may be more or less, but is never absolute. For example, targets for changes in money supply aggregates are usually set directly by central banks. At the same time, no central bank can independently, without the participation of the state, establish this or that currency regime.
On the other hand, the trends in the monetary sphere in recent decades have contributed to the strengthening of the independence of central banks. Thus, the processes of capital movement liberalization and deregulation that took place led to an increase in the importance of market instruments and a decrease in the role of administrative methods of regulation. This, in turn, led to the curtailment of regulatory procedures and, to a certain extent, strengthened the independence of central banks.
Development and implementation of monetary policy include:
determination of directions for the development of monetary policy;
choice of the main instruments of monetary policy;
creation and maintenance of a statistical database on money supply, loans and savings;
conducting research on the problems of the economy and the monetary sphere of this country and other states that form the basis of monetary policy;
drawing up monetary programs and monitoring their implementation.
An equally important regulatory function of the central bank is regulation of supply and demand for credit and foreign currency, carried out through intervention operations in the money and foreign exchange markets. In order to curb credit expansion, central banks take measures to reduce the liquidity level of credit and banking institutions, and to expand credit expansion they carry out opposite actions.
Control over the functioning of the credit and banking system - one of the control functions of the central bank - is due to the need to maintain the stability of this system, since confidence in the national currency presupposes the existence of stable and efficient credit and banking institutions.
As a rule, supervision of the credit and banking system is carried out directly by central banks, but in Belgium, Germany, Switzerland and Japan, supervisors are institutionally separated from the central bank. Despite this, the central bank is most closely associated with them, taking part in their activities or providing advisory services. In other countries, the central bank controls the activities of credit and banking institutions in conjunction with other institutions.
An equally important control function of the central bank is implementation of currency control and currency regulation.
The degree of rigidity of currency control and currency regulation depends primarily on the general monetary and economic situation of the country. Yes, in developing countries ah control is usually subject to a very wide range of operations on external payments and settlements, due to the need to regulate the use of foreign currency. On the contrary, the most developed economic terms countries are currently on the path to liberalization of foreign exchange controls.
Ensuring the smooth functioning of the system of cash and non-cash payments - one of the servicing functions of the central bank.
Initially, the activity of the central bank in this area was limited to the issuance of paper money. In the future, as non-cash payments developed, the central bank began to act as an organizer and participant in payment and settlement relations. Being at the center of cash flows, central banks are called upon to ensure the fast and uninterrupted functioning of the mechanism of cashless settlements and payments.
Another service function of the central bank is lending to credit and banking institutions and the government. As lenders of last resort, central banks lend to lending institutions that are temporarily short of financial resources.
By lending to the government, central banks finance the public debt and government deficits. This is especially common in developing countries, where central bank loans to the government represent a significant portion of their assets. On the contrary, developed countries avoid such practices. In this regard, this function currently does not apply to the main ones, but to the additional ones.
Another service function of the central bank is acting as a financial agent of the government, that is, maintaining government accounts and managing the assets of various government departments. In some countries, such as the United States, central banks perform this function in conjunction with commercial banks. In other countries, such as Italy, central banks are practically the accountants of public institutions.
Additional functions of the central bank are not directly related to its main task (maintaining the stability of the national currency), but contribute to its implementation. These functions include managing public debt, conducting analytical research and maintaining a statistical database, making banknotes, etc.
Functions for conducting analytical and statistical research by their nature can be very different and unequal in the central banks of different countries. Research in the field of monetary and exchange rate policy is mainly based on balance of payments data.
Most central banks carry out studies of the economic situation in the real sector of the economy. Some central banks publish detailed research results (US Federal Reserve Banks, Bank of Japan, National Bank of Belgium, German Federal Bank, Bank of France, Bank of England, etc.).
Many central banks study the financial situation of enterprises and create centralized services for banking risks. In addition, the central banks of Germany, Belgium, Spain, and Italy have centralized databases of enterprise balance sheets.
The task of all central banks is issuance of banknotes and bothfrombaking them to circulate throughout the country. At the same time, only a few central banks (Italy, Great Britain, Belgium, Spain, etc.) have special structural units for the production of banknotes.
Individual central banks communicatefrom non-bankingclientele and provide public services. All central banks maintain correspondent relationships with financial institutions home country, other central banks and international financial institutions. However, commercial relations with non-banking clients are always secondary.
2. Monetary policy of the central bank
2.1 Main objectives, goals, methods and forms of monetary regulation
Monetary regulation carried out by the central bank is one of the elements of the economic policy of the state and is a set of measures aimed at changing the money supply in circulation, the volume of loans, the level of interest rates and other indicators of money circulation and the loan capital market. It is aimed at achieving stable economic growth, low inflation and unemployment. The laws on central banks emphasize their responsibility for the stability of money circulation and the exchange rate of the national currency.
As an intermediary between the state and the country's banking system, the central bank is designed to regulate cash and credit flows with the help of certain tools. With the development of credit systems and loan capital markets, the ability of the central bank to directly influence the supply and demand of the money supply has decreased, but at the same time the arsenal has expanded and the effectiveness of market instruments of monetary regulation has increased.
The choice of monetary regulation instruments used by the central banks of foreign countries is quite wide. The use of different types of instruments varies depending on the direction of a country's economic policy, the degree of openness of its economy, established traditions and specific circumstances.
The instruments of monetary regulation available to the central bank differ in terms of direct objects of influence (supply of money and demand for money), in their form (direct and indirect), in the nature of the parameters established during regulation (quantitative and qualitative), in terms of impact (short-term and long-term). All these methods are used in a single system.
Objects of influence. Depending on the specific goals, the monetary policy of the central bank is aimed either at stimulating credit emission (credit expansion) or at limiting it (credit restriction). Through credit expansion, central banks pursue the goal of raising production and revitalizing the conjuncture; with the help of credit restrictions, they are trying to prevent the “overheating” of the conjuncture, observed during periods of economic upswing.
By shape instruments of monetary regulation are divided into administrative (direct) and market (indirect). Administrative instruments are those in the form of directives, prescriptions, instructions coming from the central bank and aimed at limiting the scope of the credit institution. They occupy a certain place in the practice of central banks in developed countries, and are also widely used in developing countries.
Under the instruments of a market nature, we mean the ways in which the central bank influences the monetary sphere through the formation of certain conditions in the money market and the capital market. Market (indirect) instruments are more flexible than administrative ones, but the results of their application are not always adequate to the intended purpose. Nevertheless, at present, there is a departure of the central banks of developed countries from direct methods of influence to market ones.
By the nature of the parameters, established in the process of the influence of the central bank on the monetary sphere, the instruments of monetary regulation are divided into quantitative and qualitative.
Through the use of quantitative methods, there is an impact on the state of the credit capabilities of banks, and, consequently, on money circulation as a whole.
Qualitative instruments are a variant of direct regulation of the qualitative parameter of the market, namely, the cost of bank loans.
By exposure time instruments of monetary regulation are divided into long-term and short-term in accordance with the objectives of the implementation of the immediate and long-term goals of monetary policy. The long-term (final) objectives of monetary policy are those tasks of the central bank, the implementation of which can be carried out from 1 year to several decades. Short-term instruments include instruments of influence, with the help of which intermediate goals of monetary policy are achieved.
The main instruments of monetary regulation, most frequently used by the central banks of foreign countries, are the establishment of minimum reserve requirements, refinancing of commercial banks, regulation of the official discount rate and open market operations.
At the initial stages of the transition to market relations, the most effective methods are direct methods of central bank intervention in the monetary sphere: administrative regulation of deposit and lending rates commercial banks, establishment limits lending by the bank to its customers, changing the level of minimum reserves.
2.2 Regulation of the official discount rate
In almost all countries of the world, commercial banks resort to loans from central banks, which are provided at a certain percentage. The discount, or discount, rate applied by central banks in transactions with commercial banks for the accounting of short-term government bonds and rediscounting commercial bills and other types of securities that meet the requirements of the central bank, is called the official discount rate. In other words, the official discount rate is the fee charged by the central bank when purchasing securities from commercial banks before they fall due.
The official discount rate is a benchmark for market lending rates. By setting the official discount rate, the central bank determines the cost of attracting credit resources by commercial banks. The higher the level of the official discount rate, the higher the cost of central bank refinancing loans. It follows that the policy of changing the discount rate is a variant of regulating the quality parameter money market- the cost of bank loans.
Regulation of the discount rate refers to the market (indirect) instruments of monetary regulation. The mechanism of regulation through changes in the official discount rate is quite simple, which was the reason for its widespread use in both developed and developing countries. For example, if the central bank aims to reduce the lending capacity of commercial banks, then it raises the discount rate, thereby increasing the cost of refinancing loans. If the goal of the central bank is to expand access to credit from commercial banks, then it lowers the discount rate. However, the central bank is not always able to achieve the intended goal. For example, raising the discount rate of the central bank will not be effective if the money market currently tends to reduce the cost of loans as a result of their increased supply, since in this case commercial banks will prefer to use cheaper loans from the interbank market than expensive ones. loan funds central bank. If, however, the official discount rate of the central bank was already below the market level before it was lowered, then the reduction in the cost of already cheap loans would entail a corresponding reaction of the money market.
By manipulating the official discount rate, central banks influence the state of not only monetary, but also financial market. Thus, an increase in the official discount rate entails an increase in rates on loans and deposits in the money market, which, in turn, causes a decrease in demand for securities and an increase in their supply. Demand for securities is falling both from non-banking institutions, as deposits become more attractive, and from credit institutions, since direct financing becomes more profitable with expensive loans. The supply of securities, in turn, increases. Thus, an increase in the official rate entails a decrease in the market value of securities. A decrease in the official discount rate, on the contrary, reduces the cost of loans and deposits, which leads to the opposite processes: the demand for securities increases, their supply decreases, and market value. Thus, the central bank's accounting policy is a mechanism for directly influencing the liquidity of credit institutions through changes in the cost of refinancing loans, which indirectly affects the country's economy as a whole.
As already noted, it is the central banks that are entrusted with the function of setting the level of the official discount rate.
Changing the official discount rate as an instrument of monetary regulation is widely used by the central banks of developed countries, while in developing countries preference is given to direct regulation of interest rates on loans and deposits of commercial banks.
Assessing the regulatory role of the official discount rate, it should be noted that it is a kind of barometer of the economic situation for the country's business circles.
One of the instruments of monetary regulation most actively used by the central bank are reserve requirements for the liabilities of commercial banks. This tool is distinguished by its ease of use, which, together with the direct impact on the level of liquidity of commercial banks, makes it very attractive.
The minimum reserves are the obligatory norm of deposits of commercial banks in the central bank. By changing the norm of minimum reserve requirements, central banks maintain the volume of money supply within the given parameters and regulate the level of liquidity of commercial banks. As a result of the increase in the required reserve requirements by the central bank, the amount of free cash at the disposal of commercial banks and used to expand active operations decreases. Reducing the reserve ratio, on the contrary, increases the possibility of lending.
The norm of minimum reserve requirements is established by law.
According to established practice, the most appropriate assets used to set reserve requirements are highly liquid funds. The qualitative composition of these funds is different - it can be cash at the cash desks of banks, the most liquid types of assets, government securities. In any case, all of them should be as “monetary” as possible, thus ensuring the possibility of using reserve requirements as a tool to influence money circulation.
2.3 Open market operations
Open market operations are operations of the central bank to buy and sell securities. The object of these transactions is the so-called marketable securities, mainly the obligations of the treasury and state corporations, industrial companies and banks, as well as bills discounted by the central bank.
Open market operations are the most efficient and flexible market instrument of the central bank's monetary policy, providing an effective impact on the money market and Bank loan and hence the economy. The time of their holding and their volume cause a given market reaction. In this regard, they are predictable and short-term.
The mechanism of open market operations is simple, which makes it attractive to use. So, in the case of the purchase of securities by the central bank on the open market, the volume of own reserves of banks and the banking system as a whole increases, and in the case of sale, on the contrary, it decreases, which affects the cost of the loan and, consequently, the volume of money supply.
Central bank operations in the open market involve the use of various technical procedures. They differ depending on: from the terms of transactions(direct purchase and sale or purchase and sale for a period with an obligation to repurchase at a predetermined rate); volumetocom transactions(transactions with state or private securities); urgency of transactions(short-term - up to 3 months - and long-term - from 1 year or more - operations with securities); areas of operations(only the banking sector or together with the non-banking sector of the securities market); method of setting interest rates(central bank or market); source of initiative in carrying out the operation(central bank or money market participants).
Differences in the technical procedures for conducting operations on the open market are due to a number of factors. The most important of them are the specifics of the credit and banking system, which implies a different composition of market participants, and the peculiarities of national legislation. Open market operations are most widespread in countries with the most developed segments of the money market - the USA, Canada, Great Britain, Germany, Japan, France and Italy. In developing countries that do not have a sufficiently broad market for high-quality securities, central bank operations with securities cannot affect the monetary base and the amount of reserves of commercial banks without at the same time disorganizing the market itself.
Depending on the conditions of transactions with securities on the open market, as noted, direct and reverse operations are distinguished. Historically, the first form of open market operations was direct operations, that is, central bank operations to buy or sell government bonds and other obligations, treasury bills, and in some countries, private bills and central bank bills. Direct transactions are carried out on a cash "cash" basis, which implies full settlement within the day the transaction is completed. Operations based on the so-called regular delivery provide for the full settlement and delivery of securities to their buyer on the next business day.
Reverse Operations on the open market ("repo" operations) - transactions for the purchase and sale of securities by the central bank with the obligation to resell and buy back at a predetermined rate. Reverse operations on the open market are characterized by a softer impact on the money market, and therefore are a more flexible method of regulation. This makes them even more attractive and expands the scope of their use. Reverse transactions are widely used in the USA, Japan, Canada, Great Britain, France, and also in Germany, where they currently account for over 95% of total securities transactions. Operations are carried out with an interval of 1 to 15 days.
In the traditional, classical sense, operations on the open market are carried out on the secondary securities market. However, in countries where the secondary market has not received sufficient development, operations in the primary market are equated to operations in the open market, although in this case the desired result is achieved not directly, but indirectly. It should be noted that with a relatively small scale, operations on the open market have mainly a qualitative rather than a quantitative impact on the liquidity of the banking system and the state of money circulation. As the volume of operations on the open market expands, it becomes possible to effectively influence the quantitative parameters of the money market. As a result, operations on the open market are turning into an effective means of regulating the state of money circulation and the economy as a whole.
Conclusion
The main task facing all central banks is to maintain purchasing power the national currency and the stability of the credit and banking system of the country. All central banks have similar functions and apply comparable regulatory instruments. This leads to a gradual convergence organizational structures, coordination of their activities, and in Western Europe - the formation of a single monetary and foreign exchange policy of the EU member states.
Monetary regulation carried out by central banks, being one of the components of the economic policy of the state, at the same time allows you to combine macroeconomic impact with the ability to quickly adjust regulatory measures and serves as a tool for their prompt and flexible support.
The main activity of central banks is the regulation of money circulation.
One of the most important activities of the central bank is the refinancing of credit and banking institutions, aimed at ensuring the stability of the banking system.
One of the most important functions of the central bank is to participate in the management of public debt, which is formed from the obligations of the central government, local authorities authorities of public sector enterprises.
The Central Bank is the conductor of the state monetary policy, aimed mainly at regulating exchange rate.
To conduct monetary policy, central banks usually use 3 types of instruments: intervention in foreign exchange markets, discount policy and management of foreign exchange reserves.
Bibliography
Anulova G.N. Monetary regulation: the experience of developing countries. - M.: Finance and statistics, 2009.
Dolan E.J., Campbell K.D., Campbell R.J. Money banking and monetary policy. - M.-L.: Profilo, 2011.
Banks and banking operations. ed. E.F. Zhukova M.: "Unity" 2007.
Banking system of Russia. Handbook of a banker. ed. A.G. Gryaznov. M.: "DEKA", 2009.
General theory of money and credit. ed. E.F. Zhukov. M.: "UNITI", 2007.
Polyakov V.P., Moskovina L.A. Structure and functions of central banks. Foreign experience: Tutorial. - M.: INFRA-M, 2008.
Shenaev V.N., Naumchenko O.V. The Central Bank in the process of economic regulation. - M.: Consultbankir, 2010.
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