2.1. Organizational principles of monetary regulation
The organizational structure of the US monetary regulatory authorities, their powers and methods of operation are based on extensive and ramified legislation, which reflects the historical features of the formation and development of the economy and the monetary sphere of the country. The control and regulatory activities of these bodies largely overlap and duplicate, and this constitutes one of the important features of the organization of monetary regulation in the United States 1 .
In the United States, banks are divided into national banks, operating on the basis of a license (charter) from the federal government, and state banks, operating on the basis of a license (charter) from the state government. This feature leads to a double interpretation of the principle of two-tier banking systems, adopted in most countries. Typically, the term “two-tier system” means that the first level is occupied by the Central Bank as the regulatory authority for the monetary system, and on the second level there are all other credit institutions: commercial, savings, mortgage banks, etc. In the USA, the two-tier system includes the Federal Reserve System (Fed), national and state banks. The US financial and credit system has one more feature. The Federal Reserve System is not only a central bank, but also a professional association of the country's banks. All national banks are necessarily members of the Federal Reserve System, which gives them some benefits and imposes obligations to comply with certain requirements of the Federal Reserve System. State banks can be members of the Fed on a voluntary basis. But in any case, they are obliged to follow the instructions of the Fed. Accordingly
but, national banks form one level of the US banking system, and state banks form the second. The principles of building the US banking system are shown in Fig. 1.
Figure - Diagram of US monetary authorities 1
Regulatory regulation is intended to accomplish the following tasks 2:
Ensuring the reliability and efficiency of the monetary system fulfilling its economic tasks;
Ensuring the stability of the credit system and preventing bankruptcy of commercial banks and other credit institutions;
Limiting the scale of concentration of capital in the ownership of a few credit institutions, preventing the establishment of monopoly control of these banks over the money market.
The main regulatory authorities for monetary regulation in the United States include several agencies.
1. Office of the Comptroller of Currency (Office of Comptoller of Currency) (hereinafter - UKDO). This structure in the US Treasury (Treasury Department) is in charge of issuing permits (charters) for the creation of national banks, supervising them and conducting regular audits of their activities. Each national bank is audited at least twice every three years and is required to submit reports to the UKDO at least four times a year. UKDO also considers applications for opening branches and merging banks.
2. The Federal Reserve System is the main body for economic regulation of the monetary sphere, the central bank of the United States.
The Federal Reserve has a wide range of administrative powers, which it uses to supervise and control the activities of credit institutions. At the same time, the Federal Reserve is implementing regulatory measures that, through the monetary sphere, have a great impact on the state and nature of development of the US economy. The Fed's policies significantly influence the global economy as a whole. Therefore, the activities of the Federal Reserve have attracted close attention not only from financial and credit organizations in the United States, but also from all countries of the world.
The Federal Reserve System was created in 1913 to manage monetary circulation and banking activities at the federal level. The entire territory of the United States was divided into 12 districts, in each of which a Federal Reserve Bank was created, and together they form the central bank of the United States - the Federal Reserve. Its modern status, principles of organization and powers were influenced by a number of laws.
The Federal Reserve is a federal agency independent of the legislative and executive branches of government. This status allows its leadership to independently make decisions in the field of monetary policy. The independence of the Federal Reserve is ensured not only by the legislative guarantee of its status, but also by the procedures for appointing its leadership.
The highest body of the Federal Reserve is the Board of Governors (Board of the Federal Reserve). For brevity in English, it is often called the Federal Reserve Board. The Council consists of seven members, who are appointed by the President, in consultation with Congress, every two years for a term of 14 years, in order to ensure rotation of Council members. The Comptroller of the Currency and the Secretary of the Treasury cannot be members of the council. The board can only include one of the chairmen of the Federal Reserve Bank. If a council member has served a full term, he cannot be appointed a second time. From among the members of the council, the president of the country appoints the chairman of the board of governors for a term of 4 years. He can hold his position several times. Since 1987, this position has been held by A. Greenspan. In June 2004, he was once again appointed to this post by President George W. Bush.
The powers of the Federal Reserve Board of Governors include 1:
– changing the norm of reserve requirements within the limits established by law;
– approval of discount rates proposed by the Federal Reserve Banks;
– regulation of the provision of loans by Federal Reserve Banks to each other;
– conducting supervision of the Federal Reserve Banks and auditing their activities.
– election of the chairman of the board of directors and his deputy for each Federal Reserve Bank from its board.
An important and influential body of the Federal Reserve is the Federal Open Market Committe (hereinafter referred to as the FOMS), consisting of 12 people.
It includes members of the Board of Governors and the five presidents of the Federal Reserve Banks, necessarily including the New York Reserve Bank. The Chairman of the MHIF is the Chairman of the Board of Governors of the Federal Reserve System. The Committee conducts trading in government securities through the Federal Reserve Bank of New York.
The Federal Deposit Insurance Corporation (hereinafter referred to as the FDIC) was created in 1933 and is one of the main institutions of the US financial system. The law provides for mandatory federal deposit insurance for national banks and, on a voluntary basis, for state banks. State banks are also involved in the insurance and regulatory system through the mechanism of correspondent accounts, which they are required to maintain in national banks. In 1934, when the FDIC began operations, deposit insurance was 100% up to $2,500. Currently, all deposits up to $100,000, which are held by most small and middle-class depositors, must be insured. USA.
The FDIC also evaluates the activities of credit institutions - their reliability, the level of management personnel, and the compliance of banks' activities with the requirements of regulatory documents. Without providing insurance with the FDIC, the bank cannot begin its activities. The FDIC also regularly checks the activities of credit institutions and, if necessary, participates in resolving issues related to the opening of branches, mergers of credit institutions, and in many other similar cases. The wide range of powers of the FDIC makes it one of the most important institutions in the system of government regulation of the US monetary system.
State Banking Departments (DBS) issue licenses (charters) to state banks to conduct operations. In addition, the BDS issue instructions, conduct inspections of banks, impose fines for certain violations, and make decisions regarding the opening of branches and mergers.
Other government bodies also influence the activities of credit institutions. Notable among them are the Federal Financial Institutions Examination Council and the Securities and Exchange Commission, which have extensive powers and carry out extensive regulation.
There are also non-governmental organizations that monitor the activities of credit institutions, created on an industry or other basis. These include, for example, the American Bankers Association, the Association of Independent Banks, various committees of clearing houses, etc. These organizations develop transaction techniques and customer service standards, and maintain contacts with authorities and the press.
2.2. Role and Functions of the Federal Reserve System
The Federal Reserve has the government's monopoly on issuing cash. In modern economies, money is created not only by central banks, but also by private commercial banks and other lending institutions. However, there is a clear division of rights between them. Commercial banks create non-cash money when they open deposits, issue loans and conduct payments by transferring money from one account to another. But the right to issue cash is a monopoly of the Federal Reserve. It issues cash in the form of banknotes and coins, which are produced at its request by the Treasury.
The US economy is characterized by growth in the money supply, the size and structure of which is the result of a number of economic factors: general economic growth, income levels and the scale of monetary operations. There is also an increase in the amount of cash, which occupies a small but important place in the economic life of the United States and serves as an influential element in the international economic position of the country. The amount of cash required for circulation is determined by business practice, when credit institutions fulfill the requirements of clients for the issuance of cash and accept cash from them in the course of banking operations. In modern conditions, cash payments account for only 5-6% of the total volume of payments. The bulk of banking transactions are carried out through an electronic payment system, including remote transactions using cards and ATMs 1 .
If they need cash, banks turn to the Federal Reserve, which supplies them with cash, and if there is a surplus, they hand it back. The release of cash into circulation occurs against mandatory collateral, mainly against government bonds. The Federal Reserve requires banks to deposit government bonds for the same amount as security for the requested amount in banknotes. Unsecured cash is not issued into circulation.
The United States currently issues banknotes in denominations of $1, $2, $5, $10, $20, $50, and $100. Of the approximately $560 billion in cash issued in 2004, nearly two-thirds were $100 bills. and approximately another 15% are $50 bills. Most of these bills are located outside the United States, since Americans themselves rarely use bills higher than $20 for cash payments.
In principle, it is possible to issue banknotes of higher denominations. Banknotes in denominations of 500, 1000, 5000 and 10,000 dollars were approved for issue in 1918 and were intended primarily for interbank transactions. They circulated mainly during the 1920s and 1930s. and were used not only by banks, but also by the population, for whom they served as a means of savings in conditions of low reliability of the banking system. There was even a banknote with a face value of 100 thousand dollars, purely for settlements between banks. The strengthening of the banking system after its reform in 1933 reduced the need for such large denominations, and by the mid-1940s. It became obvious that non-cash transactions are confidently replacing these cash banknotes. In payments and banking operations, large bills replaced checks, and the population stopped using cash for savings, giving preference to bank deposits and other assets that generate income in the form of interest. Taking these circumstances into account, the issue of new banknotes of this denomination was stopped in 1946, and in 1969 the Ministry of Finance and the Federal Reserve decided to withdraw them from circulation. All bills of the listed denominations, which by that time had returned to the Federal Reserve Banks, were destroyed. The few notes of this class remaining in the economy remain technically legal tender, but they are now so rare that they can only be found through numismatists or financial dealers. Thus, the largest denomination remaining in circulation after 1969 was the $100 note. However, the Federal Reserve retains the right to issue banknotes of all denominations, and the Treasury retains the right to produce them.
It is appropriate to recall large denomination dollar bills in connection with the introduction of the euro on January 1, 1999 in 12 EU countries. The introduction of cash euros in the form of banknotes began in 2001. Cash euros are issued in denominations of 5, 10, 20, 50, 100, 200, 500 euros and coins of 1 and 2 euros, as well as 1, 5, 10, 20 and 50 euro cents.
Some experts in the United States fear that the euro could displace the dollar in global payments, especially in transactions involving large denominations. The dollar may also lose its competitive advantage as a store of value for the population of some countries, since in the euro system there are 200 and 500 euros for this, while there are no bills higher than 100 dollars. To maintain the position of dollar bills in global circulation, they propose resuming the issuance of $500 banknotes. It is noted that such bills will be readily used by wealthy groups of the population as a means of payment and savings. All these arguments relate primarily to the use of dollars in developing countries in Asia, Latin America and countries with economies in transition, which are characterized by “dollarization” of the economy.
Opponents of issuing $500 bills point out that they are not needed for domestic circulation in the United States. The benefits from the convenience of their use will go not so much to honest citizens as to lawbreakers interested in large bills, which are more convenient to use in laundering criminal proceeds, tax evasion and other illegal transactions. Thus, opponents believe, the issuance of $500 bills will be a service mainly for shadow businesses and outright criminals, whose needs the Fed does not need to take care of. In their opinion, a denomination of $1,00 is quite sufficient for both calculations and accumulation, and the position of the dollar in the world is determined by more important factors, which are based on the strength and stability of the US political system, the high level of development of the American economy, the power and perfection of financial system, as well as the fact that the US authorities do not limit the period during which issued dollar bills are mandatory for acceptance in all monetary transactions on their territory. This creates an attitude towards the dollar in the world as a monetary asset, the reliability of which is almost eternal, which is an important factor in its preference to other currencies.
The Federal Reserve carries out a large volume of settlement transactions, acting as a mandatory intermediary between banks and other lending institutions. Together with their branches and offices, the Federal Reserve Banks form an extensive system for managing settlements in the monetary sector. There are 25 branches and 48 regional offices of the Federal Reserve Banks throughout the United States, each of which provides a wide range of banking services to lending institutions, including the storage and processing of notes and coins, check processing, food stamp processing, and other types of payments and financial services. As financial agents for the U.S. government, the Federal Reserve Banks and their branches handle a large variety of securities in the form of savings bonds, Treasury notes, and bills. Regional offices provide primarily check processing services. For example, in 1996, 64 billion checks were issued in the United States for a total amount of $75 trillion, i.e. each average American family writes about 25 checks per month 1 .
Under the direct deposit system, the bank, on behalf of the enterprise, debits the amount of the monthly wages of employees from its account and sends the money to an automated clearing house (hereinafter referred to as the ACH). The Federal Reserve System operates several APRs that provide clearing services to all depository institutions that submit information in a form suitable for automatic processing. In addition, there are several private ARPs. All of them are currently united into an ARP system operating throughout the country. Having received funds from the bank, the clearing house distributes this amount among the banks in which the company's employees keep their accounts, and those banks make appropriate charges to their accounts. Employees of enterprises are regularly sent notices indicating accrued amounts and the status of their accounts. Using this system in the United States, more than 80% of employees are paid.
When transferring wages, there is a movement of non-cash money. Next, the bank analyzes customer demand and forms its cash needs, taking into account the fact that cash transactions are carried out primarily not on the premises of the bank or its branches, but on a large scale are carried out remotely through an extensive network of ATMs. Automated banking services have become widespread in recent years. They are available to every bank depositor and are provided using bank cards, which are issued to the client when opening a deposit. Through the machine you can make a deposit or pay interest, withdraw a certain amount of cash from your account, transfer a deposit from one deposit account to another, make payments on a bank loan or for utilities, and check the status of your account. All these operations allow banks to significantly expand the range of clients and the range of service time - most ATMs operate around the clock. Since all ATMs are connected to the bank’s general electronic system, their reliability is fully ensured, and bank employees have the opportunity to constantly monitor and manage these operations. There are about 100 thousand ATMs in the United States, united in approximately 150 systems interconnected in a nationwide network.
2.3. Economic methods of monetary regulation. Money supply and its aggregates
Monetary regulation covers not only cash in circulation, but also the entire money supply of the country, changes in which lead to adjustments in business activity and the nature of economic development of the United States.
Since the Federal Reserve is, in fact, the main and only issuer and “regulator” of the money supply, measures of the supply of money, called monetary aggregates, have been established since 1980 to measure it. Their value as of September 2003 was as follows 1:
M1 = cash + travelers checks + demand deposits + + other checking accounts (M1 = $1178 billion)
M2 = M1 + time deposits up to $100 thousand + savings accounts and money market deposit accounts + shares in money market mutual funds (private owners) + short-term repurchase agreements + short-term deposits in Eurodollars (M2 - $5378 billion .).
MZ - M2 + time deposits in excess of $100 thousand + shares in money market mutual funds (corporate owners) + long-term repurchase agreements + long-term deposits in Eurodollars (MZ - $7,800 billion).
L = MH + short-term treasury bills + commercial paper + savings bonds + banker's acceptances (L = $9,000 billion).
Another indicator of the volume of money in the economy is the monetary base - MB. The monetary base includes the amount of cash, i.e. banknotes and coins, - C (Cash, currency) and the total volume of reserves of the banking system - K (Reserve). The procedure for calculating MB, in comparison with the monetary aggregates of money supply - M1, M2, MH and L, is much simpler, since the volumes C and K are determined directly by the Federal Reserve, while the components of monetary aggregates are determined by commercial banks and can move from one category to another.
However, due to the fact that the majority of cash issued in the United States is in circulation outside its borders, the Federal Reserve uses data on cash in the cash registers, safes of banks and other credit institutions for calculations.
Methods of monetary regulation are based on the use of three instruments that have a strong impact on the general state of the monetary sphere, and through it, on the state of economic activity. These include:
– change in the norm of required reserves for commercial banks and other credit institutions;
– change in the Federal Reserve lending rate;
- Fed open market operations.
These instruments provide a significant economic effect, so their use is considered the main content of the Federal Reserve's monetary policy.
Changing the norm of required reserves is the most radical method of regulation. The obligation of commercial banks to keep a certain percentage of funds from the value of deposits in special reserve accounts of the Federal Reserve was established by law in 1933 in order to ensure the liquidity of banks and prevent their collapse in the event of a sudden withdrawal of funds by depositors. The maximum norms for required reserves are established by law, and the Federal Reserve has the right to change them within the specified limits.
In practice, the Fed very rarely changes the required reserve ratio, since this tool has a very significant effect and can simultaneously reduce or increase the money supply on a large scale. The principle of credit expansion proves that the money supply after the appearance of the initial deposit increases in proportion to the value of the bank multiplier, which is mathematically expressed as the ratio of this deposit to the required reserve ratio. Therefore, a change in the required reserve rate leads to a multiple increase or decrease in the money supply. So, for example, with a reserve ratio of 10%, the multiplier is 10. Theoretically, this means that when the Federal Reserve lends a commercial bank in the amount of $100, the banking system, as a result of successive deposits, creates a total amount of deposits of $1000 and a required reserve amount of $100. In fact, a loan , issued by the Federal Reserve to a commercial bank, is returned to it in the form of mandatory reserve contributions.
In reality, the value of the banking multiplier turns out to be significantly less than calculated due to the attenuation effect and cross-lending, but it is still quite large and effective. Moreover, changes in reserves are so effective that small changes in the money supply require extremely small adjustments to the mandatory reserve norms - hundredths and even thousandths of a percent. This effect is achieved through open market operations, so that in a normal situation the Fed does not need to resort to direct changes in the required reserve ratio. Therefore, the Fed used this tool only during periods of economic crises, for example, in the 1950s–1970s. 1
In 1980, the Depository Institutions Deregulation and Monetary Control of 1980 adjusted the system of reserve requirements. The requirement to hold reserve deposits with the Federal Reserve System was extended to almost all credit institutions. Before 1980, the reserve coverage requirement applied only to member banks of the Federal Reserve and applied to all deposits in these banks. Upon passage of the Act, all U.S. depository institutions (commercial and savings banks, savings and loan associations, credit unions, U.S. branches and agencies of foreign banks, and other lending institutions) must comply with Federal Reserve regulations and maintain their own cash reserves in their accounts. institution and in the form of deposits in the Federal Reserve Banks 1.
The range of deposits for which reserve coverage is required is limited to three types: transaction accounts, non-personal deposits (deposits held by an institution other than an individual), and Eurodollar account liabilities. The new law eliminated reserve requirements for personal savings and time deposits. This became possible due to the fact that the current US system of insurance of deposits by credit institutions in the Federal Deposit Insurance Corporation has shown its reliability. In combination with other measures to protect the rights of depositors and taking into account the achieved level of development of the American banking system, the position of personal savings and time deposits has become quite strong. Exempting these types of accounts from the Federal Reserve's mandatory reserve coverage is aimed at reducing banks' costs when working with such accounts, increasing their profitability, and thus stimulating the growth of personal savings.
The 1980 Act gave the Federal Reserve the authority to change reserve requirements for transaction accounts, non-personal time accounts, and the liabilities of U.S. depository institutions with respect to their foreign subsidiaries and other foreign banks.
For transaction accounts, limits range from 0 to 14%. Within this framework, the Fed applies a reserve obligation ratio of 3% for transaction accounts of a certain size and 10% for larger accounts. Reserve requirement limits for non-personal time accounts are set at 0% to 9%, and within these limits the Fed may make adjustments based on their maturities. There are no limits on reserves for net (net) borrowing by depository institutions from foreign lenders (Eurodollar deposits). Since 1990, the Fed has made reserve standards for non-personal and Eurodollar accounts equal to zero, i.e., it has not made any contributions to reserves for them.
The limit on the total amount of deposits subject to the 3% reserve coverage requirement is reviewed annually. Such a review is necessary as income and deposits increase. In 2001, for accounts up to $60 million, a standard of 3% was applied, and for accounts larger than this value - 10%.
The primary mechanism of the reserve requirement is the absolute amount of monetary resources that must be maintained by a commercial bank or other depository institution in a reserve account at a Federal Reserve Bank. It must comply with the established standard of reserve requirements.
In the United States, the reserve assets that can be used to meet reserve requirements include only two types of monetary assets. These include cash on hand (i.e., bills and coins held in cash registers and safe deposit boxes at lending institutions) and reserve accounts at Federal Reserve Banks. Because reserve accounts are held by Federal Reserve Banks, they are called federal funds.
Since the volume of banking transactions does not allow current reserve requirements to be maintained on a daily basis, a procedure has been established by which reserves must be maintained at a given level over a 14-day period. It is called the maintenance period and is determined using a special technique.
The sum of reserve accounts at Federal Reserve banks and that portion of cash on hand that is normally used for reserve needs is called total reserves. Total reserves are divided into two parts. The first part is required reserves, the amount of which is determined by current regulations based on the amount of specific deposits and other obligations of depository institutions that are subject to reserves. The second part of the reserves are excess reserves, the value of which is equal to the excess of actual reserves over mandatory reserves. Obviously, it is not profitable for banks to have excess reserves, since this limits their ability to carry out active lending operations. But the bank cannot allow a reserve deficit, that is, a state when the amount of actual reserves is less than the required reserves required by law. In these cases, depository institutions are subject to a fine.
Reserve accounts at Federal Reserve Banks are non-interest bearing. Therefore, credit institutions that are the holders of these accounts are not interested in the emergence of surpluses, much less in the fact that these surpluses take on significant dimensions. This is why federal funds are traded: credit institutions that have a deficit in their reserve accounts buy the surplus from their partners. These operations are carried out regularly, since most of them are classified as short-term and even overnight. The interest rate on transactions with federal funds is of great importance and serves as one of the main guidelines for the credit system and the entire economy.
The Federal Funds rate is the main benchmark for setting interest rates in the interbank lending market, in which excess commercial bank reserves held in the accounts of Federal Reserve Banks are sold. The market rate of interbank loans at which commercial banks buy each other's available funds is called the current or effective federal funds rate. It changes daily depending on the state of the loan market. The Fed itself does not participate in the process of buying and selling credit resources from federal reserves (funds) and, moreover, does not even set a fixed cost for such loans. The Fed's policy here is rather advisory in nature and is carried out through the establishment of the federal funds rate, which serves as a benchmark for the interbank loan market.
This rate, set by the Federal Reserve, is called the Expected, Intended or Target Federal Funds rate. By announcing a change in the rate, the Fed makes it clear to commercial banks what level of cost of interbank loans (in fact, the volume of money supply) the Fed will be satisfied with, based on an analysis of the current state of the national economy.
The interest rate on transactions with federal funds is set centrally. This right belongs to the Board of Governors of the Federal Reserve System. Until 1994, the time when the new rate was set was an official secret, since it was one of the Fed’s monetary policy instruments designed to influence the value of the money supply. Now the Fed has changed that rule and is announcing an upcoming revision of the federal funds rate to give credit market participants a chance to prepare for the coming changes. But the size of the new rate is not announced in advance, since it remains subject to agreement at a meeting of the Board of Governors. However, the direction of upcoming changes is usually quite obvious, since it is dictated by the state of the economy at the moment. For example, during the recession in the US economy in 2001, the Federal Reserve consistently reduced the federal funds rate 11 times from 6.5% at the beginning of the year to 1.75% at the end of the year 1 .
Over the past decades, the importance of required reserves in the monetary system has changed radically. Their role as a means of providing liquidity to credit institutions and a guarantor of stability in case of sudden withdrawals of funds by depositors has significantly decreased, since these tasks are successfully performed through the deposit insurance mechanism. At the same time, their importance as a means of monetary regulation has sharply increased. This makes it possible not to resort to changes in the required reserve ratio. Through the interest rate on federal funds and daily changes in the amount of funds in required reserve accounts, there is a fairly effective impact on the state of the credit system, the size of the money supply in the country and business activity. Changes in the reserve requirement are closely related to the use of other monetary policy instruments: changes in the discount rate and open market operations.
One of the most actively used regulatory tools is the change in the Federal Reserve lending rate. The discount rate is the interest rate that determines the cost of loans provided by the Federal Reserve to commercial banks.
In practice, these transactions are conducted through the Federal Reserve Banks. In addition to the lending rate, each Federal Reserve Bank can determine the volume of lending to commercial banks by establishing the so-called discount window. The meaning of the expression “discount window” characterizes the difficulty of obtaining a loan from the Federal Reserve: it does not happen automatically, “through a wide open door,” but on the contrary, it is a complex procedure that is carried out through a “narrow window” and in many cases may end in refusal. Regulation of the money supply through the volume and cost of refinancing is called the Fed's discount policy, historically preserved from the times of discounting or discounting bills of commercial banks. In modern conditions, the value of the Fed discount rate is perceived by society not so much as the price of a loan for commercial banks, but rather as a minimum level of interest rate given to the credit system, which it should adhere to.
The Federal Reserve decides to change the discount rate quite often - several times a year - usually in connection with the current state of economic activity to stimulate or restrain it. The Federal Reserve discount rate is considered one of the main indicators characterizing the state of the economy. It stands among such indicators as GDP growth rates, inflation rates, unemployment, federal budget balance and balance of payments. The Fed discount rate serves as an instrument of government influence on the dynamics of these indicators. Any change in the Fed discount rate is immediately discussed in the press and commented on by specialists and politicians.
Because the Fed's policy rate is closely linked to other rates, its rate is set at a level consistent with the overall direction of the Fed's monetary policy. A change in the Fed discount rate usually occurs simultaneously with or immediately after a change in the federal funds rate and usually remains unchanged for a similar period of time. Therefore, in 2001, the Fed discount rate was changed 11 times and was lowered from 6.5% in January to 1.75% at the end of the year. 1
Changing base interest rates is an effective tool for regulating the volume of money supply, combining prompt action and determining the strategic goals of monetary policy. An indicator of the state of the money supply is usually the values of the three main rates at which commercial banks borrow money for a short period.
Discount policy becomes especially important during periods of economic and financial crises as a means of maintaining the stability of the monetary system - at times when the liquidity of banks and other financial institutions deteriorates, mainly due to collapses in the stock market. These situations highlight the importance of the Fed as a central bank: it acts as a bank of banks and acts as a lender of last resort.
Currently, banks rarely turn to the discount window, since the procedure for obtaining loans is accompanied by an inspection by the Federal Reserve of their activities, and banks prefer to borrow funds on the interbank loan market at the federal funds rate. For this reason, the level of the Federal Reserve's benchmark rates—the federal funds rate and the discount rate—serves primarily to influence the state of economic activity through the monetary system and the securities market. The Federal Reserve cuts base rates during periods of decreased business activity and serves as a signal for a general decrease in interest rates in the country. This leads to cheaper bank loans, as well as easier lending conditions through the debt securities market. This policy is usually called an easy money policy. The comparative cheapness and availability of credit leads to a certain increase in business activity and helps overcome economic crises. This is also facilitated by an increase in the market value of shares due to a decrease in base interest rates. In addition, cheaper bank loans stimulate growth in investment in shares, which increases economic activity.
When cyclical expansion forces are too active and inflation rates rise, the Fed resorts to raising benchmark rates, signaling the need for higher borrowing costs. Rising interest rates limit credit, depress stock prices, and dampen business activity. Such measures are called deflationary policies. They are considered as a means of preventing a crisis and are used in conditions of “overheating” of the economy.
An example of the Fed's discount policy is its actions in recent years. From mid-1999 to the end of 2000, the Fed raised interest rates to combat an overheating economy, and in 2001 lowered them to combat the crisis.
In modern conditions, open market operations serve as a very effective means of regulation. To quickly influence the supply of money, the Fed most often uses securities transactions, which are carried out almost daily, and, therefore, there are continuous changes in the composition of the bank’s balance sheet - its liabilities and assets. By buying securities on the market, the Fed increases the volume of money supply in the country's economy, while selling - on the contrary, it reduces the money supply, as if “tying up” excess money in its liabilities. Therefore, the size of reserve requirements must also continuously change. In this way, through open market operations, the Fed influences the structure of the bank's monetary resources, encourages it to issue new loans or, on the contrary, limits its capabilities in this area.
Operations on the open market with securities are carried out by the MHIF, choosing as an investment object US Treasury securities (short-term Treasury bills for a period of 91 and 180 days) and long-term Treasury obligations (Treasury Notes or Bonds, as well as government Governments bonds These investments are chosen for two reasons:
The Fed does not invest in corporate securities to avoid conflicts of interest;
The market turnover of government securities is so large that even large transactions do not significantly affect their quotes, i.e., the correspondence of the yield on these securities to the level of the discount rate is a consequence of changes in the supply of money, and not direct demand for securities.
Indeed, the Fed’s participation in the purchase of securities has a dual effect on their price:
1) demand increases, prices rise and profitability decreases;
2) at the same time there is an increase in the money supply, an increase in demand for investment (investment of the increased supply of money in securities), as well as an increase in prices and a decrease in profitability with the simultaneous supply of money in the loan market, which also leads to a decrease in rates.
In fact, the Fed's operations in the securities market are a flexible and operational tool for regulating the supply of money, the main advantages of which include:
A fairly effective mechanism for regulating the supply of money;
Full control by the Federal Reserve System of the volume of purchase and sale of securities;
Efficiency of decision making and reversibility of transactions.
The Fed's transactions in government securities should not be viewed as providing credit to the government. US law does not provide for direct provision of government loans by the central bank. All government revenues and expenditures are regulated through the budget mechanism. Covering the state budget deficit and thus finding the missing funds is carried out by issuing government securities (treasury bills, bonds, etc.) through the Ministry of Finance. The Federal Reserve Banks participate in the offering of these securities and then use them as a tool for monetary regulation through open market operations.
The Federal Reserve conducts open market operations daily. But reports on these operations are published after the end of the next quarter, so commercial banks and other lending institutions do not know the goals of the Fed and actually act as passive players. Being bound by an agreement with the Fed, they are forced to follow its line. The consequences of these transactions result in permanent changes in the amount of reserves that commercial banks must maintain, and thus the Fed affects their ability to lend. The total volume of purchases and sales of government securities as part of open market operations has in recent years averaged $400 billion per month for purchases and the same amount for sales. Skillful management of these operations allows the Fed to effectively influence the activities of banks and credit institutions.
CONCLUSION
In the course of the study, the stated goal of the work was achieved - an analysis of the monetary system was carried out and the state of monetary policy in Russia was investigated.
Monetary policy is understood as a set of measures taken by the government in the monetary sphere in order to regulate the economy. It is part of the overall macroeconomic policy. The main final goals of monetary policy are: sustainable growth rates of national production, stable prices, high levels of employment, balance of payments equilibrium. From their totality, we can identify the priority goal of monetary policy - stabilization of the general price level.
Along with the final goals, intermediate goals are identified. They are the volume of money supply and the level of interest rates.
The central bank of the country implements monetary policy.
The central bank’s measures for monetary regulation of the economy are designed to ensure its stabilization at low levels of inflation and unemployment. Monetary policy can be aimed at stimulating monetary emission, i.e. expansion of the total volume of money supply in circulation (credit expansion), which gives the effect of some revival of market conditions in conditions of a decline in production. It can also be aimed at limiting monetary emission, i.e. to reduce the volume of money in circulation (credit restriction). This monetary policy option is typically used by the central bank during periods of economic boom and when signs of stock market trading occur. Credit restriction in the context of increasing production growth rates is intended to curb the “overheating” of market conditions. The policy of credit expansion, on the contrary, is used to “cheer up” market conditions and is usually used during periods of crisis and decline in production. It is often combined with deficit financing of the country's economy and leads to an exacerbation of inflationary processes.
When implementing measures for monetary regulation of the country's economy, an objective contradiction inevitably arises between the task of fighting inflation and the problem of stimulating economic growth. Therefore, the monetary policy of the central bank should be closely linked with the investment and financial policy of the state and complemented by a flexible system of tax regulation of the economy.
Specific methods and instruments of the Central Bank's monetary policy are determined by the law on the Bank of Russia and are very diverse. The Central Bank has been granted the broadest powers and complete independence in the matter of choosing methods and measures for monetary regulation of the country's economy within the framework of current legislation.
State regulation of the monetary sphere can be carried out with any success only if the state, through the central bank, is able to influence the scale and nature of the activities of private institutions, since in a developed market economy they are the basis of the entire monetary system. This regulation is carried out in several interrelated directions.
State control over the banking system is aimed at strengthening the liquidity of financial and credit institutions, i.e. their ability to timely satisfy the requirements of depositors (primarily due to accounting (discount) policies, open market operations, and the establishment of required reserve standards). The same measures are used by the state to compress (expand) the money supply.
Public debt management is an area of government regulation in conditions of chronic budget deficits, which lead to an increase in public debt (external and internal). With the growth of domestic public debt, the influence of government credit on the loan capital market increases sharply. To do this, the central bank uses various methods of managing public debt: buying or selling government obligations; changes the price of bonds and the terms of their sale; in various ways increases their attractiveness for private investors.
Monetary policy methods are divided into two groups: general (affect the loan capital market as a whole) and selective (intended to regulate specific types of credit or lending to individual industries, large firms, etc.).
Thus, monetary policy is the conscious control of the money supply in order to maintain economic stability, minimal inflation, and maximum employment. To achieve this, monetary policy influences the volume of money supply by controlling and managing the volume of cash reserves in the banking system as a whole.
The United States has developed and operates a highly organized and effective system of monetary regulation, which has a strong impact on the economic development of the country. The regulatory authorities of the monetary system in the United States are characterized by a complex system of organizational structure and, to a certain extent, duplicate each other in practical activities. Despite certain costs of such a structure, it provides effective control over the activities of many credit institutions in the country.
The United States has an effective regulatory system through the Office of the Comptroller General, the Federal Reserve System, the Federal Deposit Insurance Corporation, and other authorities.
The main body of economic regulation of the monetary system in the United States is the Federal Reserve System - the Fed. It is organized as a central bank and at the same time as the supreme body of the professional association of American banks, which includes national and state banks.
The Fed has a monopoly on the issuance of cash. The Fed organizes the circulation of cash dollars. Of the approximately $550 billion in cash in 2000, more than $300 billion was in circulation outside the United States, mostly in the form of $100 and $50 bills.
To influence the credit sector and the US economy using economic methods, the Fed uses changes in the required reserve ratio, changes in the discount rate and open market operations. The complex influence of these instruments, the use of each of which has its own characteristics, makes it possible to strengthen the sustainability of economic development in the United States, reduce the depth of crises and curb excessive growth that generates inflation.
The Fed extremely rarely resorts to changing the required reserve ratio, since such actions would lead to too sharp changes in the size and structure of the money supply and would have an excessively strong impact on the state of the economy. Currently, the basic norm of required reserves is 3% of the amount of deposits received in bank accounts.
One of the most actively used instruments of monetary regulation is changes in the Fed discount rate. It not only determines the cost of obtaining a loan from the Federal Reserve for commercial banks, but also serves as a guideline for the entire credit system, influencing the state of the bank loan sector and operations in the securities market. The value of the discount rate is closely related to the value of the Federal Reserve Funds rate, which serves not only as a practical tool for banking operations, but also as an important guideline in determining interest rates and securities prices.
An important tool for credit regulation is the Federal Reserve's open market operations. The purchase and sale of government bonds in the Fed's operations with commercial banks and other lending institutions serves as a means of influencing the banks' ability to lend to the economy and ultimately affects the size of the money supply in the country.
BIBLIOGRAPHY
Antonov N.T. Pessel M.A. Money circulation, credit and banks. M. 2000.
2015-01-27
Monetary system Monetary system MONETARY AND BANKING SYSTEM OF RUSSIA
Agapova T.A., Seregina S.F. Macroeconomics. Textbook – M.: Moscow State University named after. M.V. Lomonosov. – M.: JSC “DIS”, 2001.
Anikin A. The US economy at the end of the century: Results of the problem // MEMO - 2000.- No. 11 - pp. 27 - 46.
Introduction
The monetary system is one of the most important sections of economic science. It is much more than a passive component of the economic system, more than just a tool that facilitates the operation of the economy.
The monetary system is a form of organization of monetary circulation in the country established by the state, which has developed historically and is enshrined in national legislation.
National monetary systems were formed in the 16th and 17th centuries. with the emergence and establishment of the capitalist mode of production, although some of their elements appeared in an earlier period. The formation of monetary systems in a given period of historical development is a necessary pattern that meets the conditions of commodity production. The formation of comprehensive commodity-money relations requires stable monetary circulation.
The type of monetary system depends on the form in which money functions: as a commodity - a universal equivalent, or as signs of value.
A properly functioning monetary system infuses vitality into the cycle of income and expenditure that embodies the economy.
A well-functioning monetary system promotes both full capacity utilization and full employment. Conversely, a poorly functioning monetary system can become the main cause of sharp fluctuations in the level of production, employment and prices in the economy, distorting the distribution of resources. Therefore, the study of this topic is relevant.
The main purpose of the work is to study the US monetary system.
Objectives of this course work:
1) study of the monetary system, its elements and types
2) consideration of the issue of monetary unit and monetary circulation in the USA
3) study of inflation in the post-war period in the USA
4) study of cash and non-cash turnover, as well as regulation of the monetary system in the USA.
Chapter 1. Monetary systems in countries with developed market economies
Features of monetary systems of developed countries
The monetary system is a form of organization of monetary circulation in the country, enshrined in national legislation. In each country, it developed historically as commodity-money relations developed.
The modern monetary system includes the following elements:
Name of the currency and price scale;
Types of banknotes;
Emission mechanism and procedure for securing banknotes;
Structure of money supply in circulation;
The procedure for establishing the exchange rate and exchanging for foreign ones;
The mechanism of monetary regulation.
An integral part of the monetary system is the national currency system, although it is relatively independent.
A monetary unit is a currency established by law that serves to measure and express the prices of all goods. A monetary unit is usually divided into small multiples. Most countries have a decimal division system of 1:10:100. (1 US dollar is equal to 100 cents; 1 pound sterling is 100 pence; 1 Indonesian rupiah is 100 sen, etc.).
Price scale - as a choice of a country's monetary unit and as a means of expressing the value of a product through the weight content of the monetary metal in this chosen unit. The last definition of the price scale has lost its economic significance, since credit money does not have its own value and cannot be an expression of the value of other goods.
The official price scale lost its economic meaning with the development of state-monopoly capitalism and the cessation of the exchange of credit money for gold. As a result of the Jamaican currency reform of 1976-1978. the official price of gold and the gold content of monetary units were abolished.
Types of money that are legal tender are primarily credit money and, first of all, banknotes, small change, and also paper money (treasury notes). Thus, in the USA, bank notes in circulation are in the amounts of 100, 50, 20, 10, 5, 2 and 1 dollar (the issue of 500 dollars and above has been discontinued), Treasury notes (tickets issued by the US Treasury) in 100 dollars, and also silver-copper and cupro-nickel coins of 1 dollar, 50, 25, 10 and 1 cent.
Old coins of 2 and 1 shilling are in circulation, which in value correspond to the new 10 and 5 pence. If in industrialized countries, as a rule, government paper money in the narrow sense of the word (treasury bills) is not issued, then in some developing countries they have quite wide circulation.
The emission system in developed capitalist countries means the procedure for issuing bank notes by central banks, and treasury notes and coins by treasuries in accordance with the legally established emission law. The main channel for the issue of money in these countries is deposit-check issue: an increase in deposits in customer accounts and, accordingly, the mass of checks servicing the payment turnover. Commercial banks and other credit organizations participate in it. For example, in the United States, the right to issue banknotes is granted to the Federal Reserve System (Central Bank), and small denomination banknotes, silver dollars and small change are granted to the Treasury.
Due to the fact that monetary policy is closely related to credit policy, in the conditions of modern capitalism state monetary regulation of the economy is carried out. In many industrialized countries, targeting has been introduced since the 70s, i.e. establishing targets for regulating the growth of the money supply in circulation for the coming period, which central banks adhere to in their policies.
In the United States, since 1975, the Federal Reserve System (FRS) has periodically reported to Congress on the planned rate of growth or contraction of the money supply in circulation for the coming 12 months.
The characteristic features of modern monetary systems of economically developed countries are:
Abolition of the official gold content and exchange of banknotes for gold;
Demonetization of gold;
Transition to credit money that is not redeemable for gold;
Issue of banknotes into circulation not only as a means of bank lending to the economy, but also to a large extent to cover state expenses (issue collateral is mainly government securities);
The predominance of non-cash circulation in money circulation;
Strengthening state monopolistic regulation of money circulation.
Formed during and after the global economic crisis of 1929-1933. currency blocs ensured the preservation in developing countries of monetary systems dependent on the metropolises, which controlled the issuing institutions and their operations. The size of the issue was determined by the state of the balance of payments, and not by the needs of the economy.
During and after the Second World War, on the basis of the pre-war currency blocs, currency zones were created, the characteristic features of which are: maintaining a fixed exchange rate in relation to the main currency; storage of national currencies in the banks of the hegemonic country; preferential procedure for currency payments within the zone.
In the early 80s, in most small states, including island ones, national monetary systems were created, ensuring the stability of which is the most important condition for the normal development of a nation. Any monetary system is based on several basic principles. The principles of organization of the monetary system are understood as the basic rules in accordance with which the functioning and regulation of the monetary system is carried out. Let's consider the fundamental principles of a modern monetary system based on market relations.
One of the main principles is the presence of centralized regulation. Regulation by the state is typical for both market and administrative-command systems. But in a market economy, in addition to administrative levers, the system is exposed to economic realities, which forces all financial mechanisms to optimize their work.
Monetary systems are characterized by forecasting and planning of cash flow. It must be flexible and meet the needs of the economy: with an increase in the volume of goods and services, the money supply must increase and vice versa.
The emission system is a legally established procedure for the issuance and circulation of banknotes. Issuing operations (operations for issuing and withdrawing money from circulation) in states are carried out by:
The central (issuing) bank, which enjoys the monopoly right to issue bank notes (banknotes), which make up the vast majority of cash circulation;
The Treasury (state executive body), which issues small denomination paper notes (treasury notes and coins made from cheap types of metal.
The central bank issues banknotes in three ways:
a) providing loans to credit institutions in the form of transfer of commercial bills;
b) lending to the treasury secured by government securities;
c) issuing banknotes by exchanging them for foreign currency.
Money emission in modern conditions is of a credit nature, that is, cash and non-cash money appear in circulation only as a result of credit operations carried out by banks. The credit nature of money emission is ensured by the following mechanisms: the central bank issues loans to commercial banks, commercial banks, in turn, provide loans to enterprises at a certain percentage that ensures profit. Loans are issued on the terms of payment, urgency and repayment of the loans provided. The assets of commercial organizations and enterprises serve as the guarantor for the repayment of the loan provided. Money emission is backed by gold, currency, securities and commodities. Thus, issued banknotes are backed by tangible assets. The Central Bank is accountable to the country's parliament and is not subordinate to the government. Fighting inflation is one of the main tasks of the central bank. The government, due to the tasks assigned to it, may turn to the central bank for additional funds, which will not have material support, to finance various programs. Therefore, to maintain the stability of the monetary system, the role of arbiter in possible contradictions between the central bank and the government is performed by the state parliament. Funds are provided to the government only on loan terms. This principle prevents government attempts to finance federal and local budget deficits by increasing the money supply. The central bank must lend to the government against banknotes secured by government inventories, real estate, government securities, etc. The state ensures constant control over cash turnover and its elements: the proportions between the volumes of cash and non-cash turnover. Only the national currency is allowed to operate on the territory of the state. The population can freely exchange national currency for the currencies of other countries, but the use of the currency received in the exchange is allowed only for payments abroad. The state regulates the security of banknotes, in particular, it establishes what types of inventory items, precious metals and stones, foreign currency, securities, etc. can serve as security for money issue. The state establishes the structure of the money supply in circulation. On the one hand, this is achieved through establishing the proportions between cash and non-cash turnover, on the other hand, through determining the proportions between banknotes of different denominations in the entire volume of the money supply. An important principle is the mandatory implementation of cash discipline. The procedure for cash discipline reflects a set of general rules, forms of primary cash documents, and reporting forms that should guide enterprises, organizations and institutions of all forms of ownership when organizing cash flow passing through their cash registers. Control over compliance with cash discipline is assigned to commercial banks. As the monetary system develops and improves, various forms of non-cash payments occupy an increasing place in it, which makes it more transparent for control, flexible, and saves time and material costs. The state also determines the procedure for establishing the exchange rate of the national currency in relation to foreign currencies of national economies.
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Central Union of the Russian Federation
Non-state non-profit educational institution
Secondary vocational education
Cooperative technical school of the Tambov regional consumer union
Course work
In the discipline "Finance and Credit"
Topic: “Monetary systems of foreign countries”
Student________ Murashina V.S.
Group F-20
Specialty 080106 Finance
Specialization "Finance and Credit"
Full-time form of education
Head________ Lomakina M.A.
Tambov 2012
NNOU SPO Cooperative College of the Tambov Regional Consumer Union
Cyclic Commission of Economic and Financial Disciplines
I approve
Head______ M.A. Lomakina
" "__________20
Coursework plan
Students Murashina V.S.
Gr. F-20 full-time department
Theme of the course work
"Monetary systems of foreign countries"
Introduction
1.1 German monetary system
1.2 US monetary system
2.1German banking system
2.2Research of the US banking system, analysis of the current state of the system
Conclusion
List of used literature
Applications
Introduction
The topic of this course work is: “Monetary systems of foreign countries.”
The monetary system is one of the most important sections of economic science. It is much more than a passive component of the economic system, more than just a tool that facilitates the operation of the economy.
Each state has a national monetary system that has developed historically. In its content, the monetary system is a structured set of certain elements that closely interact and ensure its integrity. The monetary system is a form of organization of monetary circulation in the country established by the state, which has developed historically and is enshrined in national legislation.
National monetary systems were formed in the 16th and 17th centuries. with the emergence and establishment of the capitalist mode of production, although some of their elements appeared in an earlier period. The formation of monetary systems in a given period of historical development is a necessary pattern that meets the conditions of commodity production. The formation of comprehensive commodity-money relations requires stable monetary circulation.
A properly functioning monetary system infuses vitality into the cycle of income and expenditure that embodies the economy.
A well-functioning monetary system promotes both full capacity utilization and full employment. Conversely, a poorly functioning monetary system can become the main cause of sharp fluctuations in the level of production, employment and prices in the economy, distorting the distribution of resources.
Already on the threshold of the 21st century. The role and place of financial and credit relations has increased. It became obvious that achieving the optimal level of such macroeconomic indicators as real GDP growth, unemployment rate, inflation rate, balance of payments, exchange rate, and others will depend on the balance of the country's financial, credit and monetary system.
The transition to new production relations and structural restructuring of the economy led to a deep economic crisis - a drop in production, rising prices and the development of inflation.
Therefore, among the problems that require immediate solutions during the transition to a market economy, one of the most important places is occupied by the task of reducing inflation rates and stabilizing money circulation.
Thus, the study of this topic is relevant.
The purpose of this course work is to study the monetary systems of foreign countries and their development at the present stage.
As a result of this goal, the following tasks were identified in the course work:
Describe the US monetary system
Describe the German monetary system
The first chapter provides characteristics of the monetary systems of countries, identifies the main stages of development of the monetary system, monetary units and monetary circulation
The second chapter analyzes the banking systems of foreign countries and their current state.
The subject of this course work is the monetary system of foreign countries, and the object is monetary and financial relations, in particular, the economies of the USA and Germany. When writing my course work, I used the method of statistical and graphical analysis, as well as the comparison method.
In this work, various literary sources were used. The monetary system is examined on the pages of both periodicals such as “Banking Bulletin” and “Economic Bulletin”, the analysis of which makes it possible to assess the essence of the monetary system and its results, and on the pages of textbooks and books that discuss theoretical issues related to monetary system.
1. Study of monetary systems of foreign countries
1.1 German monetary system
monetary system germany financial
At the center of the German monetary system is the German Federal Bank (Deutsche Bundesbank), which plays the role of a central bank and is a single issuing center with all the functions inherent in such a body. The German Federal Bank merged the central banks of the states and the Bank of the German states, and accordingly the laws regulating their activities became invalid. The central banks of the states began to be called the main departments of the Deutsche Bundesbank, although they retained their previous name - the central bank of the state.
The executive body of the Bundesbank is the Board of Directors. It includes the President of the Bundesbank, the Vice-President and up to six members. Candidates for members of the Board of Directors are proposed by the federal government. After approval of the candidates by the Central Council of the Bundesbank, the applicants are confirmed in office by the President of the Federal Republic of Germany for a period of eight years. This ensures the independence and security of the directorate of the Deutsche Bundesbank. The status of the Bundesbank in society is very high; its board is legally equivalent to the Ministry of the Federation.
Main functions of the German Federal Bank:
¦ emission monopoly. The Bundesbank, in accordance with the Federal Bank Act, has the exclusive right to issue Deutsche Mark banknotes, which are the only unrestricted means of payment in Germany.
¦ bank of banks. The Bundesbank ensures the efficiency of the entire banking system. German banks hold minimum reserves in the Bundesbank equal to a certain percentage of their medium- and short-term liabilities. The Bundesbank provides banking services to credit institutions and government agencies and also supervises credit institutions. The main instruments of control include licensing, legislation, the right of supervisory authorities to request information from credit institutions at any time and carry out inspections, as well as resort to various sanctions.
¦ state bank (fiscal agent of the federal government). The Bundesbank plays the role of “the home bank of the federation (and, to a limited extent, the states). Therefore, taking into account historical experience and in connection with the prohibition of the European Monetary Union on issuing banks to provide loans to governments, this area of activity of the Bundesbank was limited. This helps maintain the monetary independence of the federal bank. The Bundesbank helps the government obtain credit by issuing debt in the form of bonds and treasury bills, or agrees to the issue of government securities and helps sell them by trading and placing interest-free treasury bills. The federal bank is allowed to purchase such securities only to regulate the money supply on the open market;
manager of foreign exchange reserves. The Bundesbank is the only one in the country that holds and manages foreign exchange reserves. However, the crises of the Bretton Woods monetary system and the European Exchange Rate Mechanism in 1992-93. showed that long-term market trends cannot be suppressed through interventions by issuing banks in the foreign exchange market. Stable exchange rates can only be achieved in the long term by eliminating imbalances in the global economy.
clearing center of the country. In 1996, the volume of non-cash payments carried out by the Bundesbank amounted to 195,931 billion marks.
The German theory of commodity-money relations is characterized mainly by the recognition of the theory of labor value, the cost basis of the exchange rate, and the commodity nature of money.
Based on this theoretical basis, the German Federal Bank developed in 1975 a methodology for determining the volume of money supply as a planning goal, which is determined on the basis of a general economic forecast (in particular, the growth of production potential and expected price dynamics).
The policy of the German Federal Bank is mainly aimed at managing the actions of banks to attract loans through changes in the liquidity position of banks and the mechanism of discount rates. The following are considered classical instruments:
Discount and Lombard Rate Policy;
Minimum reserve policy;
Open market policy.
Universal banks play a special role in the German monetary system. Universal banks deal with all types of banking transactions. In Germany, they accept, in addition to short-term deposits, also funds provided for a relatively long period. They also engage in issuance, trading and deposit operations with securities.
The capital structure confirms the special role of banks in the German monetary system. In this case, we are mostly talking about time and savings deposits.
Banks further strengthened their position on liabilities, three-fifths of which were bank loans. It can be noted that there is a high share of relatively long-term bank loans, which should be considered in connection with the need for long-term financing, for example, in housing construction when investing in enterprises.
In securities trading, the most important players are again banks, which operate in the equity and capital markets between non-bank institutions. They independently purchase and sell securities, and also finance their own activities by issuing securities. Banks have a particularly strong presence in the fixed income market. Three-fifths of all outstanding fixed income securities issued by issuers were bank debt. On the other hand, the banks themselves held two-fifths of the nation's fixed-interest securities.
The great activity of banks in the fixed interest securities market results in its close intertwining with other loan capital markets, especially with the money market, which can be used by the German Federal Bank as a springboard for its actions in the field of monetary policy.
Of all the listed aspects of general economic activity, the balance leans predominantly towards the German model of economic construction, and hence the monetary system. Of course, blind copying without taking into account the peculiarities of our countries is utopian, but taking a strategic course and determining the vector of society’s efforts in the right direction can and should be done /11,12, p.40/.
Thus, there are various monetary circulation systems in the world that have developed historically and are enshrined in legislation by each state.
1.2 US monetary system
The United States is the leader of the world economy, surpassing all other countries in production and economic development.
The US monetary system is unique, the only system in the world that has a number of unique features. In the only country in the world, the United States, the functions of the central bank are performed by a private organization - the Federal Reserve System. It was founded by Congress in 1913 to provide the country with a stronger, more flexible, and more stable monetary and financial system. Over time, its role in the banking sector and in the economy as a whole has only increased.
By the time the Federal Reserve Act was adopted in 1913, there were 20,000 banks operating in the United States, of which 7,000 were issuing national banks, and the rest operated under the laws of their states and did not have the right to issue banknotes. In the beginning, the main purpose of the Federal Reserve System was to help banks during banking crises and stock market fevers.
The Federal Reserve System consists of three levels: the Board of Governors, 12 Federal Reserve Banks, and about 6,000 member banks of the Federal Reserve. In addition, the Fed includes two committees: the Federal Open Market Committee and the Federal Advisory Council.
Today, the responsibilities of the Federal Reserve Bank are divided into four general areas:
Implementation of the state's monetary policy by influencing the monetary situation and lending to the economy in order to ensure maximum employment, price stability and moderate long-term interest rates;
Control and regulation of the activities of banking institutions to ensure the reliability and reasonable structure of the country's banking and financial system and the protection of consumer credit rights;
Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets;
Providing financial services to depository institutions, the U.S. government, and foreign government agencies, including performing essential functions to support the nation's payment system.
American monetary policy is characterized by the presence of credit unions, savings and loan institutions, as well as money market mutual funds, which include commercial banks, savings and loan associations, insurance companies, savings banks, financial companies, investment companies, credit unions, private pension funds , public pension funds, money market mutual funds.
Each financial institution performs a key macroeconomic task - the creation of deposits, i.e. money, mainly in the form of securities. To achieve this, existing financial institutions are constantly being strengthened and new ones are constantly being created, as, for example, since 1970. - money market mutual funds.
Money market mutual funds sell shares in the securities markets and use the resulting proceeds to purchase short-term securities. Tax-exempt funds have become an important financial innovation. These funds invest only in tax-exempt municipal securities, which in turn exempts their shareholders from being subject to taxes on the latter's income.
Another feature of the American financial market is the greater degree of freedom of its activities and greater independence from government authorities. We already mentioned this when we characterized the Federal Reserve System. Its greater independence and private ownership determine the model for building the American stock market.
When discussing the state of the American financial market, one cannot discount the fact that US dollars play the role of world money (up to 50% of export-import transactions are carried out in US dollars). In many countries, including the CIS countries, they play the role of a national means of payment and serve as a means of accumulating savings. In the Republic of Belarus alone, according to experts, the population holds up to $5 billion. USA.
The evolution of the US monetary system took place in parallel with the genesis of the world monetary system. The financial turmoil of 1929-1933, the Bretton Woods Conference of 1944 and the Jamaican System of 1976 showed that, despite numerous fluctuations in the monetary and credit spheres, the US dollar was and remains the dominant monetary hegemon. According to the Federal Reserve Bank of New York, in 2000 there was a total of 560 billion dollars in global circulation, 70% of which is in circulation outside the United States (Russia ranks second in the world after the United States in terms of cash dollar turnover). Many countries have pegged their currencies to the US dollar: countries in Latin America, Africa, and countries with economies in transition. Others, such as Panama, Liberia, and the Marshall Islands, use US currency instead of the national currency as legal tender.
2. Prospects for the development of banking systems in foreign countries
2.1 German banking system
The German banking system is relatively young. The banking system of Germany is built on a two-stage principle and consists of 3.4 thousand commercial financial institutions and the Central Bank. Credit institutions can be divided into universal and specialized banks, and, depending on their legal form, into private, public and cooperative institutions.
Private banks set themselves the goal of achieving profit, while the goal of cooperative banks is to encourage their members. Social and legal credit institutions acquire a wide network of branches within the country and abroad.
The group of public-legal commercial banks includes 594 savings banks and 13 land banks. Traditionally, savings banks specialized in attracting household savings and lending against real assets. Today they have acquired the character of universally operating commercial banks. Together with land banks, savings banks form a unified system for non-cash transactions. As a rule, savings banks are institutions of public law, the guarantors of which are individual communities, cities and regions. The field of activity of these credit institutions extends only to the territory of their guarantor. The savings bank network has 19,364 branches.
Land banks are the central organizations of savings banks in a given region, which manage their working capital and carry out some operations, such as settlements with other countries.
The respective federal states are responsible for the obligations of savings banks and land banks. State control is carried out by the land ministers responsible for this.
The group of cooperative banks consists of 2,249 credit partnerships and 4 cooperative central banks. They are characterized by a gradual transformation from unique mutual aid banks for their members into universal banks, as well as consolidation through their merger.
Settlement operations between individual credit partnerships are carried out through 4 regional central banks, the functions of which approximately correspond to the functions of land savings banks. The supreme organization of the cooperative banking group is DG Bank Deutsche Genossenschaftsbank. It is a corporation of societies. rights and as a universal bank can carry out transactions of any kind.
Mortgage banks provide loans secured by land plots and utility loans. Utility loans are issued to the federation, states, territorial communities and other institutions of public law. The importance of utility loans has been increasing in recent years due to the increased demand of public budgets for long-term financing, and they significantly exceed the volume of housing construction loans. Mortgage banks obtain the financial resources necessary for their work through the sale of mortgage notes and utility loan bonds on the capital market.
Construction savings banks specialize in financing individual construction based on the principle of collective accumulation of savings. The attractiveness of such accumulation of funds lies in the right to receive a loan for housing construction at a relatively low and stable interest rate. In addition, depositors' contributions are encouraged through government bonuses and certain tax incentives.
Guarantee banks and credit guarantee societies are mutual aid institutions for small and medium-sized enterprises. The main task of these institutions, which emerged in the mid-50s, is to provide financial support to small businesses.
The category of specialized banks in Germany includes 1 bank that stores securities (Wertpapiersammelbank), whose task is the rational implementation of securities trading.
At the head of the German banking system is the Central Bank (Deutsche Bundesbank), established by law of July 26, 1957. The law in its current version determines that the German Central Bank is part of the European System of Central Banks (ESCB).
The main task of the Central Bank of Germany is to ensure price stability and banking organization of payment turnover within the country and with abroad. As part of this task, the German Central Bank implements the monetary policy of the ESCB in Germany. The German Central Bank enjoys a significant degree of independence in carrying out its tasks. It must support the economic policy of the Federal Government of the Federal Republic of Germany only to the extent possible within the framework of the performance of its functions as an integral part of the EU Central Bank. In accordance with Art. 107 of the Maastricht Treaty, national central banks (like the ECB) in performing their functions do not have the right to follow the instructions of EU bodies or national governments.
At the third stage of the formation of the European Economic Monetary Union, monetary policy became the prerogative of the ESCB. The main tasks of the ESCB in this regard are the development and implementation of European monetary policy; conducting currency transactions; management of foreign exchange reserves of participating countries; ensuring the functioning of the payment system.
The conditions for granting state, bank and commercial loans to foreign partners are regulated by the law on external economic relations of April 28, 1961, the decree on the procedure for its implementation in an updated version of November 22, 1993, the law on the German Federal Bank in a new version of October 22, 1992, the Law on the Credit System of June 30, 1993, the Law on the Identification of Proceeds from Serious Criminal Offenses (“Money Laundering Law”) of October 25, 1993.
In accordance with the law, all payments in Germany are made freely in principle, and no permission is required to transfer capital abroad. However, freedom of movement of capital does not mean abandoning careful recording of the volumes and directions of its movement.
Accounting for capital exported outside Germany is carried out mainly by banks and credit institutions, which periodically transmit the necessary information on the movement of capital to the Federal Bank (Bundesbank) or the central banks of the states. The Bundesbank has exclusive competence to grant permits in the field of capital circulation and payments in cases where restrictions are related to the implementation of interstate agreements, the protection of security and external interests.
2.2 Research of the US banking system, analysis of the current state of the system
The modern US banking system was formed in 1980 under the influence of the Federal Reserve Act and the Depository Institutions Deregulation and Monetary Control Act. Until this point, the United States remained the only country among economically developed powers where a centralized organization did not exist. The banking structure consisted of a huge number of small independent banks, the scope of which was limited to a very small territory; the number of banks by 1860 reached 3,000, in 1913 there were over 20,000, about 7,000 of them were issuing national banks, and the rest operated under the laws of their states and did not have the right to issue banknotes. This banking freedom differed significantly from its European interpretation.
American banks were practically deprived of any possibility of building a branch system. A banking firm established in one state had no means of extending its operations beyond its borders, either by opening branches in another state or by any other means. After the adoption of the national banking law, the right to open branches was reserved only for those banks that became part of the national banking system, already having their own branches. Therefore, the position of most banks operating outside large cities, to one degree or another, approached the position of local monopolies.
Nationwide banking legislation prescribed a very specific scheme for issuing banknotes. However, over time, the benefits of this scheme became increasingly questionable. Government bonds, which were in great demand as the basis for the issue of banknotes, were usually sold at a premium; this circumstance, combined with the rule that the bank could issue only 90% of the value of the purchased bonds, significantly reduced the profitability of investments for issuing purposes, and in cases where the bank had the ability to issue loans without resorting to issuing, it preferred to do so, which gave rise to significant fluctuations in the volume of banknotes in circulation from year to year, depending on the region.
2.3 Comparative analysis of the monetary system of foreign countries
Comparative table of the main indicators characterizing the monetary system of countries.
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Index |
Germany |
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1.National currency |
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2.Banking system |
Central Bank of the Russian Federation Credit organizations, as well as branches and representative offices of foreign banks |
Two-tier banking system: the first tier is the US central bank The Federal Reserve System, and at the second level a network of commercial banks and other settlement and credit institutions. institutions |
Two-tier banking system: Bank of Germany Commercial banks; specialized credit institutions, including financial companies for small and medium-sized businesses; government lending institutions; postal savings banks. |
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3.Functions, tasks, tools of the Central Bank |
The functions of the Central Bank of the Russian Federation are defined in Article 4 of the Federal Law “On the Central Bank of the Russian Federation” Protecting and ensuring the stability of the ruble; Development and strengthening of the banking system of the Russian Federation; Ensuring the efficient and uninterrupted functioning of the payment system. Tools: 1) interest rates on Bank of Russia operations; 2) standards for required reserves deposited with the Bank of Russia (reserve requirements); 3)operations on the open market; 4) refinancing of credit institutions; 5) foreign exchange interventions; 6) establishing guidelines for the growth of the money supply; 7) direct quantitative restrictions; 8) issue of bonds on its own behalf. |
The Federal Reserve System is the central bank of the United States. The responsibilities of the Federal Reserve Bank fall into four general areas: Implementation of the state's monetary policy by influencing the monetary situation and lending to the economy in order to ensure maximum employment, price stability and moderate long-term interest rates; Control and regulation of the activities of banking institutions to ensure the reliability and reasonable structure of the country's banking and financial system and the protection of consumer credit rights; Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets; Providing financial services to depository institutions, the U.S. government, and foreign government agencies, including performing essential functions to support the nation's payment system. |
1. issue of banknotes; 2.implementation of monetary policy; 3. change in the norm of required bank reserves, 4.operations on financial markets, 5. regulation of the interest rate, 6.carrying out mutual settlements between commercial banks; 7.monitoring and verification of the financial position and condition of the management of financial institutions; 8.conducting transactions with government securities; 9.carrying out international activities; 10.performing economic analysis and conducting theoretical research. Tools: 1.change in the norm of required bank reserves, 2.operations on financial markets, regulation of the discount rate |
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4.Functions, tasks and operations of financial and credit institutions |
Functions of commercial banks: 1.accumulation and mobilization of temporarily free funds, 2.providing a loan, 3. mediation in making payments and settlements. Operations of commercial banks: 1)attracting funds from individuals and legal entities into deposits (on demand and for a certain period); 2) placement of raised funds specified in paragraph 1 of part one of this article on one’s own behalf and at one’s own expense; 3) opening and maintaining bank accounts for individuals and legal entities; 4) carrying out settlements on behalf of individuals and legal entities, including correspondent banks, on their bank accounts; 5) collection of funds, bills, payment and settlement documents and cash services for individuals and legal entities; 6) purchase and sale of foreign currency in cash and non-cash forms; 7) attraction of deposits and placement of precious metals; 8)issuance of bank guarantees; 9) making money transfers on behalf of individuals without opening bank accounts (except for postal transfers). In Russia, Sberbank of the Russian Federation dominates among savings institutions (as of February 1999 it had 1,848 branches). |
An extensive group of savings institutions occupies an important place in the credit system. They attract small savings and income, which without the help of the credit system cannot function as capital. There are different types of savings institutions: savings banks and cash desks, mutual savings banks (a type of cooperative banking institutions in the USA), trust savings banks, savings and loan associations (in the USA), credit cooperatives (unions, associations). The main functions of commercial banks are: 1)Mobilization of temporarily free funds and converting them into capital; 2) lending to enterprises, the state and the population; 3) issue of credit money; 4) carrying out settlements and payments on the farm; 5) emission and founding function; 6) consulting, presentation of economic and financial information. 7) other. |
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5.Regulatory framework |
Constitution of the Russian Federation Federal Law “On the Central Bank of the Russian Federation (Bank of Russia) No. 86-FZ dated July 10, 2002 Federal Law “On Banks and Banking Activities” No. 395-1 dated December 2, 1990 Other Federal Laws Regulatory acts of the Central Bank (Regulations, instructions, clarifications) |
In the USA, the control mechanism consists of the following links, bodies and elements: Legislative acts and regulations of Congress; Institutional support (a system of federal laws exercising general supervision over the activities of exchanges); A mechanism for self-regulation of the securities market (on the part of the stockbrokers themselves); Tested methodology for government intervention in the activities of the fictitious sector of the economy |
Germany Bank Law No. 89 of April 1, 1998 In Germany there are not many legal requirements for banks, and this is the peculiarity of banking in this country. The system of commercial banks is guided in its activities by so-called guidelines, i.e. oral instructions from the Ministry of Finance. Although these guidelines do not have the force of law, all commercial banks strictly adhere to them. |
Conclusion
The financial system is understood as the totality of the country's financial institutions, rules, regulations governing the financial activities and financial relations of the state (monetary system, system of financial institutions). The financial sector of the economy in a broad sense includes financial institutions, regulatory and supervisory bodies, as well as financial unions. The main tasks of regulatory and supervisory authorities within the financial system are to maintain its sustainable functioning, implement government regulations and directly monitor the activities of financial institutions.
Financial institutions within the financial sector include organizations related to the banking system as well as non-bank financial intermediaries. In turn, central banks have a special place in the banking system.
In economically developed countries, there are traditionally two main types of financial systems - segmented and universal.
In a universal financial system, there are no legislative restrictions on banks performing those financial service operations that are not banking.
In a segmented financial system, banks are prohibited from performing non-banking functions. An additional feature, although not absolute, is a more rigid delineation of areas of activity and individual operations.
The above division into universal and segmented financial systems in modern conditions is still not absolute. The most typical representatives of segmented systems are the USA and Germany.
Central banks of issue are the main regulator of monetary policy in all countries, and naturally, the main problem of organizations implementing electronic money systems is the settlement of relationships with them.
In the absence of proper controls, the central bank will have distorted information about the volume of means of payment in the economy, which will ultimately reduce the effectiveness of its monetary policy. In addition, there is a danger of uncontrolled emission of electronic money, which can lead to inflation.
The financial system plays an important role in this program.
The practice of banking abroad is of great interest for the new economic system emerging in Russia. The construction of a new banking mechanism is possible only by restoring the principle of functioning of credit institutions accepted in the civilized world and based on the centuries-old experience of market banking structures. Therefore, it is so important to study foreign practices in organizing banking systems that have demonstrated their high efficiency.
Bibliography
1. Economic reforms in Eastern Europe and Russia. Russia and the modern world. Vedenyapin Y. S. - M., 2008.
2. All about Russian money. / Ed. Pevicheva I.N. - M., 2008
3.Dollarization in the transition economies of Russia and the countries of Central and Eastern Europe // Problems of forecasting. Golovnin M.Yu. - 2007.
4. State economic policy: experience of transition to the market Under general. ed. prof. A.V. Sidorovich. - M.: Business and Service, 2009.
5. Money, credit, banks” edited by Doctor of Economics, Professor, Corresponding Member of the Russian Academy of Natural Sciences E. F. Zhukov “Unity”, M.: 2006, 536 p.
6. Economic development of modern Japan. / Dinkevich A.I. Money and credit. - 2008. - No. 10. - P.62-74.
7. Money, banks and monetary policy. Dolan E.D. - SP b., 2004.
8. Journal “World Economy and International Relations”, 2009, No. 6, pp. 87-96
9. Journal “World Economy and International Relations”, 2008, No. 8, p. 117
10. Journal “World Economy and International Relations”, 2009, No. 4, pp. 84-93
11. Euro against dollar. / Ivanova A., Bykov P. Expert, No. 44, 2008
12. Finance and credit. Textbook. Kovaleva A. P. - Rostov-N/D: Phoenix, 2004.
13. Banking system of Great Britain, Smirnov E.P. Banking, 2008, No. 9, pp. 25-29.
14. World Economy: Textbook / Edited by E.D. Khalevinskaya. - M.: Yurist, 2008, p. 57-62,137-140, 279-284.
15.Economy of foreign countries: Textbook. St. Petersburg: Publishing house Mikhailov V.A., Pogorletsky A.I., 2008.
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Modern funds of developed countries, despite national characteristics, have common features, for example, the principle of organizing the monetary system:
Ø Centralized management of the monetary system. This principle is characteristic of the administrative-command model of the economy, but in conditions of market relations this management is carried out not by direct, but by indirect methods.
Ø Forecast planning of cash flow.
Ø Stability and elasticity of money turnover, i.e. The monetary system must be organized in such a way that:
1. avoid high inflation rates
2. increase cash flow and, first of all, the matter (?) of non-cash payments.
Ø Credit nature of money issue
Ø Security of banknotes issued for circulation, which must be secured by the assets of the main bank.
Ø Independence of central banks from production and subordination to the country's parliament.
Ø Providing loans to the government
Ø Integrated use of monetary regulation instruments
Ø Supervision and control of cash flow
Ø Functioning within the country only of the national currency
Banknotes:
1. National currency. As a rule, a small change is one hundredth of a monetary unit.
2. Types of money, which are legal tender: credit bank notes issued by the main bank, in certain periods - treasury notes and small change coins.
3. Providing cash signs of state legislation.
Establishes the type of security for each country's currency: commodities, gold, foreign exchange, precious metals, securities and government guarantees. (???)
4. Emission system– legislation establishes the procedure for issuing and circulating banknotes. Issue operations are carried out by the main banks and federal treasuries. The share of treasury notes accounts for no more than 10% of the total money supply. Credit emission is carried out, as a rule, by the Central Bank.
5. Structure of money supply in turnover can be viewed from the following positions:
This is the ratio of cash and non-cash payments
The share of individual banknotes in circulation.
6. Cash turnover planning program. At the same time, there is a set of indicators that determine the cash flow plan, and also the objects of monetary regulation are highlighted
7. Monetary regulation mechanism– a set of instruments of monetary regulation, as well as the rights and obligations of government bodies that carry out this regulation.
8. Determination of exchange rate or quotation currencies, i.e. the ratio of the national currency to the currencies of other countries, to each separately, and sometimes to their totality. Foreign exchange the rate can be fixed or floating. In Russia it is fixed-floating.
9. Cash discipline in the country reflects a set of general rules for the form and current (primary) cash documents, as well as reporting forms that are followed by all business entities.
- Characteristics of the monetary system of the Russian Federation
The formation and development of the USSR monetary system began in the 20s of the last century during the implementation of the monetary reform of 1922-1924. In the process of legislative reform, all elements of the new monetary system were determined, i.e. The gold chervonets was declared the monetary unit.
October 11, 1922 - the monopoly right to issue chervonets was granted to the State Bank of the USSR. Issues from banks were also carried out in the process of short-term lending to sectors of the national economy. Loans were provided on the security of gold and easily sold commodity values.
To maintain the stability of the chervonets in relation to gold, the state allowed its exchange for gold in coins and bars or for stable foreign currency. In accordance with the law, chervonets issued for circulation must be backed by 25% with precious metals and 75% with easily marketable commodity values.
In 1924 – new treasury notes were released into circulation. The legislation established a certain limit: in 1924 - 50%, in 1928. – 75%, in 1923 - 100%
In 1925 the issue of treasury notes was transferred to the Central Bank. Monetary system of the 20s. practically functioned until the 90s, when 2 laws were first adopted (dated December 2, 1990):
Ø Law on the Central Bank
Ø Law on Banks and Banking Activities
The main parameters of the new monetary system were determined by the RSFSR Law on the Central Bank. The monopoly right to issue banknotes and organize their circulation was granted to the Central Bank
The Law on the Central Bank established the instruments of monetary regulation:
Ø Required reserve standards
Ø Operations on an open bank (securities)
Ø Refinancing of banks (providing loans)
Ø Currency intervention (regulation)
Ø Establishing guidelines for money supply growth: M 0 and M 2
Ø Direct quantitative restrictions
In 1992 The federal law on the monetary system of the Russian Federation was adopted. It practically duplicated the elements of the monetary system of the law on the Central Bank. And in connection with the adoption of a new law on the Central Bank in 2002, the earlier law was repealed.
- Monetary reform in the Russian Federation and their characteristics.
In modern conditions, achieving sustainable economic growth is impossible without developing and improving the monetary system. And a change in the monetary system and its elements necessarily occurs under the condition of monetary reform.
Currency reform– a transformation carried out by the state in the sphere of monetary circulation, aimed at streamlining and strengthening the country’s monetary system, as well as stabilizing the national monetary unit.
Experts distinguish the following types of monetary systems:
Ø Radical monetary systems
When they are carried out, the principles of organization of the monetary system change and they are designed for a long period, which makes it possible to stabilize the national monetary unit. They are preceded by transformations (measures) to improve public finances and create conditions for strengthening the country’s economy
Ø Partial transformation of the monetary system
They help eliminate certain negative phenomena in the monetary sphere for a short period of time. As experience shows, all monetary reforms achieve only temporary or partial ordering of the elements of the monetary system . Taking into account world experience, the following types of monetary reforms are distinguished::
J Transition from one monetary commodity to another (from copper money to silver money or from one type of monetary system to another)
J Replacement of a defective and backed coin with a full one. Or paper, irredeemable for gold, for money that is backed by gold reserves.
J Partial measures to stabilize the monetary system (change in the order of emissions, change in the price scale or its restoration)
J Formation of a monetary system in connection with the creation of new states or the unification of the monetary systems of several countries.
Prerequisites for successful implementation of monetary reforms:
1. Political stabilization in the country, increasing confidence in the policies pursued by the government and the Central Bank.
2. Creating conditions for the development of the national economy and increasing product supply
3. Increase in budget revenues and refusal to finance its deficit by issuing money
4. Restoring trust in credit institutions and attractive conditions for accumulating funds
5. Availability and sufficiency of gold and foreign exchange reserves, allowing to maintain the stability of the exchange rate and the stability of the exchange rate, and the stability of the commodity and money supply.
Currency reforms:
· Reform of pre-revolutionary Russia 1839-1843. by the name of the minister Kamkina. Purpose: introduction of silver monopoly . The silver ruble became the monetary unit. Banknotes became auxiliary banknotes and 3 rubles. 50kop. = 1rub. silver During the same period, a depository office was created at the State Bank of Russia, which accepted silver in exchange for deposit notes, which were freely exchanged for silver. In 1841, credit notes in the amount of 50 rubles were issued, which were also exchanged for silver, i.e. During this period, 3 types of paper banknotes functioned in parallel in Russia:
Ø Banknotes
Ø Deposit notes (credit)
Ø Silver ruble
Reform results:
- a transition was made from banknotes to credit money, which was exchanged for silver.
A new issuer of paper money appears, because... In 1843, an expedition of state tickets was created under the Ministry of Finance.
¸ Reform 1895-1897 Count Witte
In conditions of stability in the internal and external situation, sustainable economic development, the prerequisites for carrying out monetary reform were created in Russia.
Since 1893, transactions in gold were prohibited, and control over exchanges and the overall money supply in the country was strengthened. Russia actively increased its gold reserves, for which it used foreign loans and foreign currency from grain exports.
In 1895, transactions with Russian gold coins were transferred to the State Bank: half-imperials= 7.50 rub., and imperials= 15 rub.
In 1897, the exchange of credit notes for gold was allowed. Gold rubles contained 0.774148 g of pure gold.
And on August 29, 1897, the monopoly right to issue money was granted to the state bank. At this point, all loan money was backed by 75% gold. The results of this reform are progressive, because Russia could move to the gold standard, and the silver coin could turn into auxiliary banknotes, which were also used.
¹ Reform 1922-1924
New treasury notes: 1 chervonets = 10 new rubles
º Currency reform of 1947
Target:
1. Strengthening the system based on the abandonment of the card system
2. Elimination of multiple(?) prices
3. withdrawal of excess money supply from circulation and the money supply that was in the hands of the population. The foundations of the reform were determined by the resolution of the Council of Ministers of the Central Committee of the Central Committee of the Russian Federation on December 14. 1947 “on carrying out monetary reform and the abolition of cards for food and industrial goods.” In accordance with this resolution, the exchange of money in circulation is carried out for newly issued ones; a revaluation of household savings in savings banks and enterprises, as well as bonds, was carried out. Money in Sberbank up to 3000 rubles. were not overvalued from 3,000 to 10,000 – 3:2, and money in hand was 10:1, funds in accounts were 5:4, over 10,000 rubles. – 2:1.
Partial monetary reforms:
· Denomination– monetary reform, in which the monetary unit is strengthened, i.e. a change in the face value of banknotes with their exchange at a certain ratio for new, larger bills. At the same time, the monetary obligations of legal entities and individuals are recalculated.
1922: 1 new ruble. = 10,000 old fish.
1923: 1 new rub. = 100 rubles 1922 = 100,000star.
1961: 1 new rub. =10 old rub.
1997-98: 1 new. rub. = 1000 old rub.
· Devaluation
Under the gold standard, this is a decrease in the metallic content of the monetary unit. In terms of paper money circulation, this is a depreciation of the national currency against the foreign currency.
· Revaluation – appreciation of the national currency against foreign currency
· Nullification – partial monetary reform, in which depreciated banknotes are declared invalid
- Types of monetary systems:
The type of monetary system is determined by the form of functioning of money:
· Money functions as a commodity or universal equivalent
· Money acts as signs of value
Types of monetary systems:
- Metal handling system
With this division, the commodity circulates and performs all the functions of money. Depending on the number of metals involved in circulation, they are distinguished:
- monometallism(1 precious metal as money; in Russia 1897 - gold; 1843-52 silver)
- bimetallism(2 or more metals)
- Credit and paper money system
Precious securities are not involved in circulation.
- Non-cash payment system and its main elements
Non-cash money turnover– a set of payments made without the use of cash. In non-cash payments, the fundamentals were developed during the credit reform in 1930-32. In recent years, as economic processes have developed, the forms and methods of non-cash payments, as well as the principles of their organization, have been improved.
The national and economic significance of non-cash payments:
- Reduces the amount of cash in circulation
- Helps mitigate the seasonality of cash flow
- Promotes concentration of funds in banks
Signs of classification of non-cash payments
- depending on the purpose of payment:
Commodity
Non-commodity
- at the venue
One-city (?)
Intercity
Modern Monetary Systems include: 1) monetary unit 2) price scale 3) types of money 4) emission system 5) state or credit apparatus for regulating money circulation. An integral part of the monetary system is the national currency system, which is relatively independent.
1) Monetary unit- a monetary sign established by law, which serves to measure and express the prices of all goods. The monetary unit is divided into small multiples. Most countries have a decimal division system (1:10:100).
2) Official price scale lost its economic meaning with the development of state monopoly capitalism and the cessation of the exchange of credit money for gold. As a result of the Jamaican currency reform of 1976-1978, the official price of gold and the gold content of the Currency Unit were abolished. Gold has become a common commodity, the price of which is determined by the level of supply and demand.
3) Types of money, which are legal tender, are mainly credit bank notes, small change coins, as well as types of paper money such as treasury notes. If in industrialized countries government paper money (treasury bills) are not issued, then in some developing countries they have fairly wide circulation (transfer transactions, mutual settlements).
4) Emission system. In developed capitalist countries, the emission system means the procedure for issuing bank notes by central banks, and treasury notes and coins by the treasury in accordance with the legislation established by the emission law. The main channel for issuing money in developed countries is deposit-check issue. It means an increase in deposits in customer accounts and, accordingly, in the mass of checks servicing the payment turnover. Commercial banks and other credit organizations participate in it. For example, in the United States, the right to issue banknotes is granted to the Federal Reserve System, and the right to issue silver dollars and coins is granted to the Treasury. Due to the fact that this monetary policy is closely related to credit, in the conditions of modern capitalism, state monetary regulation of the economy is carried out.
In many industrialized countries, since the 1970s, targeting has been introduced (from the English target-goal), i.e. establishing targets for regulating the growth of the Money Supply in circulation for the coming period, which central banks adhere to in their policies. In the United States, since 1975, the Federal Reserve System periodically reports to Congress on the planned rate of growth or contraction of the Money Supply in circulation for the coming 12 months.
The characteristic features of modern Monetary Systems of industrialized capitalist countries are: 1) the abolition of the official gold content and the exchange of banknotes for gold. Demonetization of gold. 2) transition to credit money that is not redeemable for gold. 3) issuance of banknotes in circulation not only in the order of bank lending to the economy, but also to a large extent to cover state expenses (issue collateral is mainly securities). There should be as many goods as there is money to ensure the circulation of money in society, but the state intends to issue a little more money. 4) the predominance of non-cash turnover in money circulation. 5) Strengthening state monopolistic regulation of money circulation. The state strongly regulates the development of the monetary system, and its monopolization is almost completely achieved.
The currency blocs formed during and after the global economic crisis of 1929-1933 ensured the preservation in developing countries of monetary systems dependent on the metropolises, which controlled the issuing institutions and their operations. The size of the issue was determined by the state of the balance of payments, and not by the needs of the economy. Currency blocs analyzed exports and imports and issued more money, due to the fact that some of the money went abroad.
During and after WWII, on the basis of pre-war currency blocs, currency zones were created, the characteristic features of which are: 1) maintaining a fixed exchange rate in relation to the main currency of a particular zone 2) storing national currencies in the banks of the hegemonic country (the country that issues the main currency of the zone) 3) preferential procedure for currency payments within the zone.
In the early 80s, in most small states (including island ones), national monetary systems were created, ensuring the stability of which is the most important condition for the normal development of the national economy.
Topic 8: Modern inflation and its national characteristics.
I. The essence of inflation
II. Types of modern inflation and its classification by country.
III. Forms and methods of anti-inflationary policy.
I. The essence of inflation
The term “Inflation” comes from the Latin inflatio, which means inflation. Indeed, financing government expenditures through the issue of paper money not in accordance with the volume of goods produced leads to an inflated monetary circulation and a depreciation of money.
Inflation is not a product of modern times, it occurred in the past, but the specificity of inflationary processes in the past was that it occurred at the time of excessive issue of banknotes in parallel with the cessation of their exchange for gold.
Modern inflation has a number of distinctive features:
1) If earlier inflation was local in nature, now it is widespread, all-encompassing.
2) If earlier inflation occurred over a longer or shorter period of time (it was periodic), now it is chronic.
3) Modern inflation is influenced not only by monetary, but also by non-monetary factors.
Modern inflation is a consequence of the influence of numerous factors that lead to the depreciation of paper money. The first group includes factors that cause monetary demand to exceed product supply, resulting in a violation of the requirements of the law of monetary circulation.
The second group combines factors that lead to an initial increase in costs and prices of goods, supported by a subsequent pull-up of the money supply to their increased level.
Depending on the predominance of factors of one group or another, two types of inflation are distinguished:
1) Demand inflation
2) Cost inflation
Demand demand inflation is caused by a number of monetary factors:
1) Militarization of the economy and increased military spending. Military equipment becomes less suitable for use in civilian industries, as a result of which the monetary equivalent opposed to military equipment turns into a factor that is superfluous for circulation.
2) State budget deficit and growing domestic debt. In this situation, the economy is characterized by an increase in long-term and short-term loans, both from economic agents and from the state as a whole
3) Imported inflation - the emission of national currency in excess of the needs of trade turnover when purchasing foreign currency by countries with an active balance of payments.
4) Excessive investment in heavy industry. At the same time, elements of productive capital are constantly extracted from the market, in exchange for which additional money equivalent comes into circulation.
Cost-push inflation is characterized by the impact of a number of non-monetary factors:
1) Price leadership, when manufacturers, when setting and changing prices, were guided by the prices of leading companies.
2) Declining labor productivity growth and falling production. The deterioration of general conditions of reproduction, caused by both cyclical and structural crises, played a decisive role in this.
3) Increased importance of the service sector
4) Acceleration of the increase in costs and, especially, wages per unit of production
5) Energy crisis – rise in price of oil, gas and other energy resources. If before the 60s the average annual increase in oil prices was 1.5%, then after the 60s it reached 12 percent or more.
