The M2 monetary aggregate is amount. Monetary aggregate. Monetary aggregate M1.
For the convenience of exploring the material, the article of the monetary unit is divided on the themes:
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
Check deposits are the same money, although "invisible", for payment with their help is carried out through checks and by means of recording in bank books, without requiring cash.
Consequently, we need to overcome the traditional understanding of money as cash (banknotes and coins). In economic theory, such a "narrow" understanding of the money was overcome in the early 1930s, although everyday consciousness has not yet perceived this change. However, in the theory of money, it is generally recognized that the money included in the transfer accounts ("Transaction deposits") - accounts "to demand", created specifically for use in non-cash settlements. In the world, the absolute majority of transactions occur with the help of transaction deposits.
I must say that economists reflect on what people are guided by choosing a storage method money - in the form of cash or in the form of translation accounts?
Today it is believed that four vital motifs are inclined in favor of cash:
Which of the monetary aggregates considered is the best for assessing the money supply? It is impossible to give an unequivocal answer to it, because the question itself requires clarification: for what purpose is such an assessment? In fact, if you need to evaluate the number of assets that are used as a means of means, the best is undoubtedly the parameter M1; In it, as we have seen money is used as a means of circulation. On this basis, the M1 monetary unit is considered to be the most suitable for assessing the money supply, and therefore the most common.
However B. last years It is recognized that the parameter M2 better reflects the connection of the money supply with other economic variables that appear in the equation of money exchange: M * V \u003d PY, namely at the rate of circulation of money V, weighted price level P and the real volume of production y. Therefore, since the 1980s, many economists have become inclined to think that the M2 parameter is more suitable as the basis for theory and conduct. There is, however, and other points of view, supporters of which none of the parameters (M1, M2 and M3) are not considered optimal, and therefore it is recommended to choose such a monetary unit, which would represent a common suspended unit of all liquid assets.
The M0 aggregate includes cash in circulation: banknotes, metal coins, treasury tickets (in some countries). Metal coins that make up a minor share of cash (in developed countries 2-3%), make it possible to persons make small transactions. Usually these coins are mined from cheap metals. The real cost of coins is significantly lower than the nominal to prevent their melting in order to profit in the form of ingots.Treasury tickets - paper money, which are carried out by the Treasury. Paper money is currently functioning in poorly developed countries. For example, in the Republic of Djibouti in circulation there are treasury tickets (the dignity of 500, 5000, 1000 francs) and coins, the emissions of which are carried out by the Treasury; Treasury tickets and coins operate in the Kingdom of Tonga.
The prevailing role belongs to banknotes.
The M1 aggregate consists of an M0 aggregate and funds on the current accounts of banks. Funds in accounts can be used for payments in cashless form, through transformation into cash and without translation to other accounts. For calculations using funds on these accounts, their owners discharge payment orders (the predominant form of settlements in the Russian economy) or checks and. It is the aggregate M1 serves operations on the sale of gross domestic product (GDP), the distribution and redistribution of national income, accumulation and consumption. The M2 unit contains an M1 unit, urgent and savings deposits in, as well as short-term government securities. The latter do not function as a means of circulation, however can turn into cash or check bills. Savings deposits in commercial banks are withdrawn at any time and turn into cash urgent deposits are available to depositor only after a certain period of time expire and, therefore, have less liquidity than savings deposits. In the US, the M2 aggregate includes:M1 - 23% (including Cash 7% and check deposits 19%), savings and term deposits - 74%.
The M3 aggregate contains the M2 unit, savings deposits in specialized credit institutions, as well as securities that appeal in the money market, including commercial bills issued by enterprises. This part of the funds invested in securities is created not, but is under its control, since the transformation of bills into a means of payment requires, as a rule, the bank acceptance, i.e. Guarantees of his payment by the bank in case of insolvency. M4 aggregate is equal to the M3 unit plus various forms of deposits in credit institutions.There is an equilibrium between the aggregates, otherwise there is a violation of money circulation. Practice suggests that equilibrium occurs at m2\u003e M1; It is strengthened at m2 + m3\u003e M1.
In this case, cash capital goes from cash turnover to non-cash. In violation of such a relationship between aggregates in the monetary circulation, complications begin: a shortage of monetary signs, the rise in prices, etc. To determine the country's money supply, a different number of aggregates are used (for example, USA - four, France - two). In Russia, the aggregates M0, M1, M2 M3 are used to calculate the aggregate money supply; M0 - Cash in circulation; M1, except for M0 - means of enterprises in settlement, current, special accounts in banks, deposits of the population in savings banks to demand, means of insurance companies; M2; equals M1 plus urgent deposits of the population in savings banks, including compensation; M3 consists of m2 and certificates, bonds state loan.
Monetary aggregates in Russia
In a modern economy, money is not only banknotes and coins that represent cash flows. Money protrudes in non-cash form: bank deposits, checks, etc.In the money supply, you can select the active and passive part. The active part is cash and non-cash funds serving the country's economic turnover, while the passive part is temporarily not used in the calculations.
The elements of the money supply vary on the speed and ease of turning them into cash. As a result of this division, monetary groups are formed, or cash aggregates, and a new element is added to each embryo, and a new element is added. IN different countriesah division of monetary aggregates varies. Let us give an example of Russia and the United States. In Russia, the allocation of monetary aggregates is carried out by the Central Bank, and in the United States - the Federal Reserve System (analogue of the Central Bank).
| Monetary aggregates of Russia | № | US cash aggregates |
| M0.- These are banknotes and coins in circulation | 1 | M0.- These are banknotes and coins in circulation (not always stands) |
| M1. = M0. + Means on settlement, current, special accounts of firms, means of insurance companies and household deposits in demand banks | 2 | M1. - These are banknotes and coins in circulation, demand deposits, check deposits, travelers |
| M2. = M1. + Urgent household deposits in banks, as well as compensation | 3 | M2. = M1. + Urgent deposits to $ 100,000, shares of mutual funds of the money market |
| M3. = M2. + certificates and bonds of the state loan | 4 | M3. = M2. + Urgent deposits Over $ 100,000, Commercial Securities |
| 5 | L. = M3. + government securities |
In general, there is no significant difference in the allocation of monetary aggregates of Russia and the United States. However, we note that the USA unit does not always stand out in the US, and the fourth unit (m3) is subject to more detailed separation.
So, the first monetary aggregate - banknotes and coins is present in cash.
In the second unit, firms and households are added to them, which can be obtained on the first requirement.
The third and fourth aggregates are less liquid, since to transform these funds to cash requires a certain time.
So that the household or firm can get compensation (payments) of insurance, compensation for various
Damage), the bank must consider the necessary documents for this, which requires some time. One of the conditions of the urgent contribution may be a ban on the withdrawal of money of the previously agreed period. To sell some securities on which it is in question in the fourth unit, it is also necessary to spend a certain time. IN modern society Molds of money are quite varied.
Let's try to answer the question how much money is necessary for the economy for the normal development of the country.
Required amount of money in the economy
The calculation of the required amount of money in the economy was already undertaken within the framework of the classical direction. The classical quantitative theory of money in modern form was formulated by A. Marshall and I. Fisher. In accordance with this theory, the value of money depends on their quantity in circulation.
I. Fisher proposed an equation reflecting this dependence: M * V \u003d P * Q
M - the amount of money supply
V - money circulation rate
P - total magnitude of commodity prices
Q - Number of goods sold
Modifling this equation, we obtain the amount of the required amount of money in the economy.
Thus, the amount of money supply in circulation depends on:
1. The values \u200b\u200bof the prices of all goods manufactured and offered for sale;
2. price level in the country;
3. The speed of circulation of money.
If during the year there is an existing monetary mass, for example, one turnover, that is, the revenues of economic entities are spent on the purchase of goods, and then return to them back as the same income, then this requires one amount of money supply. If during the year there are two or three turns, then money in the economy needs two or three times less, respectively. If the monetary mass of its required level is exceeded, inflation begins in the country.
Liquidity of monetary aggregates
Money is, first of all, a universal meter ("counting unit") of the economic value of market goods. But the money because they are a generally accepted counting unit that they are used as a means of payment for any realizable (sold) benefit. "Payment" and continues the main theoretical and practical problem of money - "Everything that acts as money is money."Indeed, most of the "assets" (so-called market demand, which under certain circumstances and conditions can be alienated by their owners) are potential money. Here is this ability of a real asset to act as a means of payment (albeit "illegal"), and thus, in the role of peculiar money, I received the name "liquidity" in economic theory.
Direct experience shows us that liquidity is the real property of assets in: a payment facility can potentially act any asset on which there is a solvent demand in the market. The case is only in the costs associated with the exchange of this asset on the purchased benefit (or, most often - for money). "The degree of liquidity" and means the comparative value of the cost of the exchange of this asset (in economic theory such metals are called "").
Assets can be arranged according to the degree of liquidity. One plus of this long row will occupy assets whose transaction costs are minimal. "Champion" among them are cash, possessing the property of the immediate, direct exchange for any other asset with zero exchange costs - all sellers, always and in any quantities are ready to take this "asset." In short, cash is absolutely liquid asset. A completely illiquid asset will be located on another pole, which is not there and there will be no market demand.
Between these pluses and are all other assets. It is clear that the higher the liquidity of the asset, the closer it becomes for money, the more like the money.
Liquidity characterizes the three properties of any asset (owned by the value of the value, which he could, if necessary, to exchange for another value):
- the real possibility of using this asset as a means of payment,
- the speed of transformation of the "reliable" asset into a means of payment,
- The ability of the asset to maintain "in time and space" its original ("degree of anti-inflation sustainability").
It is not by chance that most people appreciate their assets as a "potential cash", making, in particular, amendment to the real degree of their liquidity (consulting cash).
The liquidity of the assets is an important characteristic of the market status of the economic agent: the more liquid assets it possesses, the greater economic opportunities open before him.
So, it can be argued that almost any alienated (i.e. who has demand) an asset can act in the means of the payment of payment and thereby, even with losses, in the role of single, simultaneous money.
How, in this case, determine the amount of money supply? Knowledge of the essence of liquidity helps to answer this question: depending on which the degree of liquidity is included in the characterization of the payment tools (circulation). If only absolute liquidity is recognized, only cash will be attributed to the means of payment if there are highly liquid assets (for example, short-term government securities) - then the amount of money supply will significantly expand.
The question of how to determine the amount of money supply, not idle: if the monetarists are right, which consider that the magnitude of this mass is decisive macroeconomic importance, then it is necessary to determine what is subject to regulation. The liquid approach and underlies the so-called "monetary aggregates" - grouping of liquid assets in order to calculate their total value.
Basic cash aggregates
In, money is a view that can be used for transactions. Most feature Money is their high liquidity, that is, the ability to exchange quick and minimal costs to any other types of assets.Three main money functions:
1. Means of exchange.
2. Measure value (measuring instrument for transactions).
3. A means of savings or accumulation.
The amount of money in the country is controlled (monetary, or monetary policy), in practice, this function is carried out by the central bank. To measure the money supply, monetary aggregates are used: M1, M2, M3, L (in the order of decrease in the degree of liquidity). The composition and number of the monetary aggregates used vary by countries.
According to the classification used in the United States, monetary aggregates are presented as follows:
M1 - Cash out of the banking system, demand deposits, traveler checks, other check deposits.
M2 - M1 Plus nonsense savings deposits, urgent deposits (up to $ 100,000), one-day conversation agreements and others.
M3 - M2 plus urgent deposits over $ 100 thousand., Urgent agreements on reverse ransom, deposit certificates, etc.
L - M3 plus Treasury savings bonds, short-term government obligations, commercial paper, etc.
Macroeconomic analysis more often used M1 and M2 aggregates.
Sometimes the cash indicator (M0, or C - from the English "Currency") as part of M1, as well as the quasi-money indicator (Qm) as a difference between M2 and M1, i.e., mainly savings and term deposits , then m2 \u003d M1 + Qm.
The dynamics of monetary aggregates depends on many reasons, including the interest rate movement. So, with an increase in the interest rate, the M2, M3 aggregates can be discovered by M1, since their components bring income in the form of a percentage. Recently, the emergence of the M1 of new types of deposits, bringing interest, smoothes the differences in the dynamics of the aggregates caused by the movement of the interest rate.
In Russian statistics, M1 aggregates ("Money"), "quasi-money" (urgent and savings deposits) and M2 ("broad money") are used.
Structure of monetary aggregates
Indicators of monetary aggregates are designated M1, M2, M3 and L. M1- Money Indicator, usually defined as a means of payment used when performing operations. M1 consists of the following components: banknotes and coins in the turnover, traveler checks of non-banking issuers, demand deposits (with the exception of interbank deposits, government deposits, deposits of foreign banks and official institutions) and other deposits that can be reached with the help of checks. "Other deposits that can be withdrawn with the help of checks include NOW, ATS accounts in depository institutions and mutual accounts with the right to discharge orders like checks, credit unions. Thus, M1 components are financial assets that are accepted as a means of payment and are stored with the purpose of making payments. For this reason, M1 deposits are often considered as "transactional monetary remnants". The use of other monetary indicators, in addition to M1, (M2, M3 and L), reflects the fact that consumer units in the economy retain large amounts of liquid assets - "almost money", which can be quickly converted to M1, and then use for payments. In fact, the supply of liquid assets is often temporarily "placed" money, which is currently not required for payments, but which will soon need to return to the flow flow.Certain items of liquid assets are combined with M1 to create wider monetary aggregates. A feature that distinguishes M2, M3 and L is that each subsequent indicator includes less liquid assets, the components of the M3 increase are less liquid than the components of the M2 growth. The principle of which distinguishes these indicators is that M2 is more "almost money" than m3, and m3 closer to being money than L. The choice of liquid assets to be included in this monetary unit is undoubtedly the question Methodical and to some extent arbitrary. Motives to create such indicators of monetary aggregates were attempts to measure money as a whole, due to the fact that the amount of money (and especially the measurement of the money supply) has tremendous economic significance. Due to the economic significance of money, the central governments are trying to manage the money supply, pursuing the goal of economic policy. Consequently, the number of "money" needs to be managed, and the monetary aggregates to be measured and management is what the most consistent with such economic policies, as a change in price level, production, employment and interest rates.
Monetary Mass Structure Cash Aggregates
The money supply is understood as a monetary supply, or a combination of generally accepted payments in the economy, or the amount of cash and non-cash in circulation.The structure of the money supply is determined by the relationship between monetary aggregates. Under cash aggregates, a combination of assets that perform the functions of money possessing the same liquidity are understood.
Building the structure of the money supply is similar in all countries with a market economy. The structure of the money supply is based on the principle of decreasing liquidity of monetary aggregates, the entrance to it of the aggregates.
Under liquid is understood as such an asset that can be used as a means of circulation and payment or facing means of circulation and payment and has a fixed nominal value.
The structure of the money supply
In Russia:
M0 - Cash in circulation, not including funds in reserve Funds of the RCC Central Bank of the Russian Federation. Feature M0 - very high specific gravity in the structure of the money supply (up to 40%); There is no tendency to reduce.
Monetary base (reserve money) - the most liquid assets for the classification of the Central Bank:
Cash, including at the cash desks of commercial banks
Funds of commercial banks on the Central Bank
Funds of commercial banks in the fund of the mandatory reserve of the Central Bank
Funds on deposits in the Central Bank
M1 \u003d m0 + funds on the calculated, current accounts, demand accounts. In M1, cashless turnover money is added to liquid cash, the owner of which can be used at any time.
M2 is the main monetary unit, which is used to analyze the state of the monetary sphere; Shows the level of monetization of the economy.
M2 \u003d M1 + Urgent deposits for up to 1 year.
Feature: a slight difference from M1 due to the low specific gravity of term deposits.
Wide money \u003d funds on currency accounts + m2 + foreign currency in the hands of the population.
M3 \u003d m2 + urgent deposits for more than 1 year + deposits and savings certificates + government securities.
In countries with a developed economy:
M0 - Cash (1-5% - Specific)
M1 \u003d M0 + means on transaction accounts + means in demand accounts that do not bring%. The owners of these accounts have the right to electronic check transfers.
M2 \u003d M1 + Small term deposits + securities for one-day repo operations. Repo - operation for the purchase of securities for sale (purchase) the next day certain rate.
M3 \u003d m2 + large term deposits + securities on repo operations more than 1 day.
L \u003d M3 + Treasury securities.
The monetary unit is part of the money supply, representing a certain set of monetary assets combined by liquidity.
M0 - Cash or narrow money.
M1 \u003d M0 + demands to demand.
M2 \u003d M1 + accounts in foreign currency + foreign bank deposits.
M3 \u003d m2 + quasi-thong (bills and checks).
M4 \u003d M3 + Central Bank.
M5 \u003d M4 + All foreign currency.
The components of the money supply make it possible to eliminate or determine the level of monetization of the economy. Monetization level \u003d M2 / GDP (for the Russian Federation \u003d 14-15%, and in developed countries - about 50%).
Types of money cash aggregates
Until now, there is no generally accepted opinion about what money is. This is due to the fact that there are many that can perform money functions. Because of this, the definition of money is deprived of certainty and clarity, being quite vague. Different definitions of money are given, for example, some believe that money is that society recognizes money, others, what makes money, others believe that money is a financial asset that serves to make transactions (for the purchase of goods and services ). Most of the economists came together on the fact that the most correct definition of money concerns their functions, that is, money is the functions they perform.Five functions of money are allocated: means of circulation (exchange), measurement measures, means of accumulation, means of payments and global money.
Money function as a means of circulation. Money is used to buy goods and services, so they are a means of circulation. In the process of circulation of goods, the money performs several basic functions of the means of treatment: mediating (when the goods from the manufacturer to the consumer), binding (when the goods move from one person to another, are combined into a single process of all exchanges) and the function of the price realizer. Thus, money is an intermediary in the exchange of goods, in making transactions.
The next money function is the function of measuring the cost of all goods and services or a unit of account. The cost is measured in monetary signs, as well as weight in kilograms or liters, distance in meters or kilometers. As long as money began to perform this feature, the cost of each product was to be measured in certain quantities of other goods produced in the economy. Accordingly, the consumer and seller needed to know the proportions of the exchange (for example, how much is one kilogram of meat not in rubles, but in televisions, cars, tomatoes, etc.). In the event of a monetary exchange, such a need disappears. An account unit is a monetary unit of the country (ruble in Russia, euros in Europe, dollars in Australia).
The third money function is the money function as a means of payments. It is manifested in the use of money when paying for deferred payments (pay taxes, debt payment, income receipt). This feature differs from the function of the means of appeal in that the use of money as an intermediary in the exchange involves the simultaneous movement of goods and money, and when the function is fulfilled, the payment tool movement of goods and money does not coincide over time (credit for goods) or there is no movement of goods, but There is only a movement of money (bank loan).
The function of money as the accumulation means proceeds from the fact that money retains its value in time. Thus, there is an opportunity to save (accumulate or save) them for purchases in the future. If there is no inflation in the economy, then the value of money will not change, and it will be possible to buy on them the same amount of goods and services after time. If inflation exists in the economy, then the money loses part of its purchasing power over time.
If the money is capable of performing the above functions in other countries of the world, then they fulfill the function of world money.
Thus, the money is considered as assets serving a means of payment (they are accepted by merchants of goods and services). The most important characteristic of money is liquidity. Liquidity is the ability to use one or another asset (securities, monetary signs, credit cards, equipment, etc.) immediately and conveniently exchange for goods and services without changing their nominal value (without losing their cost). The more quickly and conveniently you can exchange assets for goods and services (or money), the greater liquidity they possess. High liquidity has not only money themselves, but all other assets that can be quickly turned into money, a number of assets (for example, equipment or bonds) have less liquidity, they are not used directly to pay. Cash has a property quickly and without costs to exchange for any other asset, real or financial, or possess absolute liquidity.
There are two theories of the origin of money (rationalistic - the emergence of money as the result of the agreement between people, and evolutionary - regardless of the desire of people, some objects stood out and became money). However, it is clear that they appeared with the occurrence commodity production. That is, any goods began to perform the functions of money (shells, skin pieces, animal teeth, etc.). This money is called commodity. Them a distinctive feature It is that their value of both money and value as goods are the same. Over time, the role of money was entrenched in one product - noble metals. This was facilitated by the properties of these metals. The properties of noble metals are portability (in low weight and volume is greater value), divisibility (if splitting the gold ingot into several parts, then in sum, the value will not change, as opposed to, for example, livestock), relative rarity (this provides noble metals great value), transportability (it is convenient to transport them, in contrast to the same cattle), comparability (if there are two gold ingots of one weight, then they have the same value, in contrast to fur), awareness (gold and silver is easy to distinguish from other metals), Wear resistance (noble metals are not exposed to strong corrosion, do not lose their value over time, unlike furs and skin).
At various times, either the type of noble metal (gold or silver) or two (both gold and silver) was used in different countries. If only one type of noble metal is used in the economy as money, then such is called monometallism. If both types of noble metal are used in the economy as money, then such a monetary system is called bimetallism. At first, ingots were used as money, but it was uncomfortable in the fact that during the exchange process had to be separated and weighed. Accordingly, the monetary cash circulation appears. As the coins are used, their weight decreased, but when exchanging their value remained the same. This led to the idea that it was possible to replace full gold and silver coins of value symbols, i.e., paper and metal money made of non-dense metals, such as copper, tin, nickel. So there were symbolic money.
The feature of symbolic money is that their value as goods are much lower than their value as money. Accordingly, paper and metal money are symbolic money. A feature of paper money of the early period was free exchange for gold money (the Gold Standard system). Now they are a debt obligation. This may be a debt obligation of the Central Bank of the country (cash signs) or the debt obligation of a private economic agent. Therefore, paper money is credit money. There are three forms of credit money: a bill (debt obligation of one economic agent to pay another economic agent to a certain amount taken by borrowing, within a certain period and with a certain remuneration), a banknote (bank's debt obligation, in modern conditions, only the Central Bank has the right to issue a banknote ) And the check (the order of the owner of the bank deposit to issue a certain amount from this contribution to himself or another).
Commodity made of noble metals are also called full. Symbolic money, the buying capacity of which exceeds the cost of goods, of which they are made (paper, copper) are also called defective money.
Paper money appears in circulation as a result of emissions. Emissions is a release of paper money as money signs. Emissia is carried out by the issuer - the central bank. Thus, in the hands of paper money. The total volume of all released paper and metal money is a sum of money.
The economy uses many varieties of money to make transactions. Sometimes the same types of money simultaneously perform several functions, respectively, they are difficult to account. For their calculation, cash aggregates are used, which take into account the money on their main varieties. In various countries, different cash aggregates are used, but the system of monetary aggregates is built in the same way: each next unit includes the previous one.
The first type of assets are money in the narrow sense of the word, or cash. Cash is the amount of paper and metal money treated in the country. A monetary unit, which includes cash, which are in the hands of economic agents, is called M0. The concept of narrow money also includes current deposits (bank accounts, money from which is issued on the first requirement of the depositor). When summing in cash in circulation (M0) and current deposits, the second monetary unit is obtained, called M1.
Money in the narrow sense of the word \u003d m1 \u003d m0 + current deposits.
However, it is impossible to say that this definition of money in the narrow sense of the word is absolute. There are various variations. For example, in some countries, the M1 aggregate includes traveler checks, in addition, there is a problem whether to include cards for travel in the metro, telephone cards or foreign currency (if it is widespread in commodity transactions in the country) . Accordingly, this unit, as well as all the others, is sufficiently flexible and is conditional.
The next monetary unit is already money in the broad sense of the word. It is denoted by M2, and includes financial assets of M1 and savings accounts, a pair that are not issued checks, small term deposits (up to $ 100,000):
Money in the broad sense of the word \u003d m2 \u003d m1 + minor term deposits + savings deposits.
The third monetary unit is called "Near Money" (Near Money). It is indicated by M3 and includes large term deposits (over $ 100,000), deposit certificates (more than $ 100,000), deposit certificates (agreements for a certain period of purchase of securities):
"Almost money" \u003d m3 \u003d m2 + deposit certificates + large term deposits
The last monetary unit is called liquid assets and is denoted by L. In addition to the aggregate M, it includes short-term treasury securities, commercial paper, savings bonds, bank acceptances.
Liquid assets \u003d L \u003d m3 + short-term treasury securities + savings bonds + commercial paper + bank acceptances.
The hierarchy of monetary aggregates in all countries is responsible for the same criterion, namely, liquidity. The liquidity of monetary aggregates increases upwards (from L to M0), and the yield is from top to bottom (from M0 to L).
Accordingly, it can be concluded from the above that the offer of money is determined by the economic behavior of the Central Bank (it provides and monitors cash), commercial banks (they store funds on their accounts), households and firms (they make decisions about In what the ratio is divided into cash between cash and funds in bank accounts).
Also, the offer of money depends on the magnitude of the reserves of commercial banks issued on credit, and the values \u200b\u200bof the banking multiplier. Impacting one of these factors or on both, the central bank can change the amount of money supply, conducting monetary (credit-monetary) policies.
Banks and banking system
Banks are called organizations that are engaged in attracting and making money. They are the main financial intermediary in the economy. The activities of banks are the channel by which changes in the money market turn into changes in the commodity market. Banks are financial intermediaries, since, on the one hand, they accept deposits from some economic agents (households and firms), i.e., they accumulate temporarily free cash, and on the other, they provide them under a certain percentage to other economic agents, t. e. Give loans. Therefore, the banking system is part of which includes both banking and non-bank (funds (investment, pension, etc.), insurance and investment companies, pawnshops, credit unions, etc.) credit institutions. However, the main financial intermediaries are commercial banks.
Banks have certain functions, such as accumulation of free funds and send them in the sphere, where there is a demand for loan capital, mediation in payments, the transformation of savings and capital, creating sources of credit for firms, issuing credit money.
The combination of all banking institutions of the country is called a banking system. Currently, the banking system is a two-level. The first level of the banking system is the central bank. The second level is represented by the system (set) of commercial banks.
The main functions of the Central Bank are: the emission of monetary signs, the implementation, ensuring the stability of the national currency, the maintenance of financial operations of the government, the control and coordination of the activities of commercial banks (both domestic and foreign acting in the country) and the regulation of foreign economic activity of national banks, carrying out interbank settlements , maintenance of international financial operations of the country, monitoring the state of balance of payments, currency regulation and some others.
The second level of the banking system is commercial banks. are private organizations that have legal right Attract free cash and issuing loans for profit. Therefore, they perform two main types of operations; Passive (attracting deposits) and active (issuing loans). In addition, commercial banks perform settlement and distribution operations, trustful or trust operations, interbank operations (credit - issuance of loans to other banks and transfers - transfer of money), operations with securities, operations with foreign currency, etc.
The bulk of the income of commercial banks is the difference between interest interests and interest interests. Additional sources of bank revenues can be commissions for the provision of various types of services (transfer of money, cash reception and enroll them to the client's account, etc.) and revenues on securities. Thus, in order to make a profit, banks need to issue loans. This deprives the bank of 100% solvency and liquidity. That is, if he gives the money of depositors on credit, it makes a profit, but there is a problem with solvency and liquidity. A solvent bank is puzzled if its assets are equal to its debt. Bank assets are considered to be banknotes and financial resources (bonds and debt obligations, which serve as a source of bank revenues). Bank debt is its passive. Bank liabilities are deposits posted in it, which he is obliged to return to the first requirement of the client. If the bank does not allow the funds placed in it, it has one hundred percent solvency and avoids high risks, but does not receive any profit. Accordingly, it cannot pay for its costs, i.e. the bank must risk and give loans, just to be able to exist. The more loan issued the value, the higher it will be both profit and risk. In addition to solvency, the Bank has a liquidity problem, i.e., the ability at any time to issue in any number of depositors part of the contribution or the entire contribution of cash. If all deposits of the bank leaves in the form of monetary signs, it has absolute liquidity. However, monetary signs do not have such a yield as promotions and bonds. Accordingly, the higher the liquidity of the bank, the lower its profitability. Modern banks operate in a partial reservation system (which is enshrined and legislative acts), i.e., a certain part of deposits (deposits) is stored as a reserve, and the remaining amount is used to provide loans. The reserves of the bank enshrined by legislative acts are called the norm of mandatory bank reserves, which are a certain percentage of the deposit amount, which banks are not eligible to give a loan, and which they are stored in the Central Bank.
Thanks to the partial reservation system, universal commercial banks can create money. The process of creating money is called credit extension, or credit cartoon. This process begins with additional money in the banking system, i.e., the deposits of a commercial bank increase (if the amount of deposits decreases, then the return process is a credit compression).
Indicators of monetary aggregates
One of the most important indicators characterizing the monetary scope, and in particular, is a monetary mass. The money supply can be determined as a set of funds intended for payment of goods and services, as well as for the goals of accumulation of non-financial enterprises, organizations and the population.The unity of money of non-cash turnover and cash led to the possibility of consideration of them as a totality in the form of money supply, under which the cumulative amount of cash and money of non-cash turnover is understood. The federal law "On the Central Bank of the Russian Federation" provides for the following: "The Bank of Russia can establish the growth benchmarks of one or more monetary mass indicators ..." (Art. 43). It is important to emphasize that we are talking about the aggregate amount of money supply, which includes money of non-cash turnover and cash. The differences between non-cash cash payments and non-cash turnover, which is performed by transferring securities, is also manifested in the composition of the money supply in circulation, securities are not included.
The amount of money required for circulation during the gold standard was regulated automatically, spontaneously on the market. Demand and proposal was balanced by equilibrium prices, the level of which was maintained by the cash of gold coins. Excessive money went out of circulation and accumulated (tee) in the form of gold bars (treasures).
Otherwise, things are in the case of deputies of full-fledged money, defective paper money, which no matter how much they are released, are stuck in circulation. Consequently, the exit from such a position is only one: prevent the release of unnecessary monetary signs. This means that their release must correspond to the volume of valid (full-fledged) money.
In general, the amount of money necessary for the treatment of goods and services, when the money is functioning as a means of circulation, can be determined by the formula:
M \u003d c / co
Where m is the mass of goods; C - prices; CO - the speed of money turnover (monetary signs).
If the money is functioning as a means of circulation and as a means of payment, then the formula acquires the following form:
M \u003d (C - K + P - VP) / CO,
Where k is the sum of the prices of goods sold on credit; P - the amount of payments for which the term has come; VP - the sum of mutual payments.
In Western economic literature, for similar purposes, the so-called exchanging equation is used, the formula of which is as follows:
Where M is the amount of money (money supply); V - the speed of money turnover; P - price level; Y - Real National Product.
Therefore:
Those. This formula represents a modified variant of the above formula (1). It follows that the amount of money (M) required to appeal (maintain the car mass) is directly proportional to the level of prices (P) multiplied by the amount of goods (q) and inversely proportional to the rate of circulation of a monetary unit (V). On this dependence focuses the views of monetarists.
Formula is better known as the Fisher model (I. Fisher - American economist of the XX-th century).
The Fisher model expresses the pattern, in accordance with which the price increases adequately causes an even greater increase in the money supply. At the same time, the following simplifications are made in the calculations: first, previously released monetary signs do not go out of circulation, secondly, as often happens in crisis periodsThe speed of their turnover can be feverishly increasing, which proportionally increases the money supply.
To measure the money supply in circulation in countries with a market economy, monetary aggregates are applied. They differ in the breadth of the Company's monetary assets and the degree of their liquidity. At the same time, the larger the unit number of the unit, the wider coverage and below the liquidity of the money.
The system of monetary aggregates is a system that allows you to organize accounting of the money supplying in the country, monetary aggregates are indicators of the volume and structure of the money supply:
M1- Cash (banknotes and coins) + funds on current bank accounts;
M2- M1 + Urgent savings deposits in commercial banks;
M3- M2 + Savings deposits in special credit institutions; M4- m2 + deposit certificates in large KB;
M5- M3 + CB Deposit Certificate. L - cash, checks, deposits, securities, all previous aggregates are included in L.
In the United States, four monetary aggregates are used to determine the money supply, in Japan and Germany - two, in England and France - two.
In Russia, the following monetary aggregates are used to calculate the aggregate money supply: M0, M1, M2, M3 (M0 - cash, M1 \u003d M0 + Means of organizations on settlement, current and special accounts + deposits of the population in demand banks + means of insurance companies; M2 \u003d M1 + urgent deposits of the population in banks; m3 \u003d m2 + certificates and bonds of the state loan). In direct statements of the Central Bank, there are only m0 and m2.
The M2 monetary aggregate is the amount of cash in circulation (outside banks) and balances of funds in national currency in the accounts of non-financial organizations, financial (except credit) organizations and individuals who are residents Russian Federation.
The most important component of the money supply is a monetary base, which can be interpreted both in a narrow and broad sense. In a narrow understanding, the monetary base includes cash outside the Bank of Russia and the obligatory reserves of commercial banks in the Central Bank of Russia (CBD). In the wide view in the monetary base, remnants of correspondent and other bank accounts in the CBR are additionally included.
Considering the structure and relationship between the monetary base and the mass of money in circulation (M2), the following can be noted. One part of the monetary base is cash in circulation - enters the money supply directly, and the other means of banks in the Bank of Russia - causes a multiple increase in the money supply in the form of bank deposits. This is due to the fact that the total amount of funds in bank accounts to the CBD in providing commercial banks with loans to its customers remains unchanged (only the transfer of funds from the corsche of one bank to the other), and the amount of deposits and, therefore, the amount of money supply increases. The latter is associated with the ability of the banking system to create deposits based on the issuance of bank loans.
The degree of multiple increase in deposits in the lending process is measured by a bank multiplier (BM) using the animation coefficient determined by the formula: BM \u003d 1 / the norm of mandatory reserves.
The degree of multiple impact of the monetary base on the volume of money supply is determined by a monetary multiplier (DM) by the formula: DM \u003d M2 / Monetary base.
If, for example, DM is equal to 3.0, it means that each ruble of the monetary base has the ability to create a money supply in the amount of 3 rubles.
In conclusion, we note that the monetary base is one of the main indicators used to monitor the processes occurring in the country's economy. By changing the amount of the monetary base, the Bank of Russia regulates the amount of money supply and thereby affects the level of prices, business activity and other economic processes.
Composition of monetary aggregates
The monetary unit is an indicator of the number of money or financial assets classified as a monetary mass (their liquidity is close to a single).In economic theory, the following money supply units are allocated:
M0 - Cash;
M1 - Financial assets that can be immediately involved for settlements (cash and demand deposits);
M2 - is formed by the addition of the aggregate M and the most common types of term deposits;
M3 - is formed by taking into account the M aggregate and certain types of major term deposits and urgent reasons (deposit certificates, government bonds);
L is the widest of all monetary aggregates, summarizing all money and financial assets.
The composition of monetary aggregates of unequal in various countries.
The Central Bank of the Russian Federation conducts calculations of monetary aggregates M0, M1, M2, M3, where:
M0 - Cash;
M1 - M0 plus funds on settlement, current and special accounts of enterprises and organizations, insurance companies, deposits to demand the population in Sberbank and other commercial banks;
M2 - M1 plus urgent contributions of the population in Sberbank;
M3 - M2 plus certificates and bonds of the GosMaima.
Cash aggregates are a hierarchical system: each subsequent unit includes the previous one. Between themselves, monetary aggregates differ not only on the composition of the money supply, but also by the level of liquidity. The highest liquidity has a monetary unit M0 (cash), the liquidity of M1 is lower than M0, but higher than M2, since demand deposits must be returned to the depository on its application, and urgent deposits can be used by the Bank at its discretion during the whole period Deposit and returned to the depositor only after this period.
For most of the XX century. (up to 90s.) The M1 unit was considered as the most accurate meter of money supply. However, at present, the development of credit relations has become a more apparent dependence of key parameters from the M2 unit, which is currently being considered as the most important object of monetary policy.
Dynamics of monetary aggregates
Money supply volumes - Money Supply (M0, M1, M2, M3, M4) - are important macroeconomic indicators. Essentially, with their help you can measure the entire money supply in the country. The M0 monetary unit characterizes all the cash that appeals within the country under study.M1 \u003d M0 + check deposits, i.e. It takes into account the most liquid resources: cash currency, funds on demand accounts, traveler checks.
M2 \u003d M1 + Urgent deposits, deposits less than $ 100,000, i.e. Includes M1, urgent deposits (up to $ 100,000) and other highly liquid savings.
M3 \u003d M2 + large term deposits and deposits are more than $ 100,000.
M4 is a total monetary aggregate.
In the US, the indicators M1, M2, M3 are published every week on Thursdays at 16:30 EST (New York), characterizing the weekly change in the money supply. The most significant of them for Americans is M2, which remains one of the components of the index of advanced economic indicators calculated by the Conference Board.
For most european countries Traditionally, the M3 monetary aggregate is most important, for the UK - M4.
In the period when the theoretical concept of monetarism was dominated in financial and banking structures, this indicator was key to assessing the prospects for the development of the national economy and its foreign exchange market. In fact, this concept has decisive influence on leading countries of the world. For example, in 1979, the Paul Volcker, which was headed by the US FRC, headed over the amount of money supply, and not such generally accepted and proven practices such as management of basic interest rates .
P. Volker With the help of aggressive policies, the monetary mass limit managed to curb inflation, but put the US economy to the edge of the crisis. Therefore, from the fall of 1982, when large difficulties arose in a number of sectors of the US economy, and the dollar has ceased to respond to the macroeconomic tasks of the country, the Fed was forced to return to the usual methods for regulating the economy by changing the level of interest rates. However, such indicators of a monetary supply as M1 and M2, in the United States retained their importance in conducting various economic research, including estimates of the dollar against the main world currencies.
Neomonetarists are gaining momentum
Now in many economically developed countries, the number of non-monetary economists is growing. They give paramount importance to the problem of the impact of a money supply for the economy and the course of the national currency. That is, again gaining the power of the discussion on the effectiveness of macroeconomic regulation carried out through the control of the amount of money supply.
In particular, in the United States, Moody's Investors Service Analyst John Lonski (John Lonski) considers this impact very significant. Jim Angel ends him from Georgetown University. He is confident that this influence does not depend on the methods of calculating the indicators of monetary aggregates. Nevotarists state that in today's conditions, the threats for a number of economically developed countries, the money supply is a decisive factor determining in the short term and price dynamics for a longer time period. When the monetary offer is growing, then either the volume of economics increase, or the prerequisites are created for their increase, which is also positively affected by the national currency. When the monetary mass in this category of countries falls, economic growth slows down, and transition to recession is possible. At the same time, the price of the national currency decreases markedly.
At the same time, nevomotarists do not believe that the central banks of developed countries should fully focus on the amount of money supply, as the floor of the Volker made. However, in their opinion, this indicator should be of more serious importance in the development of monetary policy, rather than this is done now.
It should be noted that at the moment, nevomotarists are positively assessed by the situation in the economies of Japan, the USA and Great Britain. In 2003, the proposal of money in the national markets of these countries increased significantly, which, in their opinion, testifies to the start of economic lifting.
Thus, in Japan, from March 2002 to March 2003, the growth rates of the M4 indicator on year 8.3% were 8.3% compared with 6.7%, recorded for the previous 12 months. During the same period of time in the United States, the growth rate of the indicator M2 reached 9.1%, compared with 5.8% of the previous year.
Reliable growth indicators
The historical retrospective testifies (at least over the past 8 years) that the growth of consumer costs in the country strongly correlates with an increase in its money supply. That is, the monetary aggregates are becoming increasingly reliable indicators of the coming economic growth.
For example, a significant reduction in the growth rates of M2 (up to 3.93%) in the United States in the second quarter of 2000 was preceded by a sharp slowdown in the growth rate of the GDP growth of this country at the end of the year. And a sharp increase in the growth rates of m2 (up to 7.23%) at the end of 1998 preceded the economic rise and "boom" on the stock market of America, which no one was waiting after such a short period of time after a number of regional crises of 1998 and the collapse of the Long- Investment Fund Term Capital Management in the USA.
In addition, excessive liquidity is now (the difference between the growth rates of money supply and nominal demand for money) in the countries of the developed economy is at the level close to the maximum levels of 1993. At the same time, the tendency to decrease in the last quarters is preserved.
Since excess liquidity played an important role in supporting consumer spending, until recently its influence on the corporate sector was limited.
It seems that now the situation begins to change - the enterprises finally began to receive from cheap credit resources. Since for the last part-time three years, the profitability of short-term government bonds and other high reliability papers decreased in the United States by 2.5-2.8%, and over the past year, the spread between state-owned bonds and "bonds" decreased by more than 3.5%. Thus, the decline and its availability for risky borrowers look an obvious fact.
In addition, it is impossible not to take into account the fact that even the preservation of relatively high rates in the rest of the corporate sector (companies with a higher rating) until last year allowed to reduce the cost of borrowing through the use of LIBOR-swaps. It is likely that today European and American manufacturing sectors have never been ready to respond to improving liquidity. Free cash flow companies have increased dramatically over the past two and a half years. Positive dynamics is also observed in corporate reports: the last two quarters showed an explicit positive dynamics or in current indicators, or in the expected values \u200b\u200bbefore the end of the year.
Thus, for companies included in the wide S & P index, the average value of profit per 1 share has increased for the last quarter by 5.8%. Along with the increase in the business optimism of the US business sector, largely related to the latest economic reports (GDP growth by 7%, an increase in employment and fall), increasing the profitability of the corporate sector leads to an increase in its expenses - investments. This should have a positive effect (due to the multiplicative effect) throughout the American economy.
At the same time, criticism of nevometarism argue its position in that quite often the growth of consumer spending is accompanied by a slowdown in the growth rate of the money supply in the country, including due to the rate of treatment (for example, in England in the mid-1990s. And the United States of the early 1990 x years). Ultimately, the Central Bank of England raised the basic discount rate by 0.25%, while finding this moment the most appropriate to change the monetary policy towards its tightening. For such a step, the British pushed several reasons: Sustainable (although low in comparison with the USA) GDP growth rates, increased inflationary pressure, the situation in the housing market and the absence of unemployment.
Positive news Sterling
Figure 1 shows a weekly GBP / USD schedule. A stable rally is seen that continues from September. The last two bars were no exception. And in the first week of November, the key resistance of 1.7000 was overcome. Analysts noted that substantial support for the course of Pound this week was published data on consumer loans in September.
It became known that they rose to a new maximum - 1.83 billion pounds. What gave even more grounds to believe that the level of interest rates will increase next week, because The growth of consumer loans is the main concern of the Bank of England and the main argument in favor of increasing rates. It fears that the growth of loans can cause the collapse of the housing market and consumer spending. At the same time, the calculation of the M4 monetary aggregate was taken into account.
The day before raising a bet by the Bank of England, a similar action was made by the Central Bank of Australia. He also raised the discount rate by 0.25%, motivating this decision, in addition to overheating of the consumer lending market, which began by revival, in the light of which the "soft" monetary policy is inadequate.
According to the M3 monetary aggregate in the eurozone, the growth of this indicator in September 2003 slowed down from 8.2% to 7.4%. Despite this, the ECB is still concerned about the growth rate of the money supply, which increase inflationary pressure and complicate the actions of the ECB in terms of a possible reduction in interest rates in the eurozone.
And the Fed of the United States refused the principles of the establishment of the targets of the money supply for a 6-month period, as was with a number of Greenspina's predecessors. All this indicates that there are a number of problems related to the use of monetary aggregates in assessing the economic prospects of a country or another. And not least, they are due to the ever-expanding spectrum and the complexity of financial instruments.
Indeed, how, for example, to invest in mutual funds of the money market? According to a number of sources, in the conditions of a bearish market, the assets of the US monetary market funds providing services to institutional and individual investors have increased by more than 65% and 20%, respectively. Their growth made a certain contribution to the increase in the M2 indicator, which meant only a change in the methods of saving funds, since it did not lead to a noticeable increase in consumer spending. In other words, cautious investors only transferred some of the funds from the stock market in the money market tools. Such an increase in the M2 monetary aggregate cannot be considered a sign indicating the upcoming strengthening of the economy and the financial market of the United States. However, it was these actions that were often provided in the period under review a smoother correction of the dollar. On the other hand, it is obvious that as soon as the probability of becoming a new business cycle increases, the return of funds to the economy and financial markets will begin. Since with the growth of cash aggregates, the moment will inevitably come when depositors will have more free money than they would like to increase or assets in shares and bonds, or expenses for goods and services.
According to the main economist West Chester research company Mark Zandi, potential investors have large cash reserves, and as soon as attitudes towards the stock market and the economy will change, "this money will be quickly put into running."
The Fed is not afraid of inflation far from all economists agree with the thesis that the growth of money supply and excess liquidity is the harbinger of consumer spending and the rapid restoration of the growth rate of the economy. Many economists who are not among the nevomotarists are standing on more rigid positions: they are alarming that an increase in the amount of money in the economy can strengthen inflationary pressure. Even the Shadow Open Market Committee (Shadow Open Market Committee, or SOMC) in the United States stated that the Fed needs to pay special attention to monetary aggregates, since their current values \u200b\u200bare contrary to the prevailing opinion on the absence of a threat of an inflation burst.
SOMC believes that aimed at stimulating economic growth aggressive actions to reduce interest rates in recent years indicate the loss of Fed's attention to the long-term problem of maintaining pricing stability. At the current growth rate of the M2 monetary aggregate (8.0-9.0%), an unmanaged leap of commodity prices is possible.
Nevertheless, most economists believe that due to the relatively low consumer demand in the coming months, the Americans are not threatened with high inflation. But the problems of deflation - there is obviously, Mr. Alan Greenspan has repeatedly stated in his speeches. After all, the monetary aggregates cannot be considered in the separation from other economic indicators, most of which only in the last quarter began to indicate that economic growth rates are increasing.
At the same time, although the M2 money supply indicators and are not the economic indicators of the "number one" in the United States, their current levels allow to predict a significant acceleration of the growth rate of the economy in the next six months.
Cash aggregates cash market
Money is the most important macroeconomic category, which allows analyzing inflation processes, cyclic oscillations, a mechanism to achieve equilibrium in the economy, consistency of the work of commodity and money markets, etc.Money is a type of financial assets that can be used for transactions. The most characteristic trait of money is their high liquidity, i.e. The ability to exchange quick and minimal costs to any other types of assets. Usually highlight three main functions of money:
1) Means of exchange, 2) cost measure - (measuring instrument for transactions), 3) means of savings or accumulation of wealth.
The amount of money in the country is controlled by the state (monetary, or monetary policy), in practice, this function is carried out by the central bank. To measure the money supply, monetary aggregates are used: ML, M2, MH, L (in the order of decrease in liquidity degree). The composition and number of the monetary aggregates used vary by countries.
According to the classification used in the United States, monetary aggregates are presented as follows (from more liquid to less liquid):
ML - cash out of the banking system, demand deposits, traveler checks, other check deposits;
M2 - ML Plus nonsense savings deposits, urgent deposits (up to $ 100,000), one-day conversation agreements and others;
MZ - M2 plus urgent deposits over $ 100 thousand, urgent conversation agreements, deposit certificates, etc.;
L - MZ plus treasury savings bonds, short-term government obligations, commercial paper, etc.
In macroeconomic analysis, ML and M2 aggregates are more often used. Sometimes there is a cash indicator (MO or C from English "Currency") as part of ML, as well as the Quasi-Money indicator (Qm) as a difference between M2, i.e. Mainly savings and urgent deposits, then M2 \u003d M1 + Qm.
The dynamics of monetary aggregates depends on many reasons, including the interest rate movement. So, with an increase in interest rates, the M2 aggregates, the MH may be distinguished by ML since their components bring income in the form of a percentage. Recently, the emergence of the ML of new types of deposits, bringing interest, smoothes the differences in the dynamics of the aggregates, due to the movement of interest rate.
The model of money market connects demand and money supply. Initially, it can be assumed that the money supply is controlled by the central bank and fixed at M. Price levels also take stable, which is quite acceptable for short-term model5. Then, the real offer of money will be fixed at the level and the graph shows vertical direct IS.
The demand for money (curve L) is considered as a decreasing function of the interest rate for a given level of income (with a constant price level, the nominal and real interest rates are equal to). At the point of equilibrium, the demand for money is equal to their suggestion.
A mobile interest rate holds a cash market in equilibrium. The correction of the situation in order to achieve equilibrium is possible because the economic agents change the structure of their assets depending on the motion of the interest rate. So, if M is too high, then the offer of money exceeds the demand for them. Economic agents who have accumulated cash will try to get rid of it by turning into other types of financial assets: promotions, bonds, urgent deposits, etc. The high interest rate, as already mentioned corresponds to the low rate of bonds, so it will benefit from cheap bonds based on income from increasing their course in the future, due to the decline in banks and other financial institutions in the context of exceeding the supply of money on demand will begin to reduce interest rates. . Gradually, through the change in economic agents, the structure of its assets and the decrease in the banks of their interest rates in the market will be restored. With a low interest rate, the processes will go in the opposite direction.
The fluctuations of the equilibrium values \u200b\u200bof the interest rate and money supply may be associated with the change in exogenous money market variables: the level of income, money supply. This is graphically reflected by the shift, respectively, the curves of demand and money supply.
Thus, a change in the income level, for example, its increase (see Fig. 7.3.), Increases demand for money (shift to the right of demand curve for money L °) and a percentage rate (from R1 to R2). Reducing the money supply also leads to an increase in interest rates (Figure 7.4.).
A similar mechanism for establishing and maintaining equilibrium in the money market can successfully operate in the current market economy With developed, with established behavioral bonds - a typical reaction of economic agents to change certain variables, let's say, interest rates.
Monetary aggregates and money base
Monetary aggregates on the methodology of international financial statistics are divided into:1. Money. Include money outside banks and demand money (similar to m).
2. Quasi-thong. Liquid deposits of the monetary system that are not used as a means of payment. Include: urgent and savings deposits and deposits in foreign currency, accounted for in the balance sheet of the Russian Central Bank and private banks.
3. "Wide Money". The combination of "Money" and "Quasi-Money" aggregates (M2 plus deposits in foreign currency).
The characteristic of the monetary aggregates will be incomplete without clarifying the concept of "monetary base", which is the basis of the money supply.
The monetary base, according to the IMF methodology, includes:
Pure international reserves (CMD), defined as the difference between gross international monetary authorities.
Pure internal assets (CVA), which characterize the loan to the extended government, private banks, and other non-classified assets.
Net loan to the expanded government is defined as the sum: net requirements of monetary regulatory authorities to the federal government, taking into account the interstate loan; Pure Bank of Russia's loan to local government bodies; Pure loan of the Russian Central Bank.
In the Russian Federation, the monetary base is calculated in two indicators: the monetary base in a narrow sense (cash in contact with cash in the storage facilities of the Russian Federation) and is wide (cash in circulation; correspondent accounts and mandatory reserves of private banks in the national bank of the Russian Federation).
Money supply cash aggregates
In a modern market economy, the money supply is provided by the banking system: the central and commercial banks of the country. The Central Bank issues paper money from various dignity and coins. Commercial banks are involved in the monetary circulation, providing loans to business and the population. The presence of all money in the economy is called the offer of money. The offer of money is the amount of money in circulation in the country's economy. The amount of money supply acts as an essential factor determining the expenditures in the national economy.To measure the amount of money supply, the following indicators are used (aggregates):
M0 is banknotes and coins in circulation;
M1 \u003d m0 + funds on settlement, current, special accounts of firms, means of insurance companies and household deposits in the banks of contentment;
M2 \u003d m1 + urgent deposits of households in banks, as well as compensation;
M3 \u003d m2 + certificates and bonds of the state loan.
Cash aggregates are located in descending order of liquidity. The number and composition of the monetary aggregates used vary by the countries of the world. In the US and Russia, the calculation of the money supply is conducted on four monetary aggregates, in Japan and Germany - in three, in England and France - on two.
The question of what unit is money, discussion. However, most economists believe that genuine money is the M1 unit, since its components can be used immediately. M1 unit is called money in the narrow sense of the word. In developed countries, a share of metal money accounts for 2-3%, and paper money is 25% of the M1 money supply. Cashless money has become the main form of money in the modern economy.
Urgent deposits of individuals, deposits of enterprises, deposit certificates and bonds of state loans that are components of monetary aggregates M2 and M3 - highly liquid financial assets. Although they do not function directly as a means of circulation, but they can easily translated into cash and cashless money. Therefore, the Central Bank calculates M2 and M3 monetary aggregates and takes into account their value when regulating the money supply.
The money supply controls the central bank by monetary emissions and regulating the issuance of money in a loan to commercial banks through the establishment of an accounting rate (refinancing rate) of the Central Bank. If a certain fixed amount of money is established as its tactical goal and is supported at this level, regardless of what will happen with interest rates, the curve of money supply will be vertical line (SM1). If the tactical goal of the Central Bank is the stabilization of the interest rate (at least in the short-term interval) at a certain fixed level, regardless of the change in the amount of money, the curve of the money supply will be horizontal (SM2). If the central bank does not establish tactical goals for any value of the money supply, nor for the value of the percentage rate and allows for the expansion of the amount of money as a percentage rate increases, the curve of the money supply will increase (SM3).
The angle of inclination of the money supply curve depends on the tactical target determined by the Central Bank of the country.
US cash aggregates
The amount of money in circulation. One of the economic indicators forming the exchange rate. An excess one currency will create an increased proposal for its international currency market and will cause a decrease in its course with respect to other currencies. Accordingly, the currency deficit, if there is demand for it, will lead to an increase in the course. Although the growth of money supply is usually accompanied by a falling course of the national currency, sometimes data on the growth of money supply leads to expectations of increasing the accounting rate and, ultimately, to raising the course.In the US banking system, data on the volume of money in circulation is formed by four monetary units:
M0 - banknotes and coins in circulation;
M1 - Cash in circulation, located outside of banks, Travel checks, demand deposits, other check deposits;
M2 \u003d M1 + nonsense savings deposits, urgent deposits in banks, day repo operations, one-day dollar deposits of US residents, funds in mutual fund accounts;
M3 \u003d M2 + short-term government bonds, repo operations, Eurodollar deposits of US residents in foreign branches of American banks.
M4 includes the amount of cash currency in circulation, the total amount of loans issued by banks, as well as the amount of government borrowing. M4 is considered a good indicator for inflation.
Analysis of monetary aggregates
The following analytical calculations within the framework of the monetary review indicate the need to adopt the following basic solutions:A) from cash emissions through currency and exchange operations to go to credit emission by credit and deposit animation;
b) 1/4 currency reserves to provide the government in exchange for funds of the Stabilization Fund in order to early repay external loans;
c) 1/4 currency reserves use on private national commercial banks that are not part of the raw materials of financial and industrial groups through the provision of long-term (10-15 years) subordinated loans (with tightening supervision of these banks);
d) 1/4 currency reserves send through credit organizations on leasing of the most modern equipment and technologies;
e) create government credit and investment institutions of development (bank, investment and insurance companies);
e) use the funds of the Protabilization Fund to the widespread mortgage development (it is the mortgage, and not consumer lending), through which to introduce cash funds into the bank turnover;
g) to stimulate cashless money and population participation in the stock market operations;
h) Create a specialized state refinancing agency that would provide long-term resources to credit organizations due to the repurchase of standard credit assets (will contribute to the development of securitization of credit activities);
and) to create with the participation of the Bank of Russia organized market of interbank lending;
k) enter the refinancing system by the Bank of Russia credit institutions in overdraft mode;
l) develop a system of accommodation through the Bank of Russia free budget funds and deposits in Russian credit institutions;
m) set the maximum size (in% to GDP) posting state reserves in foreign assets and stabilization fund.
Today, the monetary authorities are capable of without tension and risks to significantly increase the monetary base in the economy and send about $ 100-150 billion investment (credit) resources into circulation through the banking system and the stock market. This would significantly increase the money supply (the offer of money), raise the non-branches of production and reduce the dependence of the country's economy from the export of hydrocarbons. All this will create the basis of stable economic Development Russia.
The proposed credit mechanisms will not only do not strengthen the inflationary processes (commercial banks are not subjects of the consumer market), but will help reduce the loan interest, the development of business activity, the involvement of savings in investment and, as a result, decrease in inflation. "
As part of the second variant of the monetary program, in which the increase in net international reserves may be 1.3 trillion. rubles, there is a decrease in CVA by 421 billion rubles. Macroeconomic characteristics that meet this scenario (including higher world energy prices) are predetermined more significant than in the first embodiment, an increase in total balances in the federal government accounts in the Bank of Russia. A general reduction in net loan to an expanded government for this variant of the program may amount to 370 billion rubles.
The second version of the program provides that the increase in CMD (632 and 148 billion rubles, respectively), will not be enough to ensure the planned growth rates of a monetary proposal by monetary regulatory authorities. Therefore, it is predicted an increase in net internal assets by 239 and 640 billion rubles, respectively.
According to the third version of the monetary program, the projected increase in ChmR in 2008 (1.8 trillion rubles) will be almost 2 times the increase in the monetary base, permissible in terms of achieving the goal of inflation. The necessary decrease in the CVA for this variant of the program may amount to 866 billion rubles. Favorable foreign economic and acceleration of economic growth rates will become factors to preserve significant tax revenues to the budget. Taking into account the projected dynamics of the balances of the consolidated budgets of the constituent entities of the Russian Federation and state extrabudgetary funds in the banks in the Bank of Russia, a decline in net loan to an expanded government for this option is projected in the amount of 770 billion rubles. The remaining increase in pure internal assets will be ensured due to the dynamics of other clean non-classified assets.
The parameters of the monetary program are not rigidly specified and can be clarified in accordance with the developing macroeconomic situation, a change in the influence of key internal and external factors on the state of the monetary sphere. The Bank of Russia in the implementation of monetary policy will take into account possible risks in order to adequate response to the use of tools available at its disposal.
Modern monetary aggregates
Monetary aggregates (from lat. Aggregatus -prepaid) - parts of modern cash, which are used for circulation and payment. They combine different debt obligations depending on the degree and nature of their liquidity. These parts consistently include all the less liquid components that are increasingly served as a means of preserving value.In different countries, the whole monetary mass is divided into different types aggregates, which largely depends on the level of development of credit relations and money market. The most common three monetary aggregates, which are referred to as ML, M2 and MH. ML includes money in a narrow sense with the greatest liquidity (cash - banknotes and coins, non-cash check deposits, deposits of the population in Sberbanks to demand, etc.). The M2 and MW include, as they say, "almost money" are financial (cash) funds intended to preserve value (deposits of the population and enterprises for a long time in savingskassas, bonds of state loans, etc.).
Over the past 50 years, serious changes in the structure of monetary aggregates are very noticeable. IN western countries The share of cash from the population has sharply decreased (but in Russia the proportion of cash in the population in the M2 since the early 1990s. Until 2003, it is consistently held at 38-39%). At the same time, in countries with a developed new economy, the proportion of non-cash deposits and financial resources for maintaining banks increased.
The total distribution of information technologies in the credit and money system has recently spawned two types of funds:
Plastic money
electronic money
Plastic money is payment cards, with which non-cash payments for goods and services produce, and also receive cash (through ATMs - electronic self-service banking devices for issuing money). Plastic cards differ in purpose: to reduce the price in favor of the buyer, the calculations for automotive fuel, the acquisitions of non-cash payments in the loan of goods and services, etc.
Under electronic money, electronic monetary calculations are implied, which are produced between citizens and banks, trade and services. We are talking On the use of computer networks, communication systems with information coding means (application conventions and names), its automatic processing. The use of electronic digital signature facilitates the conclusion of property of property. With the help of information technologies, email is established: payment documents are transmitted, prices of prices are made, transactions for the sale of goods and services are performed.
The differences reviewed by us of modern cash from the Golden Standard led to fundamental changes in the movement of money in the international arena.
Characteristics of monetary aggregates
Monetary assets grouped by liquidity levels and taking into account the transactional approach are called monetary aggregates.Under the cash aggregate, a group of or several specific groups of liquid assets serving alternative money transactions are understood.
Monetary aggregates are both indicators and monetary meters of different width of cash assets. Accordingly, there is a monetary base, narrow (close) and widespread money.
The monetary base is the basis of the money supply - formed by the central bank of the country. The monetary base is, first of all, the number of monetary tickets and coins from non-precious metals in circulation, which reflects the nominal value of the money supply. However, the cash base does not include cash reserves in the storage facilities of the Central Bank. Not included in the monetary base and cash, which are in the cash desks of commercial banks, and only that mass cash, which is in circulation (outside banks). Along with cash in circulation (but), the monetary base includes the fund of mandatory reserves (P), created at the expense of commercial banks.
The obligatory reserves fund or the reserve fund is formed in the form of funds of commercial banks on their correspondent accounts in the Central Bank. The amount of the reserve fund is calculated by commercial banks from the amount of deposits attracted by them on the standards of compulsory reservation established by the Central Bank. However, the formation of mandatory reserves is made by each commercial bank separately from the part of its assets that are provided for this purpose by the Central Bank.
Thus, the basis of a monetary supply in the country is a monetary base (CDB), consisting of cash in circulation and reserve money:
KDB \u003d but + p
The monetary base in the period under study increased from 4.8 billion UAH to 97.2 billion UAH, of which cash in the appeal, representing the obligations of the Central Bank (as a government agent in the organization of money circulation), accounts for the main part ( from 72.7% to 87.1%). From this it follows that the basis of a monetary supply in Ukraine is a credit emission that has a tendency to increase, although the volume of real GDP of the country up to 2000 continuously decreased (compared to 1991) and by the beginning of 2007 did not reach its level 1991 .
The structure of the monetary base continuously fluctuates. For example, in 1997 (following the year of monetary reform), the proportion of cash increased (up to 87.1%), reaching its maximum. As the basis of a monetary supply in the country, the monetary base is facilitating the needs of the population in cash, which repeatedly move from hand to hand in the process of their movement, while performing the function of the treatment (and payment funds) in full compliance with the requirements of the transactional approach to monetary assets. And the obligation of the Central Bank to maintain money stable, assumes the possibility of preserving money (in the form of cash tickets and coins) of its value (i.e., performing them and functions tools for the preservation and accumulation of value), corresponding to, thereby, and the requirements of the liquid approach. In this regard, the monetary base is the most active and liquid monetary rate.
Narrow (close) Money mass (monetary unit M1) is formed mainly from completely liquid assets that are intermediaries in commodity exchange and performing, in contrast to all other monetary assets, the function of money as a means of circulation. It is clear that the narrow money mass is formed, taking into account the transactional approach to monetary assets included in this mass.
In international practice with money in their narrow understanding, only those monetary systems that are ready immediately and without any costs are considered to be the means of circulation (i.e., to perform the function of money as a means of circulation. In practice, this means that the category of money in a narrow sense includes a monetary offer consisting of cash in circulation (in the form of cash tickets and coins) and transactional, practically completely liquid check deposits in the form of funds in banks in banks (or Requirements). Thus, money in a narrow (close) understanding is represented by an indicator M1 (monetary aggregate) and cover two types of monetary assets: cash in circulation and practically completely liquid deposits (dL).
Respectively:
M1 \u003d but + for
It is appropriate to note that the monetary mass rate - M1 is extremely important, despite its "narrowness", as it directly includes monetary assets with which all transactions are carried out.
In the narrow sense of the word in a monetary offer, denoted by the indicator M1, in all countries without exception, it includes, first of all, the mass of cash in circulation, and, in the second place, transactional check deposits and all the ever (English op Call - on the call) accounts (accounts to demand).
Check deposits in a number of countries are not widespread. Therefore, in countries such as United Kingdom, Germany, Russia, Ukraine, etc. they are not included in a narrow money supply. Instead of transactional check deposits in these countries, funds are taken into account in current demand accounts, since from these accounts, as well as with accounts for check-in deposits, funds can be transformed into cash immediately, without prior notice to the bank.
In addition, if in Ukraine and Russia, as well as in a number of other countries, deposit accounts on savings deposits are also included in accounts, i.e. income accounts, then, for example, in the UK, such deposit accounts are isolated . Therefore, in the UK, not one, but two monetary aggregates M1: M1 NIB, which includes cash in circulation and accounts that do not generate income, and M1, covering M1 NIB and income-generating accounts.
Respectively:
M1 NIB \u003d but + deposits that do not revenue;
M1 \u003d M1 NIB + deposits that bring income;
Consider the composition and structure of the money supply of Ukraine in the monetary aggregate M1.
The greatest specific weight (from 60.8% to 70.0%) in the composition of the M1 monetary aggregate falls on cash, whose share at the end of the period under study (in comparison with 1996) decreased from 63.5% to 60.8 %, due to the growth of diquses deposits. However, the fact that in Ukraine to them since 2004 includes only those funds on the calculated and current accounts in national currency, which, on the first request of the account holder, can be transformed into cash means that a monetary proposal for the M1 aggregate It covers precisely a narrow, completely liquid money supply.
It is very important to note that in developed countries, such as Germany, the United States of America and in some other countries in the M1 monetary unit, the accounts of state and local government bodies are not included, as well as nationalized (i.e. state) industries and large enterprises.
On the one hand, the non-inclusion in the monetary aggregate M1 funds in the state structure accounts allows you to more accurately measure the monetary proposal, since otherwise the monetary proposal for M1 will be significantly overestimated.
On the other hand, the inclusion in the monetary unit M1 of state structure accounts makes it more accurate to compare the monetary proposal with the level of expenses of a private (non-state) sector, regardless of the costs caused by the state's policies, which has an important importance in the monetary regulation of the economy.
The broad monetary mass is represented by such monetary aggregates that are formed not only with the transactional, but also liquid approach to monetary assets, i.e., as a means of preserving value. Therefore, in addition to money (money supply) in a narrow understanding - M1, a monetary proposal is also considered broadly understood, the indicators of which are such monetary aggregates as M2, M3,
The M2 monetary unit consists of two monetary aggregates - M1 and MN units (eng. Near Many - "Almost" money).
Respectively:
To the MN monetary assets group, the World practice refers monetary assets that are easy to turn into cash, although they themselves, they are in bank accounts, cannot be speeches. But these monetary assets can be turned into cash with relatively low costs (losses) within one day, or rather, within one days. This means that in terms of liquidity, such assets are considered as "almost" money, i.e. "almost" completely liquid assets. This assets group in world practice unites: savings deposits, urgent deposits, mutual funds of the money market, deposit accounts, one-day repos, one-day loans in Eurodollara.
It is appropriate to note that the existence of "almost" money makes it difficult to accurately measure the money supply. However, despite this, the more in the portfolios of the richness of people "almost" of money, those with a greater hunt they turn them into completely liquid assets, that is, in cash for the purpose of their subsequent spending. In addition, the interpretibility of "almost" money in completely liquid assets (in cash) may affect the stability of the economy, especially during the increase in inflation, if the Central Bank does not take appropriate measures aimed at preventing money conversion in banks in cash banks .
Consider the characteristics of the monetary assets included in the "almost" money.
Savings deposits - deposits on deposit accounts that bring interest income and which can be transformed into cash without a fine at any time.
Urgent deposits - bringing interest incosals in accounts in various credit institutions, funds from which without fine cannot be removed (casual) before the expiration of the time-established period (with the exception of such contributions, funds from which the bank can issue within one day without prior notice ). For example, in the US, these deposits up to 100 thousand dollars.
Mutual funds of the money market - trust (trust) organizations created as joint-stock companies (open and closed type) and receiving funds from the population based on the sale of securities. Celebrated funds trust organizations are used to purchase short-term securities with fixed income or put them in a bank for an urgent deposit account. According to the situation, trust organizations, almost all income (90%), obtained by them from the attachments of the population in short-term securities with fixed income, transfer to the trusts that provided their funds to the trust management of a trust organization and only 10% obtained by the trust organization of income, It remains at its disposal as a fee for services. Mutual funds of the money market as independent mediators provide their shareholders with the possibility of using funds from checks and electronic transfers. However, in practice, these funds are used much less frequently to make payments than ordinary transaction deposits.
Deposit accounts are special indefinite deposits of banks and savings institutions in various credit institutions, which, by nature of their use, are similar to the use of mutual funds of the money market, on which interest is accrued, and there is some possibility to write on them checks.
One-day conversation agreements are one-day repo (English Repurshase Agreements - reverse ransom agreements). One-day repo (RP) is an agreement on the sale of a bank or other credit institution a physical or legal entity of securities with the obligation to return them to the seller within a higher price. The economic meaning of repo operations is that the bank (or other loan institution) is provided for a period not exceeding one day, loan secured by securities, when returning (redemption of previously sold securities), the bank pays a loan percentage.
One-day loans in Eurodollara - similar to one-day agreements on the reverse ransom of highly liquid assets that serve for operations with dollar funds located on the balance sheets of credit institutions.
The combination of completely liquid cash assets (M1 monetary aggregate and highly liquid assets of the MN monetary aggregate) characterizes broad money (monetary sentence in a broad sense) for the M2 unit. It is appropriate to note that the standard international classification practice provided by the Statistical Office of the International Monetary Fund, on the M2 monetary unit, considering it as cash assets or money, ends. Subsequent components of the money supply (outside M2) are further identified no longer as monetary assets, but as the so-called, tools or money market (SDR) and funds of the credit market (CCR).
The broad monetary mass (M2) has increased from 6.9 billion rubles for the period under study. Up to 259.4 billion rubles.
However, in its structural composition there is a decrease in the specific weight of a narrow money supply (from 72.6% to 47.5%) due to the growth of the specific weight of the quasi money (Mn) from 27.4% to 52.5%, which gives us grounds It is assumed that the proportion of deposits in foreign currency increases in Ukraine.
It is appropriate to note that individual national classification systems of countries create and use monetary aggregates broader than the M2 monetary aggregate. For example, the M3 monetary unit contains, in addition to the components of the M2 monetary aggregate, also the money market funds (SDR).
Respectively:
M3 \u003d M2 + SDR
The funds of the money market include urgent deposits, to remove the entire amount of funds with a preliminary notice of the closure of the deposit account, deposit certificates, urgent repos, urgent loans in Eurodollara, shares of mutual funds of the money market. Consider the characteristic of each of the components of the money market.
Urgent deposits that require a prior notice of closing an account. As a rule, these are large contributions of legal entities. Funds on urgent deposits, as follows from their name, become affordable depositor only when the deposit return period occurs. This, of course, does not mean that the depositor cannot withdraw money ahead of schedule. However, in this case, he will pay a loan institution that has taken into account, a penalty in the form of a decline in interest rate to the level paid on the current contributions. A variety of urgent major contributions are funds placed in a bank to acquire deposit certificates manufactured by credit institutions and, first of all, commercial banks.
The Deposit Certificate (Certificate of Deposit) is a valuable paper that is a certificate of deposit on time, after which the issuer of the certificate undertakes to redeem it, paying a loan percentage. The company (enterprise) buys a deposit certificate from the issuer with a nominal value, for example, $ 100,000 and a period of 12 months, or for a different period, in a different amount and currency.
For a bank, which issued such certificates is the ability to have a funds obtained from the sale of certificates during the agreed period, which has an important value for the bank. For the enterprise, which bought a deposit certificate, if necessary, early receipt of money is able to sell the certificate in the secondary money market. However, since the market price on which the deposit certificate is sold is subject to conjunctural market fluctuations, the market price of the deposit certificate before returning it to the issuer may deviate from its nominal value and upwards and down.
Urgent repos as well as urgent loans in Eurodollara differ from one-day repos and loans in Eurodollara just more than a day and reaching sometimes and several months. These funds, in the form of agreements or contracts can contact the money market and therefore are its (money market) tools.
The National Classification System of Ukraine measures the widespread money in the M3 indicator, and not by M2 recommended by the IMF. In this case, the share of the money supply measured by the M2 indicator is the main share (96.8-99.8%) of the money supply measured by M3. As for the funds of the money market (SDR), they are mainly represented by customer funds on the trust and securities of subordinated debt banks, are insignificant on the specific weight and tend to reduce.
In the monetary unit M3, the Ukrainian classification system of monetary assets and tools ends.
However, in a number of countries, the M4 (L monetary unit) is also used, in addition to the components of the M3 monetary unit, and the funds of the credit market (CCR), which includes bank acceptances, commercial paper and some other credit market tools.
Bank acceptances are one of the most ancient reversible tools of the money market. Banks teach the acceptance, as a rule, on such commercial papers as bills and traffic, while becoming a potential buyer of this commercial paper.
As a rule, bank acceptances are used in foreign trade as bank guarantees of the solvency of the importer, when the goods are sold under the terms of deferred payment (i.e., the exporter provided the importer of the branded credit). Bank acceptances refer to commission operations of commercial banks, so for the learning of acceptance (providing a kind of bank guarantee), the bank-acceptance charges with the importer commission remuneration. It is appropriate to note that a bill acceptable to a reliable bank has a high rating and appropriate creditworthiness. Therefore, it is an attractive subject of sale of both banks and dealers, as a low level of risk.
Commercial paper - arise on the basis of commercial bills of high denominations (over 100,000 monetary units) provided by credit institutions, for example, banks in a deposit on a loan. It is clear that the bank, taking such a bill in providing a loan, discounts it. On the basis of such a bill of exchange, the credit institution produces 10 commercial securities, the nominal value of 10,000 monetary units each. Subject to the reliability of the issuer of commercial papers, i.e., a specific credit institution, issued by them commercial bills of low denominations will be in great demand. The disadvantage of commercial paper is the lack of direct communication between them and the trade turnover, while the commercial bill has its own guarantee, to pay which it is issued.
It is appropriate to note that such monetary aggregates as M4 (and M5) in essence are not related to monetary aggregates.
M4 (L) \u003d M3 + UKR
It is appropriate to note that the practice is known for a number of monetary assets little different from each other in terms of its liquidity. Therefore, in some countries, such assets such as mutual funds of the money market are included in the M2 monetary unit (USA), and in other countries such an asset is included in the M3 (Ukraine) monetary unit. With the development of the money market and banking services, the transformation of less liquid assets into more liquid no special difficulties. In this regard, there is no limit of liquid assets that cannot be turned into cash to one degree or another. Accordingly, this means that the logical limit of the money supply meters (monetary mass) is practically no broadly understood.
Therefore, in world practice, most economists for measuring money supply use a narrow money supply (M1), since all assets included in this unit can be immediately used as a purchasing and payment facility, i.e. it is immediately used as money in the means of means of circulation and payment tool.
However, due to the fact that national classification systems of individual countries are at various levels of development and, thus, cannot provide their international comparability, the IMF recommends that the money supply of different countries are compared to measure it to the aggregation level of the M2 monetary aggregate.
However, despite the recommendations of the IMF in different countries and at different times in the same countries, the monetary proposal was measured and measured by monetary aggregates, the number and composition of which are not the same and does not always comply with the recommendations of the IMF.
This provision is explained by a number of reasons. First, the level of development of the country's economy and, above all, its credit system. Secondly, subjective approaches, depending on the country's dominant conceptual views of state officialsDefining a largely monetary policy of the state, although independently of certain reasons, a monetary offer in the country (its money supply) is estimated both in a narrow and wide understanding.
At the same time, the choice of the indicator (meter) of the monetary offer is extremely important in monetary regulation of the economy, since the efficiency of monetary regulation and, accordingly, the further development of the economy directly depends on the proper choice of the money supply. So, if the purpose of the monetary regulation of the economy is to expand the money supply (increasing the money supply with a stable interest rate level), then, depending on the monetary aggregate used, the need for a monetary mass meter will arise (no) the need for specific activities.
For example, if you choose a monetary aggregate M1 as a monetary procedure meter, then the specific actions of the central bank of the country to increase the mass of completely liquid assets - cash and transactional check deposits (or demand accounts, i.e., those assets that are included in the cash Aggregate M1).
However, if a monetary aggregate M2 (or M3) is not required as a monetary proposal meter, then no activities are required, since in this case the extension of the monetary offer is already occurring (due to multiplicative expansion).
National monetary systems Different countries differ in the composition of monetary aggregates and their number in the money supply.
At the same time, all countries without exception include cash out of banks, as well as funds in banks in banks, which can immediately be transformed into cash.
As for the monetary aggregates characterizing the widespread money, they are practically in most countries have their own specific features reflecting both the characteristics of the national economy and the conceptual approaches of monetary authorities to the monetary policy of their country.
Cash circulation law Cash aggregates
The circulation of money does not occur - it obeys certain laws. Their knowledge allows you to quickly respond to or other changes, make appropriate solutions and influence. These rules of appeal are called money circulation laws.The main law of money circulation, the formula of which was represented by K. Marx, connects prices, the rate of circulation and the amount of money:
Number of money \u003d price amount: number of currency revolutions
This formula is more valid for the gold circulation. When applying gold as money due to the limited gold reserves, the ratio between the amount of gold (coins) and the goods is established spontaneously, but relatively exactly: an excess of money is withdrawn from circulation and goes into the accumulation sphere (treasures), and with a shortage of coins, their seized part is returned their treasures in appeal.
When credit money appears, an unsecured emission occurs. In this case, inflation is inevitable, i.e. Impairment of money due to their increased quantity. It is necessary to track the part of the monetary obligations that can be mutually repaid without additional emissions.
The equation describes above takes the following form:
The amount of money \u003d the sum of the prices of goods, services - the sum of the prices of goods sold on credit + debt payments - the amount of reconciliation
In a quantitative theory of money, the Fisher equation is used:
M is the resulting money supply;
V - the rate of circulation of a monetary unit;
P - average price level;
Q - Number of goods and services.
This law is called the law of paper-money circulation. Since the amount of money can now increase indefinitely, the role of the state in monetary regulation is colossal. One of the types of regulation is to maintain the structure and volume of the money supply - the total purchasing powerfulness of funds.
If the question "how much money is needed?" There is no unambiguous answer, then the question "what money should be more, and what is less?" You can try to give an answer by analyzing the cash aggregates. They represent composite elements The money supply is based on a liquid approach.
1) Cash and current contributions;
2) Cash and term deposits;
3) Cash, current and urgent deposits;
4) highly liquid securities.
This test is an assessment of knowledge on the topic "Money and their functions. Basic cash aggregates. " To answer it correctly, you need to remember what monetary aggregates are and what is their structure. As you know, the amount of money in the country is controlled by the Central Bank. But control without measuring the money supply is impossible. Therefore, to solve this task, aggregation is used, i.e. summation, association of all funds in certain enlarged indicators, called monetary aggregates.
The criteria for the allocation of monetary aggregates is the liquidity of various funds. Under liquidity means the possibility of quickly turning this asset to cash without any loss of its value. In accordance with this, the following monetary aggregates are distinguished: M1, M2, M3, M4.
The M1 unit consists of two main elements. First, this is cash, i.e. metal and paper money. Sometimes this part of the M1 aggregate is denoted as MO. And, secondly, these are check deposits, i.e. deposits in commercial banks, savings cash registers or in savings institutions that checks may be discharged.
In most countries, non-cash payments with the help of checks are the familiar form of commercial operations due to their convenience and security. At first glance, it may seem strange that current accounts in banks are part of the money supply. But it is easily explained: after all, at the first request of the client, checks and current deposits in banks immediately appeal to cash.
Thus, M1 \u003d Cash Paper and Metal Money + Check (Current) deposits in banks.
The M2's monetary aggregate includes the M1 unit, as well as the less liquid part of the financial assets, to which, above all, include urgent small deposit deposits of organizations and individuals. Urgent deposits, as follows from their name, can be available to depositor only after the storage period. For example, the depositor can withdraw without loss of three or six-month deposits only after the expiration date. If he will require early termination of the contract concluded with the Bank, it is a fine, in accordance with the conditions specified in the contract. For example, it may be a decrease in the amount of interest due to the contribution to the level of interest of current contributions. Therefore, urgent deposits have less liquidity than current deposits. This type of deposit is included in the amount of deposit because, after the storage period, the depositor receives cash, as well as this unit can be transferred to cash until the storage period is expired, though with certain losses.
The monetary aggregate of the MH includes the M2 unit, as well as large term deposits (for example, in the United States to large term deposits include deposits exceeding $ 100,000), as well as deposit certificates, reverse redemption agreements. Large deposits are obviously less liquid than small and medium, since the depositor in the early termination of the contract will have large losses than when terminating contracts on small and medium deposits. However, after the storage period, these deposits may also be drawn to cash or transferred to the current account. Therefore, the MH unit also applies to the money supply.
The M4 aggregate is a MW unit in the amount with short-term treasury commitments, savings bonds, commercial promissory bills. Having these knowledge, analyze the task of the test. Answer number 1 certainly represents the M1 monetary unit. Answer No. 2, although it includes urgent deposits related to the desired M2 unit, but will be incorrect, since M2 is the amount of M1 and term deposits. And the M1 unit includes, as noted above, not only cash cash, but also current deposits in banks. Therefore, the response number 2 is incorrect, since the M1 unit is not fully represented in it.
Consider the response No. 3. It lists all the necessary structural elements of the M2 monetary aggregate. therefore option 3 - Right.
Since the tests may also have multiple response options, so we analyze the response No. 4. The highly liquid securities specified in it is an integral part of the M4 monetary unit, directly related to the M2 monetary aggregate.
To analyze changes in the movement of money for a specific date and for
a certain period in financial statistics began to use first in
economically developed countries, and then in our country (meaning Russia. Ed. Ed.) Monetary aggregates
M0, m1, m2, m3, m4.
The M0 aggregate includes cash in circulation: banknotes,
metal coins, treasury tickets (in some countries).
Metal coins that make up a minor cash share (in
developed countries 2-3%), make it possible to make small transactions.
Usually these coins are mined from cheap metals. Real value of the coin
significantly lower than the nominal in order to prevent their melting in order to prevent
profitable sale in the form of ingots.
Treasury tickets - paper money, whose emissions are carried out
treasury. Paper money is currently functioning in poorly developed countries.
For example, treasury tickets are in the Republic of Djibouti
(the dignity of 500, 5000, 1000 francs) and coins whose emissions
carried out by the Treasury; Treasury tickets and coins operate and
in the kingdom of Tonga.
The prevailing role belongs to banknotes.
The M1 aggregate consists of an M0 aggregate and funds on the current accounts of banks.
Funds in accounts can be used for payments in cashless form,
through transformation into cash and without translation to other accounts. For
calculations using funds on these accounts their owners discharge payment
assignments (the predominant form of calculations in the Russian economy) or checks and
letters of credit. It is the aggregate M1 serves the operations for the sale of gross
internal product (GDP), distribution and redistribution of national
income, accumulation and consumption.
The M2 unit contains an aggregate M1, urgent and savings deposits in
commercial banks, as well as short-term government securities.
The latter do not function as a means of circulation, however
turn into cash or check bills. Savings deposits B.
commercial banks are withdrawn at any time and turn into cash
Urgent deposits are available to depositor only after a certain period.
and, therefore, have less liquidity than savings
deposits. In the US, the M2 aggregate includes:
M1 - 23% (including Cash 7% and check deposits 19%),
savings and urgent deposits - 74%.
The M3 unit contains the M2 unit, savings deposits in
specialized credit institutions, as well as securities,
applying in the money market, including commercial bills,
issued by enterprises. This part of the funds invested in securities
is created not by the banking system, but is under its control, since
the transformation of the bill in the payment tool requires, as a rule, the bank acceptance,
those. Guarantees of his payment by the bank in case of the insolvency of the issuer.
M4 aggregate is equal to the M3 unit plus various forms of deposits in credit
institutions.
There is an equilibrium between the aggregates, otherwise happens
violation of money circulation. Practice suggests that equilibrium
comes at m2\u003e m1; It is strengthened at m2 + m3\u003e M1.
In this case, cash capital goes from cash in
non-cash. In disruption of such a relationship between aggregates in the monetary
composition begins complications: lack of monetary signs, price increase, etc.
To determine the country's money supply, different quantities use
aggregates (for example, USA - four, France - two). In Russia to calculate
aggregates M0, M1, M2 M3 to monetary
aggregates relate; M0 - Cash in circulation; M1, except M0 -
funds of enterprises in settlement, current, special accounts in banks,
deposits of the population in saving banks to demand, funds
insurance companies; M2; equals M1 plus urgent deposits of the population in
savings banks, including compensation; M3 consists of m2 and
certificates, bonds of the state loan.
Money mass is the most important indicator of the amount of money in circulation.
Money mass - This is the cumulative amount of all purchasing and payment facilities in cash and non-cash forms that are at the disposal of the state, legal entities and individuals and serving the country's economic turnover.
The money mass is characterized monetary aggregates - indicators of the volume and structure of the money supply.
The principles of calculating the monetary aggregates is that:
a) each subsequent monetary aggregate includes the previous one;
b) Each subsequent monetary aggregate includes less liquid financial assets than the previous one (i.e., with the growth of monetary aggregates, their liquidity decreases).
In this regard, when determining the money supply, the concepts of "money in the narrow sense of the word" and "money in the broad sense of the word" are often used.
« Money in the narrow sense of the word»Are the most liquid component of the money supply. These are usually attributed to cash and deposits (deposits) to demand.
« Money in the broad sense of the word"Along with cash and demand deposits include" potential money "- urgent deposits and savings deposits, securities, etc.
Aggregate M0. (Cash in circulation) is the most liquid part of the money supply, suitable for immediate use as a means of means. Includes banknotes and coins in the hands of individuals and in the cash desks of legal entities of the non-bank sector.
Unit ML. Includes the aggregate MO plus translation deposits (residues of the funds of legal and individuals - residents of the Republic of Belarus on current, deposit and other accounts to demand) in Belarusian rubles.
M2 aggregate (National Definition) includes an ML unit plus other deposits (urgent), open in banks by legal entities and individuals - residents of the Republic of Belarus in Belarusian rubles.
Aggregate m2 * (ruble money supply) is an M2 unit plus funds of legal entities and individuals - residents of the Republic of Belarus in securities (except for shares) issued by national and other banks in Belarusian rubles.
Aggregate MZ. (Wide money mass) is an M2 unit * plus translation and term deposits in foreign currency, funds in securities (except for shares) in foreign currency and deposits in precious metals of legal and individuals - residents of the Republic of Belarus.
To evaluate effective demand, they allocate active money supply, ruble and aggregate. Ruble active money mass Includes cash in circulation and translation deposits in national currency, that is, equal to the magnitude of the M1 aggregate. Cumulative active money mass Along with the M1 aggregate contains deposits to demand in foreign currency (in the ruble equivalent).
To analyze the state of money circulation, in addition to the money supply, other indicators are used, in particular the rate of money circulation.
Money circulation rate It characterizes the intensity of the motion of money as means of circulation and means of payment, i.e., reflects the number of transactions that each monetary unit serves during the year. In developed countries, two methods for calculating this indicator are commonly used.
1. Money circulation rate in income circuit It is calculated as the ratio of the gross national product (GNP) or national income to the money supply (M1 or M2).
2. Money turnover in the payment turnover It is defined as the ratio of the amount of working capital on banking current accounts to the average annual amount of money supply. The higher the speed of the circulation of money, with other things being equal conditions, their smaller quantity is necessary for the appeal.
Another indicator characterizing the state of money circulation can be considered coefficient of monetization . It is the amount of the return speed of money. This coefficient is defined as the ratio of the money supply (M1 or M2) to the GNP and reflects the saturation of the economy with money.
Indirect indicator of the state of money circulation is cash coefficient which characterizes the share of cash in the cumulative money supply. It is calculated as the ratio of cash flow (M0) to aggregates or M1, or M2, or M3.
Distinguish the nominal and real monetary mass.
Nominal money mass Calculated on the basis of the current price level. When determining real money supply The nominal money supply is corrected taking into account the rates of inflation, so the real money mass is less than nominal.
Monetary base - This is the total amount of cash and reserves of commercial banks located in the accounts in the Central Bank. It includes cash in circulation, cash in banks of banks and funds on their correspondent and deposit accounts in the Central Bank.
The correspondent account is the bill of one bank, opened in another bank for the implementation of settlements between them and other interbank operations
Cash and cashless money included in the monetary base form the resources of the Central Bank.
Simplified Central Bank Balance
IN asset balance Reflects the distribution of the resources of the Central Bank. The specifics of its active operations is that it is a creditor mainly only for commercial banks and government. Exercising their lending, the central bank thereby provides loans to the economy.
Banknotes and reserves of commercial banks in the Central Bank, which are monetary base, are monetary obligations of the Central Bank and are indicated in passive his balance. At the same time, they act, as already noted, as the resources of the Central Bank.
1) Volume cash In circulation in developed countries with respect to the total money supply is small. But as a component of the banknote monetary base occupy a significant proportion and in many countries are the main source of resources of the Central Bank.
2) Mandatory reserves - These are reserves that commercial banks are kept in the central bank at its request. The Central Bank obliges commercial banks to create mandatory reserves mainly for the following purposes: as an insurance reserve, providing guarantees of bank depositors; As a regulatory tool with a central bank of the money supply.
3) Excessive reserves - These are reserves that commercial banks are stored in the central bank at its own discretion, voluntarily, in addition to mandatory reserves. For commercial banks, they are asses that can be used at any time to conduct their operations.
Excessive reserves include cash at the Commercial Bank's office, funds on its correspondent account in the Central Bank and deposits in the Central Bank. The volume of excessive reserves of the commercial bank may vary due to an increase in the influx of deposits, reducing the volume of loans issued, reduce the norm of compulsory reservation, obtain a loan of the Central Bank, etc. The commercial bank itself determines the expedient volume of redundant reserves.
Money mass - These are the Soviet and cashless purchasing and billing tools, providing the appeal t and y in the Ek-Ke, which have individuals, institutional owners (enterprises, associations, organizations) and state.
In the structure of the Nature. Mass allocated active partto which you are related. Means actually serving houses. Turnover, I. passive partincluding money. Accumulations, balances on accounts that can potentially serve as calculated means.
Cash - Paper money and small barn coin.
Banking money - deposits that are serviced by such instruments as checks, credit and deposit cards, checks for travelers, etc. These calculation tools allow you to manage non-cash money.
At the same time, in the passive part of the money supply, including such components that cannot be directly used as a purchasing or payment agent. We are talking about money. Means on urgent accounts, savings deposits in commercial banks, other credit-Fin. institutions, short-term states. Bonds, stocks of the investment. Funds, etc. The listed components are monitored. The masses received the general name "quasi-money" (from Lat. Quasi - as if almost).
By placing the components of the Nature. Masses according to the degree of liquidity decrease, you can allocate several monetary aggregates - Number of indicators. masses. Naib liquid money. Aggregate Yavl-Sia Aggregate M0.which includes cash in circulation. Similar to liquid money. Aggregate Yavl-Sia Aggregate M1.which combines cash and money on current accounts (demanding accounts "), which can serve-Xia with checks. The check is a valuable paper containing the order of the account owner in a credit institution on the payment of the check holder upon presentation of the amount specified in it. The M1 aggregate is called "money in the narrow sense of the word" or "money for transactions".
Less liquid money. Aggregate Yavl-Sia Aggregate M2.. It is "money in the broad sense of the word", which include all components of the M1 + Money unit for urgent and savings accounts of commercial banks, deposits in specialized Fin. Institutions.
Even less liquid money. Aggregate Yavl-Sia Aggregate M3.which is formed by adding deposit certificates of banks to the aggregate M2, state bonds. Loan, etc. Securities of the State and Commercial Banks.
Suppose the population has coefficient deposition, representing the ratio of cash to deposits, in the amount of " cR", And banks support the rate of bank reserves at the level" rR" In this case, we can write down that C / D. = « cR", but R / D. = « rR", Where C. - cash, R. - reserves, and D. - Deposits.
We introduce the concept of the monetary base ( B.) How are the amounts of money. funds from the population (cash) and reserves of commercial banks. Then money. base ( B.) and money. weight ( M.) Can be recorded like this:
B. = C. + R.
M. = C. + D.
The relationship is. Mass to money. the database will allow us to calculate monetary multiplier, or cash multiplier (m m). To do this, we divide the money. Mass and money. Base, made respectively in the numerator and denominator, on D..
