Introduction
For the normal functioning of a market economy, maintaining a stable rate of its growth, the level and dynamics of prices, employment requires a certain amount of money. It is a set of means of payment circulating in the country at the moment. The money supply in circulation is the supply of money.
The relevance of the topic under consideration lies in the fact that in order to correctly measure the volume of the money supply, it is necessary to determine its structure. The structure can be characterized by arranging monetary aggregates as they grow larger and determining their composition and features in terms of the performance of certain functions by money.
In the structure of the money supply, such aggregate components, or, as they are also called, monetary aggregates, such as M1, M2, M3, L, are distinguished, grouping various payment and settlement funds according to their degree of liquidity, and each of their subsequent aggregate includes the previous one.
The purpose of the work is to consider the dynamics of the money supply in Russian Federation for the last few year s.
A number of tasks follow from this goal:
1. Briefly reveal the theoretical provisions of the money supply;
2. Analyze the dynamics of the money supply;
3. Describe the current state of the money supply;
4. Determine the trends in the money supply in the Russian Federation.
To achieve the goals and objectives set, textbooks and manuals on economic theory, money circulation, macroeconomics, as well as analytical and statistical data posted on the Internet.
1. Theoretical aspects of the structure of the money supply
1.1. The concept of money and money circulation
Money is an integral component of commodity production and develops along with it. The evolution of money, their history are an integral part of the evolution and history of commodity production, or market economy.
Money exists and acts where economic life is carried out through the movement of goods.
The economic concept of "goods" means any product, the participation of which in economic life is accomplished through the sale and purchase. Under the dominance of natural economy, when products were produced mainly for own consumption, they were not yet commodities. The development of the division of labor, which was accompanied by the emergence of a regular exchange of products of labor, led to the formation of a commodity economy, in which products began to be produced specifically for sale and thus became commodities.
From an economic point of view, money can be defined as a means of expressing the value of goods, a measure of value, the universal equivalent of a set of values of goods. Using money as a universal equivalent, we can measure the value of all goods on the market and compare them with each other.
Money has come a long way of evolution. The history of the development of money is an integral part of the history of the market economy. Expressing the value of the world of commodities, money throughout economic history has taken the forms that the achieved level dictated. commodity relations. Each historical period corresponds to its predominant form of money.
Based on the nature of the material, two main types of money can be distinguished: natural and symbolic money.
Money manifests itself through its functions. Usually, the following four main functions of money are distinguished: a measure of value, a means of accumulation (hoarding), a means of circulation, a means of payment. The fifth function of money is often singled out - the function of world money, which is manifested in the service of international commodity exchange.
Under money circulation refers to the process of continuous movement of money in cash and non-cash forms, serving the processes of circulation of goods and services, the movement of capital. The circulation of banknotes implies their constant transition from one legal entity or individual to another.
Monetary circulation reflects the directed flows of money between the central bank and commercial banks (credit organizations); between commercial banks; commercial banks and enterprises, organizations, institutions of various organizational and legal forms; between commercial banks and individuals; enterprises and individuals; between commercial banks and financial institutions for various purposes; between financial institutions and individuals. In countries with a market economy, money turnover consists of cash and non-cash money.
Cash turnover (circulation) is a continuous process of cash movement, which is represented by banknotes, or bank notes, treasury notes, metal coins.
Coins serve as a bargaining chip, allowing you to make any small purchases. They are put into circulation by the central bank.
Initially, banknotes were issued by all banks as bills of exchange instead of ordinary money. Subsequently, they acquired the force of a legal and sole means of payment with an exchange rate forcibly established by the state, that is, they became national money. Their release (emission) is carried out only by the central bank.
Treasury notes - the same paper money, but issued directly by the state treasury - the Ministry of Finance or a special state financial body in charge of cash execution of the state budget. In Russia, treasury notes are not issued.
Regardless of the type (model) of the economy - market or administrative-command - cash turnover is a smaller percentage of non-cash turnover. But, despite this, its role is extremely great. The circulation of cash serves the receipt and expenditure of cash income of the population, part of the payments of enterprises and organizations.
Non-cash money turnover is the movement of value without the participation of cash by transferring funds to the accounts of credit institutions, as well as offsetting mutual claims.
Under non-cash money refers to funds in bank accounts, various deposits (deposits) in banks, certificates of deposit and government securities. These deposits are also called bank money.
1.2. money supply, velocity of money
money supply - this is the amount of means of payment in the country's economy, the total volume of cash and cashless money. The money supply characterizes the purchasing, payment and accumulation funds that serve the economic relations of the country and belong to individuals and legal entities, as well as to the entire state as a whole.
Regulation of the money supply in the country is the task of central banks. It is carried out by issuing money, conducting operations on the open market (purchase and sale of government securities), regulating the required reserves of commercial banks and determining the size of the refinancing rate.
Various economic indicators are used to assess the dynamics of the money supply in the country. The change in the volume of the money supply can be associated both with its absolute increase due to the issue, and with the acceleration of money circulation.
Velocity of money circulation an indicator of the effectiveness of the movement of money as a means of circulation and payment. Due to the fact that it is difficult to quantify the speed of circulation, indirect data are used for estimates.
The following indicators of the velocity of circulation of money are commonly used:
The rate of circulation of money in the circulation of income. This indicator is calculated as the ratio of GNP or national income to the aggregates M 1 or M 2. The dynamics of the calculated value shows the relationship between money circulation and the processes of economic development;
The indicator of money turnover in the payment turnover is defined as the ratio of the amount of money in bank accounts to the average annual value of the money supply in circulation. This indicator determines the speed of cashless payments.
1.3. Law of currency
With the functioning of money backed by goods and services provided, a change in their quantity in circulation cannot have a noticeable effect on a change in the price level.
This is explained by the fact that when there is excess money for circulation, the latter go into treasure (this is typical, first of all, for the period of domination of money from precious metals), and if necessary, when the mass of commodities grows, they return to circulation. In this case, state regulation of the money supply is not required, the amount of money in circulation is regulated automatically.
The economic model of money circulation, which reflects modern practice, considers the presence of defective (symbolic) money in circulation, the nominal value of which is much higher than the cost of the material from which this money is made. The functioning of symbolic money creates a situation in which an increase in their number can have an impact on changes in the price level. Let us consider the impact of changes in the money supply on the price level and on the interest of entrepreneurs in the efficiency of their business.
Based on the equation of exchange, it is possible to determine how much money should be in circulation. The relationship between the amount of money, its structure, the rate of circulation of the money supply, the price level and the real volume of production determines the law of money circulation.
In general terms, the law that determines the amount of money in circulation can be expressed by the following formula:
where M is the amount of money needed for circulation; P1Q1 is the sum of the prices of goods and services in circulation (number of goods multiplied by the price level); P2Q2 - the sum of the prices of goods sold on credit, for which the payment deadline has not yet come; D1 - the amount of payments on the debt obligations that have come; D2 - the amount of mutually repayable payments; V is the rate of money turnover.
Let us consider in more detail some of the factors that determine the required amount of money in circulation. First, the sum of prices of goods and services sold on the market (P1Q1). If the quantity of goods and services sold in a country doubles, for example, then, other things being equal, it will require twice as much money as before. The quantity of circulating goods and services provided has a direct impact on the quantity of money in circulation. If the prices of all commodities are doubled, then twice as much money will be needed to service the circulation of goods.
Second, the sum of the prices of goods and services sold on credit (P2Q2). The degree of credit development has an inverse effect on the amount of money in circulation: the more credit is developed, the less money is required for circulation.
Thirdly, the amount of payments due (D1) reflects the amount of money needed to pay off debts: the more deferred payments there are, the more money is needed to make them.
Fourthly, the amount of mutually repaying payments (D2) reflects the degree of development of non-cash payments.
1.4. Essence of monetary aggregate ov
Various indicators are used to assess and analyze changes in the money supply, or money aggregates. Aggregates are ranked as the liquidity of the types of funds included in them decreases. The degree of liquidity is determined by how quickly this money can be used to buy goods and services.
The greatest liquidity has cash held by the buyer, or demand deposits. The money lying in the bank on a term deposit already has a number of restrictions in this respect: firstly, it is necessary to wait for the agreed term for withdrawing money from the account, and secondly, a commercial bank must be reliable. Gradually adding less liquid funds to the most liquid ones, we get a set of basic monetary aggregates М 0 , М 1 ,…, М n . To determine the money supply of each particular country, a different number of units is used: in France - 2, in the USA - 4. In Russia, 4 units are used - M 0, M 1, M 2, M 3. The sum of all aggregates is called total money supply. Let us consider in more detail their economic content.
The M 0 unit includes cash in circulation (coins and paper money) plus cash balances at the cash desks of enterprises and organizations. This unit serves the cash turnover.
It should be noted that metal money makes up an insignificant share of cash (2-3% of cash), they pay for small transactions for the purchase of goods or the receipt of services. The real value of the coin is much lower than the face value. It is made from cheap metal alloys. This is done in order to reduce the cost of money circulation, to prevent the accumulation of money in the same hands as a treasure, and also to avoid being melted down into ingots, which would be done if the metal were of technical value. Thus, banknotes predominate in the aggregate M 0 .
Aggregate M 1 consists of aggregate M 0 plus funds on current accounts of legal entities plus funds of insurance companies plus demand deposits of the population in commercial banks.
Checking account - This is an account opened by banks and legal entities to store funds and make settlements.
Demand deposit- this is a cash deposit that must be issued by the bank to the client at his first request. Therefore, we can talk about the availability of these savings for the depositor at any time. However, as we can see, this type of non-cash money is not included in the M 0 aggregate. This is due precisely to the assessment of the ability of these funds to turn into goods and services as quickly as possible. The bank may be closed for lunch, due to the end of the working day, may go bankrupt and be unable to fulfill its obligations to the client. In this regard, as already noted, the constituent components of the M 1 unit cannot be equated to cash in terms of operational availability for the client.
Unit M 1 serves operations for the implementation of GDP, for the distribution and redistribution of national income, accumulation and consumption.
Most economists tend to consider the money supply in a narrow sense, that is, consisting of the aggregate M 1 .
Other units - M 2 and M 3 - are called "almost money." These are highly liquid financial assets that do not function directly as a medium of exchange, but can be easily transferred into cash or accounts without the risk of financial losses.
Aggregate M 3 contains aggregate M 1 plus time deposits of the population in commercial banks plus short-term government securities.
Unlike demand deposits, term deposits are funds placed by the bank's customers for a certain period specified in the documents. The client can receive invested cash with interest only after this period. Obviously, the operational availability of these non-cash money is lower than that of the constituent components of the aggregate M 1 .
As for government short-term securities, they are objectively the most reliable and liquid of all types of securities. Their guarantor is the state. In addition, these short-term securities are securities with a fast maturity. High reliability ensures their quick sale on stock exchanges.
Many advanced economies, when calculating the M2 aggregate, take into account the money invested in government short-term securities. However, the current situation on the Russian securities market, connected with the state's inability to pay off its debt obligations, can also be considered force majeure in relation to the accepted scheme of monetary aggregates.
It should be noted that the current situation in Russia illustrates the reasons why these securities cannot be classified as M 0 and M 1 aggregates in terms of their liquidity, since their holders cannot sell them at the indicated par value, not to mention profit.
Aggregate M 3 contains aggregate M 2 plus certificates of deposit plus securities traded on the money market.
Deposit Certificate - this is a written certificate of a credit institution on the deposit of funds, certifying the right of a legal entity to receive a deposit and interest on it after the expiration of the established period. Securities also include commercial bills, issued by enterprises. Since this part of the funds invested in securities is not created by the banking system, it is under the control not only of the enterprises participating in the bill transaction, but also of the bank, since the transformation of a bill into a means of payment requires, as a rule, the acceptance of the bank. By accepting a bill, the bank acts as a guarantor of its payment in case of insolvency of the paying enterprise.
In a situation of a healthy economy, normal money circulation between aggregates, there is an equilibrium, certain proportions, implying that the volume of non-cash money should exceed the amount of cash. In this case, money capital is transferred from cash to non-cash circulation. If this balance is disturbed in money circulation, there is a shortage of cash, price increases and other negative phenomena.
About a third of the money supply is cash. The growth in the share of cash, payment by legal entities of the transaction made not by cashless means, but by illegal "black cash" leads to the creation of a "shadow" economy, tax evasion, and the absence of a transparent financial system of the state.
2. Regulation of the money supply in the country
2.1. Features of the monetary system of Russia
The monetary system of the Russian Federation functions in accordance with the Federal Law on the Central Bank of the Russian Federation, which determined its legal basis.
The official monetary unit (currency) in our country is the ruble. The introduction of other monetary units on the territory of the Russian Federation is prohibited. The ratio between the ruble and gold or other precious metals is not established by the Law. The official exchange rate of the ruble against foreign currencies is determined by the Central Bank and published in the press.
The Bank of Russia has the exclusive right to issue cash, organize their circulation and withdrawal on the territory of Russia. He is responsible for the state of monetary circulation in order to maintain normal economic activity in the country.
The types of money that have legal tender value are banknotes and metal coins, which are backed by all the assets of the Bank of Russia, including gold reserves, government securities, and reserves of credit institutions held in the accounts of the Central Bank.
Samples of banknotes and coins are approved by the Bank of Russia. The announcement of the issue of banknotes and coins of new designs, as well as their description, is published in the media. They are required to be accepted at their face value throughout the country and in all types of payments, as well as for crediting accounts, deposits and transfers. The period of withdrawal of old banknotes must be at least one and not more than five years. When exchanging, no restrictions on the amounts and subjects of exchange are allowed. Banknotes and coins may be declared invalid by law (no longer valid as legal tender). Counterfeiting and illegal production of money are punishable by law.
On the territory of Russia, cash (banknotes and coins) and non-cash money (in the form of funds in accounts with credit institutions) operate. In order to organize cash circulation in the territory of the Russian Federation, the Bank of Russia is entrusted with the following responsibilities:
forecasting and organization of production, transportation and storage of banknotes and coins, as well as the creation of their reserve funds;
establishing rules for the storage, transportation and collection of cash for credit institutions;
determination of signs of the solvency of banknotes and the procedure for replacing damaged banknotes and coins, as well as their destruction;
development and approval of the rules for maintaining cash transactions in the national economy.
In contrast to the period of existence of real gold money in paper-credit circulation, when the signs of value lost their connection with the metal base, the Central Bank must create certain restrictions that restrain the issuance of this money.
In order to provide cash services to credit institutions, as well as other legal entities, settlement and cash centers are being created on the territory of the Russian Federation at the territorial main departments of the Bank of Russia. These centers form a cash desk for receiving and issuing cash, as well as reserve funds of banknotes and coins. Reserve funds are stocks of banknotes and coins not issued into circulation in the vaults of the Central Bank and are important for the organization and centralized regulation of cash resources. The balance of cash in the circulating cash desk is limited, and if the established limit is exceeded, the excess money is transferred from the circulating cash desk to reserve funds.
Reserve funds of banknotes and coins are created by order of the Bank of Russia, which sets their value based on the size of the turnover cash desk, the volume of cash circulation, storage conditions. The objective need for reserve funds is due to:
the need to meet the needs of the economy in cash;
renewal of the money supply in circulation in connection with the money that has become unusable;
maintaining the mandatory denomination of the money supply in the country as a whole and in the regions;
reducing the cost of transportation and storage of banknotes.
Cash is issued into circulation on the basis of an issuance permit of a document that gives the CBR the right to support the circulation cash at the expense of reserve funds of banknotes and coins. This document is issued by the Management Board of the Bank of Russia within the issuance directive, i.e. the maximum amount of the issue of money into circulation, established by the Government of the Russian Federation.
All issues related to the organization and regulation of cashless payments are established by the Bank of Russia in accordance with applicable law. It defines the rules, forms, terms and standards for non-cash payments. His responsibilities include licensing the settlement systems of credit institutions. The law provides for a total period of non-cash settlements of no more than two business days within the subject of the Federation and no more than five business days within the Russian Federation. As payment documents for non-cash payments, payment orders, settlement checks, letters of credit, payment requests-orders and other payment documents approved by the Bank of Russia are used.
Due to the fact that the Russian monetary unit - the ruble is not legally associated with the monetary metal (gold), its fixed price scale is absent. The official price scale for the ruble is set by the state.
The regulation of money circulation, assigned to the Bank of Russia, is carried out in accordance with the main directions of monetary policy, which is developed and approved in the manner established banking legislation. The Bank of Russia, endowed with the exclusive right to issue money, is especially responsible for maintaining equilibrium in the sphere of money circulation.
AT federal law on the Central Bank of the Russian Federation (Bank of Russia) provides for the procedure for the development and conditions for the implementation of a unified state monetary policy, as well as tools for regulating the amount of money in circulation by the Central Bank. Such tools and methods, in particular, are:
interest rates on Bank of Russia operations;
required reserve ratios deposited with the Bank of Russia (reserve requirements);
open market operations;
accounting policy;
currency regulation;
setting benchmarks for money supply growth;
direct quantitative restrictions.
In accordance with the adopted state monetary policy, the Central Bank of the Russian Federation (Bank of Russia), in order to strengthen the ruble, regulates the total volume of loans issued to it, uses an interest rate policy to influence market interest rates on lending operations, stimulating the growth or reduction of credit investments.
Of course, the Bank of Russia cannot directly influence the interest rates on banks' transactions with their clients. These interest rates are determined mainly by the amount of money in circulation and the effectiveness of the intermediary activities of the banking system and financial markets. Therefore, the influence of the Bank of Russia on interest rates on transactions of the banking system with non-financial agents is limited to the regulation of the money supply and measures to improve the state of the banking system.
Required reserves perform not only a social function, guaranteeing in the event of a bank failure from a complete ruin of depositors, but they are also a source of additional financial sources for the Central Bank to regulate the money supply in circulation. The amount of required reserves is set as a percentage of the liabilities of credit institutions.
The essence of open market operations is to change the supply of loan capital in the country by buying or selling securities by the Central Bank, injecting financial resources into the economy or withdrawing liquid funds.
The accounting policy of the Central Bank is to record and rediscount commercial bills of exchange coming from commercial banks, which, in turn, receive them from industrial, transport, trade and other enterprises. The Central Bank issues credit resources to pay bills and sets the so-called discount rate. As a rule, the discount rate of the Central Bank is aimed at limiting the rediscount of bills, setting a maximum loan amount for each commercial bank. Thus, there is an impact on the volume of loans issued.
Currency regulation is associated with the purchase and sale of foreign currency by the Bank of Russia. These operations of the Bank of Russia in the foreign exchange market make it possible to influence the exchange rate of the ruble in foreign currency and the value of the money supply in circulation.
Along with the economic methods of regulating money circulation, which were listed above. The Bank of Russia, in exceptional cases, may apply direct quantitative restrictions in the form of setting limits on the refinancing of banks, on the conduct by banks of certain banking operations. The Bank of Russia may set growth targets for one or more indicators of the money supply.
The main directions of the unified state monetary policy for the coming year are determined by the Bank of Russia. The draft of the main directions of the unified state monetary policy is submitted to the President of the Russian Federation and the Government of the Russian Federation. Not later than December 1, this document must be submitted to the State Duma. In the main directions of the unified state monetary policy, an analysis of the state and forecast of the development of the Russian economy for the next year is given, the goals and objectives of the unified state monetary policy, growth guidelines for one or more indicators of the money supply are determined.
2.2. Dynamics of the money supply in Russia
Cash money supply in circulation in Russia in 2008 increased by 6.16% and as of January 1, 2009 amounted to 4 trillion. 378.1 billion rubles This is evidenced by the published official information of the Central Bank of the Russian Federation.
According to the structure of the cash supply as of January 1, 2009, it was distributed as follows: 4 trillion. 354.4 billion rubles were banknotes and 23.7 billion rubles. - coins. There were 6 billion 415.6 million banknotes and 40 billion 052.7 million coins in circulation.
In total, 99.46% of the total cash supply was banknotes and only 0.54% were coins. In terms of the number of banknotes, coins accounted for 86.19%, and banknotes - 13.81%.
For banknotes with a face value of 5 thousand rubles. accounted for 34% of the total amount of banknotes with a face value of 1 thousand rubles. - 51%, nominal value of 500 rubles. - 12%, face value of 100 rubles. - 2%, nominal value of 50 rubles. - one %. In the total number of banknotes, banknotes with a face value of 5 thousand rubles. amounted to 5%, with a face value of 1 thousand rubles. - 34%, face value of 500 rubles. - 16%, nominal value of 100 rubles. - 17%, nominal value of 50 rubles. - 9%, face value 10 rubles. - 19 %.
The dynamics of changes in the money supply in 2008 is presented in Table 1.
Table 1
Money supply M2 (national definition) in 2008
(billion rubles)
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In 2008, Russia saw an increase in the money supply (M2 monetary aggregate), broad money supply, as well as an increase in the deposits of financial and non-financial companies. However, these figures are significantly lower than in 2007. The only exception is the volume of deposits in foreign currency, which has grown by more than 100% over the year.
In particular, the volume of money supply in Russia during 2008 (as of January 1 of the current year) amounted to 13493.2 billion rubles, having increased by 1.7% against 47.5% growth in 2007. The growth of broad money in 2008 amounted to 14.6% (in 2007 - 44.2%).
The main source of growth in the volume of broad money supply was a 35.6% increase in the claims of credit institutions to non-financial organizations, as well as to the population. The growth of net foreign assets of the banking system in 2008 amounted to 23.1% (against 44.2% a year earlier).
Deposits are not financial institutions(in national currency) increased during the past year by 5.6%, although in 2007 their growth was 67.9%.
The growth rate of term deposits of non-financial organizations in 2008 amounted to 39.3% (in 2007, the deposits of this group more than doubled, by 108%); balances of funds on current and settlement accounts of non-financial organizations in 2008 decreased by 10.9% (a year earlier they had grown by 53.4%).
At the same time, the share of term deposits in the structure of ruble deposits of non-financial organizations increased last year to 43.4%.
Also, in Russia last year there was a significant increase in deposits in foreign currency. Their total volume increased by 102.8% (in dollar terms), which is 3.8 times higher than in 2007. At the same time, deposits of the population in foreign currency increased by 99.3%, non-financial organizations - by 105.9% (in 2007, the growth was 13.3% and 42.3%, respectively).
In addition, the total volume of time deposits included in the M2 monetary aggregate increased by 9.7% last year, while the volume of demand deposits decreased by 8.9% (in 2007, the growth of these indicators reached 55.8% and 52 % respectively).
Thus, according to the Ministry of Economic Development of the Russian Federation, the share of these components of non-cash funds in the total volume of the M2 monetary aggregate has also changed: the share of term deposits in 2008 increased to 43%, and demand deposits for the specified period decreased to 28.9%.
The figures for household deposits in the national currency in 2008 are noticeably lower than those for deposits in dollars, euros and other foreign currencies: the volume of such deposits decreased by 3.4%, fixed-term ruble deposits - by 3.7%, and demand deposits - by 1.9%.
Another trend that took shape last year was the growing demand of the population for cash foreign currency, which is associated with the devaluation of the ruble.
According to the data of the Bank of Russia on the movement of cash foreign currency through authorized banks, in December 2008 the net demand of the population for cash foreign currency amounted to $10.3 billion (including net demand for euro cash in dollar terms amounted to $5 billion, net demand for dollars - $5.2 billion).
The increase in the money supply (aggregate M2) in 2009 was predicted to be 19-28%, depending on scenario development options, according to the main directions of monetary policy for 2009-2011.
Earlier it was reported that the Bank of Russia predicted a slowdown in the money supply growth rate in 2008 to 30-35% from 47% in 2007 and 48.8% in 2006.
In fact, the results of the money supply dynamics are presented in Table 2.
table 2
Money supply M2 (national definition) in 2009
(billion rubles)
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In 2010-2011, the growth rate of demand for money (M2.) will continue to slow down and may reach 16-25% in 2010 and 14-22% in 2011.
The money supply (aggregate M2) represents the volume of cash in circulation (outside banks) and balances in the national currency on the accounts of non-financial organizations and individuals who are residents of the Russian Federation. The increase in the amount of money circulating in the country is one of the factors of inflation.
In the document, the Central Bank considers 4 options for each year, depending on the price of oil. In particular, in 2009, options are evaluated with an average annual oil price of $66 (first option), $90 per barrel (second option), (third option) $95 per barrel and $115 (fourth option).
In 2010, an option is being considered with an average annual oil price of $60 per barrel (first option), $78 per barrel (second option), $90 per barrel (third option) and $130 per barrel (fourth option). In 2011, scenarios are considered with an average annual oil price of $60 per barrel (first option), $75 per barrel (second option), $88 per barrel (third option) and $122 per barrel (fourth option).
The increase in the monetary base in a narrow definition in 2009, according to the main directions of the monetary policy, was projected at 17-26%, depending on the development scenarios.
According to the Central Bank, the growth rate of the monetary base in the narrow definition in 2010 may drop to 12-20%, and in 2011 - up to 9-17%.
The monetary base in the narrow definition includes cash issued by the Bank of Russia (taking into account balances in the cash desks of credit institutions) and balances on the accounts of required reserves for funds attracted by credit institutions in national currency deposited with the Bank of Russia.
The Government of the Russian Federation and the Central Bank have set the task of reducing inflation in 2010 - 5.5-7.0%, and by 2011 to reach an inflation rate of 5.0-6.8% (on a December-to-December basis). At the same time, the Central Bank notes, the specified goals for the general level of inflation in the consumer market correspond to core inflation of 6.7-8.0% in 2009, 4.5-6.2% in 2010 and 4.5-6.1 % in 2011.
The money supply next year will increase at the level of 13 - 15% in nominal terms, and taking into account next year's inflation - by 4 - 6% in real terms.
Bank loans will grow at the same rate. At the same time, loans to corporate borrowers will increase to a greater extent and retail loans will grow to a lesser extent.
Conclusion
As a result of the work done, the following main conclusions can be drawn.
In our country, until recently, monetary aggregates were not calculated and used. Theoretically, this was justified by the postulates of Marxist economic science, according to which the association of quasi-money and cash is considered unacceptable, because completely different categories are mixed - money, securities, credit.
However, it is clear that there is a close relationship between the money market (movement of short-term loans), the investment market (circulation of medium-term and long-term loan capital) and the securities market. Potentially, term account balances and securities can be used for settlements. In addition, the holders of urgent accounts have the opportunity to re-register them into demand accounts. Income from securities can be kept in current accounts, just like cash proceeds from their sale.
Of course, in practice, monetary aggregates play a positive role as guidelines for the state's monetary policy. Taking into account the blurring of the lines between cash and non-cash circulation in our country, it would be necessary to switch to their active use.
International standards provide for from four to seven indicators of the money supply. In UN statistics, preference is given to the indicator that combines cash and deposits. The IMF calculates the M1 indicator common to all countries (the totality of cash and all types of checkable deposits) and the “quasi-money” indicator (term and savings bank accounts and the most liquid financial instruments circulating on the market).
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17. www.gazeta.ru/money/2007/05/31
18. www.odengax.ru/info/news
19. http://quote.rbc.ru/macro/
20. www.inventech.ru/lib/money/money0017/
The money supply is the most important indicator of the amount of money in circulation. The money supply includes the total amount of money, cash and non-cash, which is currently in circulation, belongs to various economic entities. In addition to money, it may include other highly liquid financial assets that can be converted into money with minimal loss of time and money. These include, for example, certificates of deposit of large commercial banks, short-term treasury bills, Treasury savings bonds. Thus, the money supply is a heterogeneous indicator in structure. To characterize the structure of the money supply, monetary aggregates are used - MO, Ml, M2.
The delimitation of monetary aggregates is based on the degree of their liquidity, i.e., the possibility of a quick, with the least risks and costs, the conversion of various forms of deposits and savings into rapidly realizable funds. Monetary aggregates are ranked according to the degree of liquidity decrease. Thus, monetary aggregates MO and M1 characterize the most liquid component of the money supply. They include components that fall under the definition of money supply in the narrow sense of the word.
Other aggregates of the money supply include money that is used in settlements with certain restrictions. In their essence, they are substitutes, or “quasi-money”.
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Money supply, its structure. money aggregates. Pure money, quasi-money and broad money.
DCS tests new
Issue of money, types and causes. Seigniorage.
The amount of money circulating in the economy is called the money supply and represents the value of the money supply. The money supply is measured using monetary aggregates. Monetary aggregate - a grouping of bank accounts according to the degree of speed of transformation of funds in these accounts into cash. Each following unit:
ü Includes the previous one;
ü Is less liquid than the previous one;
ü It is more profitable than the previous one.
Monetary Aggregates:
ü Unit M0 reflects cash in circulation.
ü Aggregate M1 = M0 + money kept on demand accounts (money that is attracted by banks in the form of deposits in the current period, but can be returned to the depositor at any time without the risk of losing interest).
ü Aggregate M2 = M1 + money in urgent accounts of commercial banks. Term accounts are characterized by the fact that the depositor and the bank draw up an agreement under which the subject can withdraw the invested money along with interest at a strictly defined time, otherwise part of the interest is lost as compensation to the bank due to non-fulfillment of the agreement.
ü Unit M3 \u003d M2 + short-term securities, bank certificates, etc.
ü Unit L = M3 + government securities.
Monetary aggregate "quasi-money" - liquid deposits of the banking system, which are not directly used as a means of payment: fixed-term and savings deposits and deposits in foreign currency. In addition to these aggregates, there are quasi-money, which are the most growing part of the money supply. This is money in term savings accounts, i.e. the difference between aggregates M2 and M1. We get, M2=M1+QM.
The monetary aggregate "broad money" is a combination of aggregates M2 and "quasi-money".
Issuance of money is the issuance of additional money into circulation. The issuance of banknotes in circulation in all forms leads to an increase in the money supply in circulation. Main forms of issue:
1) issue of credit money - banknotes;
2) deposit - check issue;
3) issue of securities.
The main passive operation of the central bank and one of the forms of emission is the issuance of banknotes, the acceptance of deposits from commercial banks and the treasury, and operations to form equity.
1. Fiduciary issue - the issue of banknotes, banknotes, unsecured by the stock of precious metals (primarily gold) of the issuing bank. Historically, the issue of banknotes was allowed only if there was a gold reserve, however, this rule was gradually abandoned. Now fiduciary emission is dominant.
The main source of central bank resources in most countries is the issuance of banknotes. At the present stage, the issue of banknotes is not backed by gold. The gold backing of banknotes has been abolished, although in some countries it formally continues to operate.
Central bank loans can be credited to commercial bank and treasury accounts opened with the central bank. In this case, there is not a banknote, but a deposit issue of the central bank.
The sources of resources of central banks are the deposits of the Treasury and commercial banks. Commercial banks can place part of their cash reserves, including mandatory ones, on interest-free accounts with central banks. In a number of countries, required reserves are credited to special accounts, usually without interest. This procedure applies, in particular, in Russia. Central banks can also open term accounts with a fixed interest rate for commercial banks. Typically, the bank's equity capital accounts for no more than 4% of liabilities.
2. Another form of issue is a deposit-check issue. It is produced by commercial banks and serves as the basis for non-cash payments. In terms of volume, the issue of deposits and checks significantly exceeds the issue of cash.
3. Also one of the forms of emission is the issue of securities.
The procedure for issuing equity securities, unless otherwise provided by the legislation of the Russian Federation, includes the following stages:
— adoption by the issuer of a decision on the issue of emissive securities;
— registration of the issue of emissive securities;
- for the documentary form of issue - the production of certificates of securities;
— placement of issuance securities;
— registration of a report on the results of the issuance of equity securities.
An increase in the money supply serves as a factor in stimulating aggregate demand, an important instrument of stabilization (countercyclical) policy. The amount of money in the country is under the control of the state; in practice, this mission is entrusted to the central bank. Seigniorage is the income received by the government as a result of its monopoly right to print money.
6 Indicators (monetary aggregates and monetary base) that characterize the volume and structure of the money supply.
The money supply is the most important indicator of the amount of money in circulation. The money supply includes the total amount of money, cash and non-cash, which is currently in circulation, belongs to various economic entities.
The concept and structure of the money supply
In addition to money, it may include other highly liquid financial assets that can be converted into money with minimal loss of time and money. These include, for example, certificates of deposit of large commercial banks, short-term treasury bills, Treasury savings bonds. Thus, the money supply is a heterogeneous indicator in structure. To characterize the structure of the money supply, monetary aggregates are used - MO, Ml, M2.
The monetary aggregate is a statistical indicator that characterizes the volume and structure of the money supply.
With all the variety of methods for statistical accounting of the money supply in different countries, monetary aggregates in the most general form can be represented as follows:
MO includes cash in circulation (metal banknotes, coins, and in some countries treasury notes), including cash in bank cash desks;
M1 contains the MO aggregate plus funds in current bank accounts and demand deposits, which can be immediately used either in the function of money as a medium of exchange or as a means of payment;
M2 consists of the M1 aggregate plus fixed-term and savings deposits in commercial banks: the funds from these deposits become available to the depositor only after a certain period of time stipulated deposit agreement between the bank and its client;
MZ contains aggregate M2 plus savings certificates in specialized financial and banking institutions;
M4 consists of the aggregate MZ plus shares, bonds, certificates of deposit of commercial banks, bills of individuals and legal entities, i.e. monetary obligations, which take a long time to turn into "live" money.
The delimitation of monetary aggregates is based on the degree of their liquidity, i.e., the possibility of a quick, with the least risks and costs, the conversion of various forms of deposits and savings into rapidly realizable funds. Monetary aggregates are ranked according to the degree of liquidity decrease. Thus, monetary aggregates MO and M1 characterize the most liquid component of the money supply. They include components that fall under the definition of money supply in the narrow sense of the word. Other aggregates of the money supply include money that is used in settlements with certain restrictions. In their essence, they are substitutes, or “quasi-money”.
The qualitative composition of monetary aggregates is ambiguous in different countries, which is due both to the traditionally established theoretical ideas about money, the ratio of cash and non-cash components in the total money circulation, money and financial assets, and the specifics of the monetary system and the methods used to regulate it by the central government. bank.
The money supply in the Russian Federation is calculated as of the 1st day of each month based on the data of the consolidated balance sheet of the banking system. The composition of the money supply includes the following monetary aggregates:
MO - cash in circulation;
M1 consists of the MO aggregate plus funds on settlement, current and special accounts of enterprises and organizations, on the accounts of local budgets, budgetary, trade union, public and other organizations, plus State Insurance funds, plus deposits of the population and enterprises in banks, plus demand deposits of the population in Sberbank;
M2 consists of aggregate M1 plus time deposits of the population in Sberbank;
MOH consists of aggregate M2 plus government bonds and certificates.
Such a definition of the structure of the money supply increases the activity of money circulation management, as it allows to take into account the degree of pressure of funds in each aggregate on the formation of effective demand, and, consequently, prices in the market of goods and services. In the Russian Federation, the M2 aggregate is used as the main monetary aggregate used in the calculation of current macroeconomic indicators.
Monetary base - the total of those obligations of the central bank in relation to the private sector, which it has the ability to control. The components of the monetary base are banknotes and coins held by the population and in the cash desks of banks, cash from commercial banks deposited with the central bank in the form of required reserves.
In the Russian Federation, a “narrow” and “broad” monetary base is calculated. The narrow monetary base includes the MO aggregate (cash in circulation), plus cash in the cash desks of banks and the required reserves of banks in the Central Bank of the Russian Federation (hereinafter referred to as the Bank of Russia). The broad monetary base includes cash in circulation, taking into account cash balances of credit institutions, funds on correspondent and deposit accounts of credit institutions with the Bank of Russia, and required reserves.
The sources of growth in the monetary base can be both an increase in the net international reserves of the Bank of Russia and the Government of the Russian Federation, and the volume of their net domestic assets.
In any country, the money supply is the object of constant state regulation. The need for such regulation is determined by the fact that the size of the money supply and the rate of its growth affect the state of other economic indicators. If the money supply grows much faster than the volume of national production, then, other things being equal, this can lead to inflation. If the growth of the money supply does not keep pace with the growth in the volume of national production, then the money in circulation at a constant rate of circulation may not be enough for the normal servicing of all payments and settlements, and then a payment crisis arises.
In the process of regulating the volume of the money supply, the purchasing power of money is determined, on which the quality of the fulfillment by money of the function of measuring the value of the means of accumulation depends. The depreciation of money (decrease in their purchasing power) leads to the fact that as a measure of value in the national economy, a stable foreign monetary unit is used, which ensures comparability of prices over time. Prices for all goods are set not in national monetary units, but in foreign ones, for example, in dollars. As a store of value, depreciating national money is also being replaced by foreign currency. The population, followed by enterprises and organizations, prefer to keep their savings and savings in foreign currency, most often in dollars. There is a process of "dollarization" of the economy.
The performance of money as a means of circulation and means of payment also depends on their stability: at high inflation rates, even a fleeting presence of heavily depreciating money on hand entails tangible losses for their holders. Therefore, in conditions of hyperinflation, money in the functions of a medium of circulation and a means of payment is also being replaced by foreign currency.
To analyze the state of money circulation, in addition to the money supply indicator, such indicators as the velocity of money circulation, the monetization coefficient, the cash ratio are also used.
The velocity of circulation of money characterizes the intensity of the movement of money as a means of circulation and as a means of payment, that is, it reflects the number of transactions that each monetary unit serves during the year. In developed countries, two methods of calculating the velocity of money are commonly used:
velocity of circulation of money in the circulation of income as the ratio of gross national product (GNP) or national income to the money supply (M1 or M2);
the turnover of money in the payment turnover as the ratio of the amount of turnover of funds on bank current accounts to the average annual value of the money supply. The higher the velocity of circulation of money, the less money is needed for circulation, other things being equal.
The monetization coefficient is the reciprocal of the velocity of money. This indicator is defined as the ratio of the money supply (Ml or M2) to GNP and reflects the saturation of the economy with money.
The cash ratio characterizes the share of cash in the total money supply. It is calculated as the ratio of the cash supply (MO) to the monetary aggregates Ml, M2 or MZ. Taking into account that the general trend is to increase the share of non-cash money in the total money turnover, we can assume that the lower the value of the cash ratio, the more developed money circulation.
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Money supply is the total amount of money that is currently in circulation and belongs to different economic entities.
The monetary aggregate is a part of the money supply, represented by a certain set of monetary assets grouped in descending order of the degree of liquidity, with each subsequent aggregate including the previous one.
The national definition of the money supply is through the M2 aggregate, which means the co-money in the currency of the Russian Federation, intended to pay for goods and services, as well as for the purposes of accumulation by financial (except credit) and non-financial organizations and individuals - the President of the Russian Federation.
M2 is the amount of money in circulation and non-cash funds.
M0 - cash in circulation, namely, it is the most liquid part of the money supply available for immediate use as a means of payment. This aggregate includes banknotes and coins in circulation.
M2 in the national definition does not include foreign currency deposits.
The monetary base is not a monetary aggregate, but is the basis for the formation of the aggregate.
2.1. Money supply and its elements
The monetary base is money of enhanced efficiency.
As part of the monetary base in a broad definition, all funds are taken into account only in the national currency.
The structure of the monetary base:
1. cash in circulation, taking into account the balances in the cash desks of credit institutions;
2. required reserves;
3.obligations of the Bank of Russia to repurchase securities;
4. reserve funds for foreign exchange transactions deposited with the Bank of Russia.
Features of the money supply in Russia:
Base M2, high proportion of cash;, used as aggregates of bank accounts in accordance with the Civil Code of the Russian Federation; low share of time deposits in monetary aggregates; indirect accounting of foreign currency in the structure of the money supply to analyze the level of dollarization of the economy and take into account inflationary expectations;
In Russia there is M2X (wide money indicator) it reflects the level of dollarization of the Russian economy.
М2Х= М2+ funds in foreign currency in bank accounts + foreign currency in the hands of the population (approximately).
Structure, functions and tasks of the Ministry of Finance of the Russian Federation and its subordinate federal financial services.
The Ministry of Finance is a federal executive body that develops a unified state finance, credit, monetary policy and legal regulation in the financial sector, as well as develops financial policy in the civil service and the judiciary.
the task is to develop a unified state financial, credit, monetary policy, as well as a policy in the field of auditing, accounting and financial statements, mining, production, processing of precious metals and precious stones, customs payments, including the determination of the customs value of goods, etc.
Structure: Federal Tax Service, the Federal Service for Insurance Supervision, the Federal Service for Financial and Budgetary Supervision and the Federal Treasury. Since 2007, the Federal Financial Monitoring Service has been administered by the Government of the Russian Federation.
functions The Ministry of Finance can be called:
— development of draft laws for all tasks to be solved — coordination of budgetary and monetary policy — management of the state debt of the Russian Federation — maintaining a book of accounting for state debts and registration of the issue of government securities
1-A, 2-C, 3-C, 4-B, 5-AG, 6-C, 7-C, 8-B, 9-B, 10-C
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Essence and functions of money. The structure of the money supply
Macroeconomic equilibrium presupposes the presence of certain proportions in the money market. In Keynesian theory, the level of national production and employment is associated with changes in aggregate spending and the conduct of fiscal policy; the money market plays a minor role. However, in the post-war period, in the 1950s and 1960s, when inflation became more common than depression, and many states were able to achieve stabilization and contain inflation by applying a policy of monetary restraint, there was a revival of interest in the role of money in the economic system. In economics, one of the most influential modern neoclassical trends, monetarism, has become widespread and recognized (founded by the American economist Milton Friedman, Nobel Prize winner in 1976). The monetarist concept proceeds from the principle of non-intervention of the government in the mechanism of the functioning of a market economy, recognizes fiscal policy as ineffective, and explains the problems of economic instability and inflation as “purely monetary factors”.
From a monetarist point of view, if the money supply is insufficient, then, at least temporarily, real output and employment will decline. On the other hand, flooding the economic system with too much money causes inflation. Therefore, one of the most important tasks of national economic policy is to create conditions that ensure stability monetary system, which is the basis of the stability of the national market, the level of production and employment. Thus, in modern theories, money is considered as an active factor in social production, and the money market as a necessary part of macroeconomic analysis.
Essence money can be defined through their functions. Money is a means of paying for goods and services, i.e. a means of exchange, a means of measuring value, a store of value.
money like medium of exchange, allow you to get away from barter trade and, thus, lead to a reduction in distribution costs, which contributes to the growth of the national economy.
money like the measure of value is a monetary unit used to measure and compare the cost of goods and services. Money, as a measure of value, must have homogeneity, which is necessary to measure the value of various transactions.
money like store of value(wealth accumulation) is an asset that is retained after the sale of goods and services, and provides purchasing power in the future. Any asset can serve as a store of value to some extent (jewelry, art, houses, stocks, bonds, etc.) However, money is more suitable for this function because it has the inherent property liquidity. A liquid asset is an asset that can be used as a means of payment (or easily converted into a means of payment) and has a fixed nominal value. Money, by definition, has absolute liquidity. All other assets have liquidity to a greater or lesser extent.
For analytical purposes and policy making, it is not enough to know what money is. It is necessary to determine their number. Measuring the amount of money is associated with some difficulties, since different types of assets, to one degree or another, perform all the functions of money. Depending on the degree of liquidity, a whole set of indicators of the money supply is used. The construction principle is based on the fact that all assets can be ranked from absolutely liquid to absolutely illiquid. The structure of the money supply consists of the following monetary aggregates.
money supply M1- “money”, consists of the most liquid assets and includes two elements: 1) cash, i.e. metal and paper money in circulation; 2) checking deposits, i.e. demand deposits in commercial banks, various savings institutions, on which checks can be drawn. Cash is a small part of the money supply M1(about 3% - metallic money and about 25% - paper money). The most widespread are check deposits as part of the money supply. Checks are a means of transferring ownership of deposits in financial institutions to other entities and are accepted for payment for goods and services, and checkable deposits can be immediately converted into paper and metal money, so checks are widely used as a means of circulation.
money supply M2 and M3– “near-money” refers to certain highly liquid financial assets that include the aggregate M1 plus such elements as checkless savings accounts, time deposits, short-term government securities, which, although they do not function as a medium of exchange, can be easily and without risk of financial loss converted into cash or checking accounts. money supply aggregate L includes all of the listed elements plus long-term government securities. The term "almost money" means that these elements cannot be directly used to pay for goods and services, but must first be converted into M1.
In the future, when analyzing the money market, we will adhere to the narrow definition of money M1, since its components can be immediately consumed.
2. Supply of money and demand for money.
Equilibrium in the money market
Money Offer Sm is equal to some constant quantity, which is determined by the monetary and financial institutions that supply the economy with the amount of money supply necessary to maintain a certain level of national production. The money supply does not depend on the interest rate, so graphically it looks like a vertical line sm(Fig. 14.1, a). The money supply will be discussed in more detail in the chapter “Monetary policy”.
Rice. 14.1. Money supply (a), money demand (b),
demand and supply of money, equilibrium in the money market (c)
The demand for money is made up of the demand for money for transactions and the demand for money from the asset side (or the speculative demand for money). Demand for money for transactions Dt is directly proportional to the volume of economic transactions, i.e. determined by the size of the nominal gross national product and the velocity of money circulation Dt = GNP/V.
Graphically, the demand for money for transactions looks like a straight vertical line. Dt, i.e. does not depend on the interest rate (Fig. 14.1, b). For example, GNP is 500 monetary units, the velocity of money circulation is 5, then Dt= 100 cash units
Asset demand for money Da is the demand for M1 money (liquid assets) as savings. Assets are savings, accumulations of economic entities. There are tangible assets - real estate, jewelry, antiques, and financial assets - money. M1, time deposits, securities (shares of corporations, private and government bonds). The advantage of owning money over other financial assets, such as bonds, is their absolute liquidity, i.e. the ability to turn into goods and services. The disadvantage of owning money as an asset compared to bonds is that they do not earn interest in the form of interest.
The rate of interest is the opportunity cost of holding money as an asset.
The higher the cost (i.e., the rate of interest), the less money people want to hold as assets. They redistribute financial assets in favor of securities, such as interest-bearing bonds. At a low interest rate, the opportunity costs are insignificant, so the preference for liquidity increases, the population increases the demand for money as financial assets. Therefore, the demand for money as an asset Da is inversely related to the interest rate (Fig. 14.1, c).
General demand for money is the sum of the demand for money for transactions and the demand for money from assets, Dm = Dt + Da. Graphically, the total demand for money Dm looks like a horizontal shift in the demand curve for money as an asset Da on the demand for money for transactions Dt(Fig. 14.1, c).
Intersection of demand lines Dm and suggestions sm money determines equilibrium price, i.e. interest rate and equilibrium quantity in the money market Dm = sm(Fig. 14.1, c).
MONEY MASS. INDICATORS OF THE MONEY SUPPLY
Deviation of the interest rate from the equilibrium will lead to a temporary disequilibrium, an inequality in the magnitude of the demand for money and the money supply. But under the influence of the market mechanism, the equilibrium will be restored quite quickly.
Change of balance in the money market can occur if the demand for money changes Dm or money offer sm. As a result the equilibrium interest rate changes.
Of particular importance is change in money supply Sm as financial and lending institutions play an active role in this process. The money supply Sm changes when financial institutions, pursuing a policy of cheap or expensive money, expand or reduce the money supply.
Increasing the money supply Sm1 creates a temporary surplus of them at a given interest rate (Fig. 14.2), as a result of which the demand for other financial assets (bonds) increases, and their price becomes higher. If the market price goes up, then the interest rate on bonds goes down. This is because bond yield is defined as a fixed percentage of the face value of the bonds. Therefore, a change in the market price leads to a change in the real rate of interest received on bonds.
If the interest rate on bonds goes down, and all borrowers compete to offer lenders an interest rate close to what bonds bring, then there will be a general decrease in the interest rate. At a low interest rate, the opportunity cost of liquidity preference is low, so consumers prefer to hold financial assets in the form of cash or current deposits. Thus, with an increased money supply, equilibrium is restored at a lower rate of interest.
The opposite development of events will occur with a reduction in the money supply ( Sm2). In this case, equilibrium will be established at more high level percent (Fig. 14.2). Consider how this happens on your own, based on the graph.
The article presents the dynamics and structure of the money supply from 1993 to 2015. The indicators of money circulation in the Russian Federation from 2005 to 2015 are also presented. and an analysis of the relationship between the velocity of circulation of the money supply and various economic indicators was carried out.
The money supply is one of the main elements of any monetary system, so we considered it relevant to conduct a statistical analysis of money circulation in the Russian Federation.
Consider the aggregated indicators of the structure of the money supply in the Russian Federation for 1993-2015, which are the main macroeconomic indicators, using the data in Table 1 as an example.
Table 1. Money supply and money supply structure in the Russian Federation for the period from 1993 to 2015
|
Monetary aggregate М0 |
Monetary aggregate M1 |
Monetary aggregate M2 |
Money supply in the national definition |
|
In recent years, the characteristics of the money supply have undergone significant changes. As can be seen from Table 1, the M0 monetary aggregate, which is cash in circulation, increased rapidly from 1993 to 2015, which meant an increase in the amount of money issued by the Central Bank of the Russian Federation. However, in the period from 2008 to 2009 and from 2014 to 2015, a slight decline in this indicator by 5.1% and 1.9%, respectively, was revealed.
Indicator M1 (aggregate M0 + funds of enterprises in banks, etc.) and M2 (aggregate M1 + deposits of the population in banks) tended to increase during the years under consideration, but from 2010 to 2011 decreased by 16.8 % and by 42.2%.
As for the money supply in the national definition, it, equivalent to M1 and M2, decreased by 31.3% in the period from 2010 to 2011, then the situation stabilized.
A sharp jump and fall in all indicators is associated not only with a decrease in the volume of cash in circulation, but also with a decrease in the volume of deposits of the population, enterprises and organizations in settlement accounts in banks.
Money supply and its main aggregates
It should be noted that non-cash prevail among non-cash and cash money.
Considering the dynamics of monetary circulation, it would be appropriate to analyze the relationship between the velocity of circulation of the money supply and various economic indicators.
Table 2. Indicators of money circulation in the Russian Federation from 2005 to 2015
Table 2 shows that over the period under review, the characteristic of the velocity of circulation of the money supply tended to a significant decline. Between 2005 and 2010 and from 2011 to 2015 it decreased by 63.5% and 69.6%, respectively. With regard to the growth rate of the velocity of money, from 2005 to 2009. the figures were intermittent, but since 2010 there has been a significant drop of 62.6%. Consequently, the dynamics of these indicators indicates a decrease in the turnover of monetary aggregates, i.e., a decrease in their liquidity.
A slight decrease in cash in circulation in the structure of the money supply indicates a slight decrease in inflationary pressure from aggregate demand. It can also be concluded that non-cash funds will exceed cash by 10-15%. Such an irrational ratio of these two areas negatively affects money circulation in general, because most of the cash is not involved in banking, unlike non-cash funds. This phenomenon undermines the stability of the banking system, therefore, there is a reduction in cash in the credit sector.
22.10.2018 09:16
The concept of money supply
The money supply is the volume of the state stock of money in ruble equivalent, serves the cash flows that form the money circulation.
Money supply is a set of money circulating in the country's economy in a certain period of time, both in cash and non-cash, in current and savings accounts. In other words, it is the total amount of money in circulation in a certain period of time. Thus, non-cash and cash money are included in the total money supply.
Cash in hand includes:
- small coin;
- paper money (treasury notes, banknotes);
- credit funds (checks, bills of exchange).
Non-cash money supply is taken into account:
- on debit and credit plastic cards;
- on deposits and deposits;
- on settlement, current accounts;
- in electronic money.
States showing favorable economic situation, have predominantly non-cash cash flows. The amount of cash in circulation by citizens and other participants in the national market is no more than 5% of the total money supply. On the territory of states with a banking system of a low degree of reliability, underdeveloped market relations, the ratio of non-cash and cash money supply is fundamentally different. The more cash on hand, the lower the level of the market economy.
Dynamics of the share of cash in the total money supply of Russia
| On the date | The share of cash in the money supply (M2) |
|---|---|
| 01.01.2009 | 29% |
| 01.01.2010 | 26% |
| 01.01.2011 | 25% |
| 01.01.2012 | 25% |
| 01.01.2013 | 24% |
| 01.01.2014 | 22% |
| 01.01.2015 | 23% |
| 01.01.2016 | 21% |
| 01.01.2017 | 20% |
| 01.01.2018 | 20% |
| 01.01.2019 | 20% |
| 01.04.2019 | 19% |
Despite the fact that the structure of the monetary volume has changed in recent years, and the cash ratio has decreased by 10%, the shadow economy in the Russian Federation is flourishing, since the level of cash is not yet small enough. The unwillingness of the population to place free capital in bank accounts indicates its distrust in the banking structure in particular, and in the credit and financial policy of the state as a whole.
The structure of the money supply
In the structure of the money supply, one can single out the active part, which is formed by real money directly involved in economic turnover, and the passive part, which is formed by money in accounts that can potentially be settlement funds. However, not all components of the passive part can be used as a means of payment.
Monetary aggregates М0, М1, М2, М3, М4
The principle of building the money supply is based on the decrease in the liquidity of the assets included in its composition. The composition and structure of the cash supply characterize monetary aggregates. The hierarchical structure of monetary aggregates assumes that each subsequent aggregate includes the previous one. From country to country, there may be differences in the definition and classification of each aggregate.
Monetary Aggregates- types of money and funds that differ in their level of liquidity (the ability to quickly turn into cash), an indicator of the structure of the money supply. They are meters of the money supply, depending on the type of account in which they are located.
The Central Bank of the Russian Federation calculates monetary aggregates М0, М1, М2, М3.
Monetary aggregate М0- this is cash circulating in the economy (paper banknotes and metal coins), which is the most liquid part of the money supply.
Monetary aggregate M1= M0 (cash) + other cash equivalents that can be easily converted into cash (cheques, funds of the population on demand deposits, funds on settlement, current and other demand accounts of non-financial and financial organizations (except for credit ones)), expressed in national currency.
Monetary aggregate M2= M1 + short-term deposits (term deposits, funds in the accounts of time deposits attracted from the population, non-financial and financial organizations (except credit)) in the national currency and some money market funds. M2 money supply is money supply in the national definition of Russia.
Monetary aggregate M3= M2 + long-term deposits, government bonds, treasury savings bonds, certificates of deposit.
Monetary aggregate M4 calculated in some countries such as the UK. Monetary aggregate M4 = M3 + all monetary components and monetary surrogates with lower liquidity, a portfolio of government securities held by non-bank holders.
Narrow and wide money
tight money- a term that defines the most liquid instruments. Most often characterized by aggregates M0 or M1, depending on the country.
broad money- a term that defines the totality of assets that can be used to make payments. The definition of broad money also varies from country to country, but in general, these are instruments that can be accessed in more than 24 hours.
The volume of money supply in Russia by years
Dynamics of the money supply (M2) at the beginning of 2008 - 2019, Q2 2019 according to the Bank of Russia (CBR)
| Period | Money supply (M2), billion rubles | including: |
|
|---|---|---|---|
| Cash (M0) | Non-cash funds |
||
| 2008 | 12869,0 | 3 702,2 | 9166,7 |
| 2009 | 12 975,9 | 3 794,8 | 9 181,1 |
| 2010 | 15 267,6 | 4 038,1 | 11 229,5 |
| 2011 | 20 011,9 | 5 062,7 | 14 949,1 |
| 2012 | 24 204,8 | 5 938,6 | 18 266,2 |
| 2013 | 27 164,6 | 6 430,1 | 20 734,6 |
| 2014 | 31 155,6 | 6 985,6 | 24 170,0 |
| 2015 | 31 615,7 | 7 171,5 | 24 444,2 |
| 2016 | 35 179,7 | 7 239,1 | 27 940,6 |
| 2017 | 38 418,0 | 7 714,8 | 30 703,2 |
| 2018 | 42 442,2 | 8 446,0 | 33 996,2 |
| 2019 | 47 109,3 | 9 339,0 | 37 770,3 |
| 01.04.2019 | 46 140,0 | 8 980,6 | 37 159,5 |
Dynamics of monetary aggregates M0, M1, M2 at the beginning of 2011 - 2019, Q2 2019 according to the Bank of Russia (CBR)
| Period | Cash in circulation outside the banking system (monetary aggregate M0) | Transferable deposits | Monetary aggregate M1 | Other deposits included in the M2 monetary aggregate | Money supply in the national definition (monetary aggregate M2) |
|---|---|---|---|---|---|
| 1 | 2 | 3=1+2 | 4 | 5=3+4 |
|
| 2011 | 5 062,7 | 5 797,1 | 10 859,9 | 9 152,0 | 20 011,9 |
| 2012 | 5 938,6 | 6 818,3 | 12 756,9 | 11 447,9 | 24 204,8 |
| 2013 | 6 430,1 | 7 264,0 | 13 694,0 | 13 470,6 | 27 164,6 |
| 2014 | 6 985,6 | 8 526,3 | 15 511,9 | 15 643,7 | 31 155,6 |
| 2015 | 7 171,5 | 8 170,0 | 15 341,4 | 16 274,3 | 31 615,7 |
| 2016 | 7 239,1 | 9 276,4 | 16 515,6 | 18 664,1 | 35 179,7 |
| 2017 | 7 714,8 | 9 927,6 | 17 642,4 | 20 775,6 | 38 418,0 |
| 2018 | 8 446,0 | 11 062,8 | 19 508,9 | 22 933,3 | 42 442,2 |
| 2019 | 9 339,0 | 12 285,1 | 21 624,1 | 25 485,2 | 47 109,3 |
| 01.04.2019 | 8 980,6 | 11 830,1 | 20 810,6 | 25 329,4 | 46 140,0 |
Analyzing the dynamics of the money supply, it is possible to determine the economic state of the country. From 2008 to 2019, there has been an average increase in the money supply by 13%, and in the crisis year of 2008 its value was close to 1%, while in 2011 it was 31%. During 2013-2018 the growth rate decreased from 12% to 2.2%, which indicates that the Central Bank has taken measures to reduce inflation. The flip side may be evidence that a crisis is growing in the country.
The money supply of Russia in 2018 and on April 1, 2019
The statistics of the Central Bank of the Russian Federation states that at the end of 2018, the aggregate M2 = 47109.3 billion rubles, which is higher than the value at the beginning of the year by 6667.1 billion rubles. or 11%. In the first quarter of 2019, the money supply decreased by 2.1% compared to the beginning of the year. However, given the annual increase in M2, we can expect it to increase in 2019 as well.
The growth dynamics of cash outside the banking system in 2018 indicates that they have increased by 10.57%. For the first quarter of 2019, the volume of cash (M0) decreased from 9,339 billion rubles by 3.8% (in monetary terms, by 358.4 billion rubles) and amounted to 8,980.6 billion rubles.
Bank deposits of the population in 2018 also showed an increase - 10.87% and amounted to 20,643 billion rubles. As of April 1 of this year, the volume of funds on such deposits decreased slightly - by 0.7% and amounted to 20,857 billion rubles.
Statistical data indicate that in the amount of money, a fairly large percentage is still occupied by cash (M0) that is outside the banking system. Despite the fact that the share of cash in the money supply continues to decline, citizens of the Russian Federation continue to spend a lot of cash on purchases, neglecting such payment instruments as plastic bank cards. At the same time, the increase in deposit funds compared to last year is a positive indicator that indicates the successful monetary policy of the state-credit apparatus.
Monetization ratio
The monetization coefficient is an indicator that characterizes the economy's need for money supply. In a state with a positive economic condition and a minimum percentage of inflation, this figure is at least 50%. In the Russian Federation, the level of monetization for 2018 amounted to 43.2%, which indicates the insufficient development of the market economy.
Money supply in different countries
Dynamics of money supply M2 2008 - 2019 according to the websites of the National Banks, in national currencies
| Money supply M2, billion national currency |
|||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 |
|
| USA, USD | 8265,30 | 8550,50 | 8822,50 | 9692,30 | 10500,10 | 11067,30 | 11728,00 | 12416,10 | 13292,60 | 13937,30 | 14473,00 |
| Great Britain, GBP | 1842,49 | 1906,96 | 2092,59 | 2047,98 | 2058,13 | 2088,29 | 2086,85 | 2134,84 | 2284,26 | 2347,84 | 2419,58 |
| Germany, EUR | 1859,90 | 1849,30 | 1930,50 | 2062,50 | 2220,40 | 2285,20 | 2399,20 | 2605,80 | 2755,90 | 2880,60 | 3019,30 |
| France, EUR | 1357,77 | 1353,65 | 1456,29 | 1514,03 | 1600,46 | 1645,36 | 1707,73 | 1786,38 | 1880,62 | 2047,61 | 2161,91 |
| Japan JPY | 741700,0 | 764400,0 | 782300,0 | 806900,0 | 827700,0 | 862800,0 | 893100,0 | 920600,0 | 956300,0 | 990600,0 | 1014200,0 |
| Brazil, BRL | 1086,79 | 1185,87 | 1387,91 | 1649,90 | 1792,89 | 1985,47 | 2186,47 | 2334,14 | 2446,07 | 2581,70 | 2848,57 |
| India, INR | 11499,91 | 13557,57 | 16205,66 | 17296,53 | 18501,19 | 20296,91 | 22339,79 | 25149,05 | 20883,21 | 29891,20 | 34088,53 |
| China, CNY | 47516,66 | 60622,50 | 72585,18 | 85159,09 | 97414,88 | 110652,50 | 122837,48 | 139227,81 | 155006,70 | 169023,53 | 182674,42 |
| South Africa, ZAR | 1562,43 | 1589,34 | 1678,42 | 1798,93 | 1869,05 | 2049,69 | 2226,54 | 2441,53 | 2601,20 | 2806,03 | 2893,83 |
| Russia, RUB | 12 975,9 | 15 267,6 | 20 011,9 | 24 204,8 | 27 164,6 | 31 155,6 | 31 615,7 | 35 179,7 | 38 418,0 | 42 442,2 | 47 109,3 |
Dynamics of money supply M2 2008 - 2019 according to the websites of the National Banks, recalculated in US dollars at official rates
| Country | Money supply М2, billion US dollars |
||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 |
|
| USA | 8265,30 | 8550,50 | 8822,50 | 9692,30 | 10500,10 | 11067,30 | 11728,00 | 12416,10 | 13292,60 | 13937,30 | 14473,00 |
| Great Britain | 995,94 | 1214,62 | 1350,06 | 1279,99 | 1294,42 | 1338,65 | 1264,75 | 1395,32 | 1692,04 | 1820,03 | 1819,23 |
| Germany | 2734,05 | 2570,53 | 2567,57 | 2866,88 | 2864,32 | 3039,32 | 3190,94 | 2892,44 | 3059,05 | 3255,08 | 3562,77 |
| France | 1995,91 | 1881,57 | 1936,87 | 2104,49 | 2064,59 | 2188,33 | 2271,27 | 1982,88 | 2087,49 | 2313,80 | 2551,05 |
| Japan | 7173,81 | 8159,69 | 8912,05 | 10124,22 | 10369,58 | 8840,16 | 8446,19 | 7605,12 | 8798,42 | 8832,81 | 9191,59 |
| Brazil | 465,03 | 681,06 | 832,98 | 879,57 | 877,36 | 847,55 | 823,16 | 597,76 | 750,53 | 780,44 | 735,15 |
| India | 237,36 | 290,44 | 361,65 | 324,72 | 337,75 | 327,91 | 352,74 | 379,17 | 307,31 | 467,58 | 488,96 |
| China | 6967,25 | 8875,92 | 10997,75 | 13538,81 | 15636,42 | 18289,67 | 19812,50 | 21485,77 | 22303,12 | 25963,68 | 26551,51 |
| South Africa | 167,94 | 215,59 | 253,45 | 221,22 | 220,31 | 195,82 | 192,41 | 156,77 | 190,87 | 228,24 | 200,80 |
| Russia | 437,00 | 453,42 | 599,30 | 680,83 | 814,58 | 882,19 | 535,78 | 449,28 | 600,64 | 696,43 | 646,20 |
The money supply of all countries tends to increase, but no country is experiencing such growth as China. Since 2008, the volume of M2 in this country has increased by 3.8 times, far ahead of the United States in absolute terms. The US money supply over the same period increased by $6,206.7 billion, or 1.75 times.
Money supply control
At the legislative level, the regulation of the money supply (non-cash and cash) is carried out by the Central Bank of the Russian Federation.
Directions of the policy of control over the money supply:
- conducting an effective monetary policy;
- public debt management;
- implementation of tax policy;
- formation of the financial market;
- control over the money supply in the course of monetary policy.
The tools for regulating the money supply include the following:
Open market operations as the main instrument of regulation. It is applied through the influence on the volume of resources of commercial banks through the purchase and sale of treasury bills, government bonds and other securities with a reverse transaction after a certain time. By purchasing such securities, commercial banks reduce the amount of funds that they can use to lend to customers, which ultimately leads to an increase in loan interest. When reselling securities to the Central Bank, banks attract additional resources.
Motto transactions, which consist in the purchase and sale of foreign currency by the Central Bank in order to maintain the national currency rate, prevent its sharp fluctuations and counteract the speculative mood of market participants.
Deposit operations of the Bank of Russia used to manage excess liquidity of commercial banks. These operations allow the Central Bank to promptly attract free funds of banks into deposits, quickly neutralizing their possible pressure on the foreign exchange market, thereby preventing the depreciation of the national currency and inflation.
Discount rate policy (discount policy), which consists in regulating the interest on loans attracted by commercial banks from the Bank of Russia. The increase in the rate on accounting and lending operations is intended to limit the rate of inflation growth by "compressing" the money supply in circulation.
Change in the required reserve ratio set by the Central Bank. Its increase leads to the fact that a significant part of bank funds is "blocked" in the accounts of the Central Bank, and therefore cannot be used by banks to issue loans. As a result, the money supply in circulation is reduced.
The set of measures associated with the withdrawal by the Central Bank of excess free cash from the economy is called money sterilization. This is done due to the fact that such an excess of money can cause inflation and other negative processes in the country's economy.
The issuance of both paper and credit money was in modern conditions monopolized by the state. The central bank, owned by the state, sometimes tries to compensate for the lack of money savings by increasing the money supply, issuing excess tokens of value. Money supply is a set of cash and non-cash purchasing and payment means that ensure the circulation of goods and services in the national economy, which are owned by private individuals, institutional owners and the state. In the structure of the money supply, the active part is distinguished, which includes funds that actually serve the economic turnover, and the passive part, which includes cash savings, account balances that can potentially serve as settlement funds.
Thus, the structure of the money supply is quite complex and does not coincide with the stereotype that has developed in the minds of the average consumer, who considers money primarily cash - paper money and small change. In fact, the share of paper money in the money supply is very low (less than 25%), and the bulk of transactions between entrepreneurs and organizations, even in retail trade, are carried out in a developed market economy through the use of bank accounts. As a result, the era of bank money-cheques, credit cards, traveler's checks, and so on. These settlement tools allow you to manage cash deposits, i.e. non-cash money. When paying for goods and services, the buyer, using a check or credit card, orders the bank to transfer the purchase amount from his deposit to the seller's account or give him cash in circulation. So, at the end of the year in the money supply, cash accounted for 37%, funds on the settlement accounts of enterprises and organizations - 31%, deposits and deposits - 32%.
The determining factors in the growth of the money supply were, as before, loans from the banking system to the economy and the Government.
To date, the main feature of the money supply in Russia is that about 50% of it is the dollar and other foreign currencies. And the continuing high degree of integration of foreign currency into the entire monetary system of the country leads to the use of the exchange rate as a criterion for economic activity and a means of hoarding even by the population and enterprises that are far from the external market. All this negatively affects our monetary unit - the ruble, significantly weakens its position in comparison with other monetary units.
The participation of the Central Bank of the Russian Federation in the formation of the money supply is characterized by the volume and dynamics of the monetary base and the sources of its formation.
AT Russia the composition of the money supply consists of the following aggregates. The Bank of Russia defines such categories.
Monetary base - cash in circulation, including in the non-financial sector and in cash desks of credit institutions + the amount of required reserves of commercial banks with the Bank of Russia + funds of credit institutions in correspondent accounts with the Bank of Russia.
Monetary base (narrow) - cash ( M 0) + cash balances in the cash desks of credit institutions + balances of credit institutions in the accounts of required reserves with the Bank of Russia.
The money supply of Russia
Monetary base (broad) - narrow monetary base + balances of funds of credit institutions on correspondent, deposit and other accounts with the Bank of Russia + investments of credit institutions in bonds of the Bank of Russia.
reserve money- broad monetary base + demand deposits of organizations serviced by the Bank of Russia.
In the Russian Federation, the main monetary aggregate used in the calculation of current macroeconomic indicators is the aggregate M 2 . He was chosen as intermediate objective of monetary policy one . Same position relative to the unit M 2 followed by the USA, France and Japan.
Relatively recently, in Russia, to characterize the amount of money supply, the indicator began to be used M 2 X , which, in addition to the quantity M 2 all types of foreign currency deposits are also included. Usually this aggregate is used for the purposes of monetary regulation in countries where foreign currency is considered as an asset in the function of a store of value, for example, in such a phenomenon as the dollarization of the national economy. Currently, official Russian statistics regularly publish only indicators M 0 (cash) and M 2 (cash and non-cash money). Monetary aggregate M2 represents the amount of cash in circulation (outside banks) and balances in the national currency on the accounts of non-financial organizations and individuals who are residents of the Russian Federation.
Taking into account national characteristics monetary system, the set of aggregate indicators is different in composition, however, a clear trend towards the universalization of financial markets and instruments in recent decades has led to the fact that monetary aggregates are gradually beginning to lose their national coloring.
In international comparisons, developed and developing countries use the statistics of the IMF, which calculates a common indicator for all M 1 (cash and all types of checking deposits) and a broader indicator " quasi-money", which includes term and savings bank accounts and the most liquid financial instruments circulating on the market.
In this way:
Quasi-money = M 2 - M 1 .
In my next presentation, the focus will be on the aggregates M 1 , M 2 and M 3 . The most liquid part of the money supply is represented by banknotes and coins that are in circulation outside the banking system, that is cash in circulation (FROM = M 0) and also term deposits(or demand deposits) of non-banks in credit institutions ( D) in our further analysis we will call monetary aggregateM 1:
Unit M 1 are highly liquid and cover a larger sector of cash flows in the economy than the monetary base. This aggregate can be chosen as an object of monetary regulation in an economy with a significant share of cash circulation and a low share of term deposits, as well as in conditions where the economy falls into the so-called liquid trap and does not respond to changes in interest rates.
Addendum to M 1 term deposits ( T), will give a less liquid monetary aggregate M 2 :
Unit M 2 is used as the main object of monetary regulation in countries with financial markets, the behavior of subjects in which depends on the level of interest rates.
Adding to an aggregate M 2 savings deposits ( S ), will give even less liquid monetary aggregate M 3 :
M3=C+D+T+S
The money supply is created by money issuers, that is, issuing (central) and commercial banks.
Money is often understood only as central bank money, as well as termless (or current) deposits in commercial banks, i.е. unit M 1 . In the United States, in the country with the most developed money supply in the world, until 1987 it was generally accepted that exactly M 1 most closely matches the definition of money as means of circulation. Unit M 1 is often also called money in a narrow definition.
However, the demand for M 1 is rather volatile, and therefore American and Western European central banks are now paying more attention to the behavior M 2 than on M one . Russia also followed the example of Western countries in this area. Unit
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