The issue of money is the release into circulation of an additional number of banknotes and means of payment, causing an increase in the money supply.

A distinction is made between the issue of non-cash money and the issue of cash money.

In modern conditions, the issue of non-cash money is primary, since before cash appears in circulation, it must be reflected in the form of entries in the accounts of commercial banks. Thus, new money comes into circulation from banks as a result of credit transactions. As a result, the fundamental principle of organizing the state’s monetary system is the credit nature of money emission.

The purpose of issuing non-cash money is to meet the needs of enterprises for working capital and investments. It is carried out by crediting additionally issued money to correspondent accounts in commercial banks in the form of central bank loans.

In conditions of increased production or increased prices for goods, an additional need for money by the economy and the population constantly arises. This necessitates the existence of a mechanism for issuing non-cash money that satisfies this additional need.

In a two-tier banking system, the mechanism for issuing money operates on the basis of the bank multiplier.

The bank multiplier is the process of increasing (multiplying) money in the deposit accounts of commercial banks during the period of their movement from one commercial bank to another.

There are bank, credit and deposit multipliers. They characterize the mechanism of money multiplication from different positions.

The banking multiplier is the process of increasing money from the position of the subjects of the animation, i.e. those who multiply the money. This process is carried out by commercial banks. One commercial bank cannot multiply money; it is multiplied by the system of commercial banks.

The credit multiplier reveals the mechanism of the multiplication process, that multiplication can only be carried out as a result of credit operations of commercial banks.

The deposit multiplier reflects the object of the animation - money in the deposit accounts of commercial banks (it is they that increase in the process of multiplication).

The operating procedure of the bank multiplier mechanism is as follows. It exists only in multi-level banking systems. Moreover, the first level - the central bank - controls this mechanism, the second level - the commercial bank - forces it to act, and to act automatically, regardless of the wishes of individual banks. The banking multiplier mechanism is directly related to the free reserve.

Free reserve is the totality of all resources of commercial banks that at a given time can be used for active banking operations.

This concept appeared in Russia from Western economic literature. It should be noted that it is not entirely accurate. In fact, the free (operational) reserves of commercial banks are their liquid assets, but from the definition it is clear that this concept refers to resources, i.e., the liabilities of commercial banks.

This concept is based on the fact that commercial banks can carry out their active operations (issue
loans, buy securities, currency, etc.

D.) only within the limits of the resources available to them. The free reserve of the system of commercial banks consists of the free reserves of individual commercial banks, therefore, an increase or decrease in the free reserve of individual banks does not change its total value.

The amount of free reserve of an individual commercial bank is calculated using the formula

Wed = Kb + PR + Central Committee + MBK - OCR - JSC,

where Ср is the bank's free reserve;

Kb - capital of a commercial bank;

PR - attracted resources of a commercial bank (funds in deposit accounts);

CC - a centralized loan provided to a commercial bank by the central bank;

IBC - interbank loan;

OCR - contributions to the centralized reserve at the disposal of the central bank;

JSC - resources that are currently already invested in the active operations of a commercial bank.

The bank multiplier operates regardless of whether the loans are provided to commercial banks or the federal government. In this case, money will go to budget accounts in banks, and they also belong to attracted resources (PR), so the free reserve of commercial banks where these accounts are located will increase, and the bank multiplier mechanism will be activated.

The banking multiplier mechanism takes into account not only the provision of centralized loans, but also the purchase by the central bank of securities or currency from commercial banks. As a result of this, the resources of banks invested in active operations decrease, and the free reserves of these banks used for credit operations increase, i.e., the banking multiplication mechanism operates. The central bank can also turn on this mechanism
yes, when he reduces the rate of contributions to the centralized reserve. In this case, the free reserve of the commercial banking system will also increase, which, other things being equal, will lead to an increase in lending and the inclusion of a banking multiplier.

Management of the banking multiplier mechanism, and therefore the issue of non-cash money, is carried out exclusively by the central bank. The Central Bank, controlling the mechanism of the banking multiplier, expands or narrows the issuing capabilities, thereby performing one of its main functions - the function of monetary regulation.

The issue of cash is its release, which increases the amount of cash in circulation.

The monopoly on the issue of cash in the Russian Federation belongs to the Central Bank of the Russian Federation.

In a market economy, central banks predict the size of the expected issue using forecasts of cash turnover of credit institutions and their own analytical materials. In this case, it is important to establish not only the optimal predicted emission value, but also its distribution among individual regions of the country.

Cash issuance is carried out in a decentralized manner. This is due to the fact that the need of commercial banks for cash (it is this that determines the size of the issue) depends on the need for it of legal entities and individuals served by these banks, and it is constantly changing. Therefore, each time importing money from the Center to satisfy this need would not only be impractical (due to manifoldly increasing circulation costs), but also simply impossible.

Cash issuance is carried out by the Central Bank of the Russian Federation and its divisions - territorial departments and cash settlement centers (RCCs). They operate in various regions of the country and provide settlement and cash services to credit institutions located in these regions.

To issue cash, reserve funds and working cash desks are opened in cash settlement centers.

Reserve funds store a stock of banknotes intended for their release into circulation in the event of an increase in the need of the economy of a given region for cash. Banknotes of reserve funds are not considered money in circulation, since they do not move, but are a reserve.

Cash from credit institutions is constantly supplied to the working cash desk of the cash settlement center and is constantly issued from it. Thus, the money in the working cash register is in constant motion. They are considered money in circulation. If the amount of cash received by the cash settlement center's working cash desk exceeds the amount of money issued from it, then the money is withdrawn from circulation. At the same time, they are transferred from the working capital of the RCC to its reserve fund.

The reserve funds of the RCC are managed by the territorial departments of the Central Bank of the Russian Federation. If, as a result of the action of the bank multiplier, the amount in deposit accounts of a given commercial bank increases, then as a result:

a) customers’ need for cash increases; b) the free reserve of a commercial bank increases.

RCCs are required to issue cash to commercial banks within the limits of their free reserves. Therefore, if the majority of commercial banks serviced by the RCC increase the need for cash, and the receipt of money in their operating cash desks does not increase equivalently, then the RCC will be forced to increase the release of cash into circulation. To do this, on the basis of a special issue permit from the Office of the Central Bank of the Russian Federation, he will transfer cash from the reserve fund to the working cash desk of the RCC. For this RCC this will be an issuance operation, although in the country as a whole there may not be any issue of cash.

When an issue is carried out by one RCC, another RCC may at the same time additionally withdraw a similar amount
cash, so the total amount of money in circulation may not change. For these purposes, a daily emission balance is compiled.

Money issued by the RCC for circulation will go to the operating cash desks of commercial banks, from where they will be issued to clients of these banks, i.e., they will go either to the cash desks of enterprises or directly to the population.

Thus, cash is transformed from non-cash money held in deposit accounts and represents an integral part of the money supply created by commercial banks as a result of the action of the bank multiplier.

Test questions and assignments

Money is an integral component of the economic turnover of any modern society. The growing needs of the market require the constant release of banknotes, coins, non-cash options (loans, shares, bills, etc.). Every conscientious citizen is obliged to understand what issuing money is and in what forms it comes.

What is included in the concept

The issue of funds refers to the issue of banknotes, credit products, bills, and shares. Only non-profit government agencies (state banks, treasuries) have the right to additional issue. The Central Bank organizes the issue of credit, while the Treasury issues banknotes and coins.

Each specific state has its own procedure for organizing money emission, regulating the volume of issued cash, forms of security, etc. The process of issuing money in Russia in domestic currency is an emission system. Most developed countries practice an increase in non-cash turnover with a simultaneous decrease in cash volumes.

When talking about the issue of money, the definition must include more than just the literal designation of printing paper money or minting coins. The following situation will allow us to explain in simple words the term “emission” and what such a phenomenon means for the economic life of the state.

The circulation of money consists of cash and non-cash resources and occurs through the issue and use of paper banknotes and coins or through amounts in accounts and deposits without time limits. It is important to understand that both options for the circulation of funds are closely interrelated in the process of performing their functions with the transition of one type of money to another.

Within the state, money is issued in the form of paper banknotes and credit funds, which makes it possible to distinguish between the budgetary issue of money and the issue of credit funds.

The issue of money has always been carried out under the control of the state, which monopolistically regulates the issue of cash. As modern banking instruments develop, the issuance of credit money, bills, and checks becomes increasingly important. Using the rediscounting of bills of exchange, the Central Bank of the Russian Federation issues banknotes. Thus, the concept includes a much broader meaning than the usual issue of cash.

The release of a new batch of funds does not always stimulate turnover growth; at the same time, there is a need to close accounts, withdraw technically and physically obsolete banknotes, and close debt obligations. Thus, when issuing money, the structure of the mass of money in circulation is redistributed.

The characteristics of the emission policy of the Russian Federation include:

1. There is no obligation to back the Russian ruble with gold.
2. The ruble is the payment instrument used throughout the country.
3. The printing of banknotes and the regulation of their putting into circulation are under the monopoly of the Central Bank of the Russian Federation, which guarantees the provision of cash with assets.
4. Limitation of exchange functions is prohibited; the duration of circulation of paper bills and coins is from one to five years with the possibility of further replacement.

By issuing money into circulation, the volume of mass used, an integral part of inflationary processes, increases. If gold money is used in circulation, the volumes are regulated by current needs, which means the accumulation of reserves in the treasury and a new launch into circulation. Currently, paper money and credit circulation of funds is used with the inability of the issue of money to self-regulate. With the development of production processes and growth in sales of the resulting products, the money supply increases. If supply exceeds demand, prices increase, which is called inflation.

The Central Bank, when issuing cash, puts funds into circulation based on the results of preliminary forecasts for volumes and regions. Funds enter circulation in the form of banknotes and coins with further transfer between economic entities to financial structures and return back. The so-called monetary unit does not have a value equal to its face value. Only cash is used in circulation, and non-cash funds are reflected in account records.

The issuance of deposits and checks is carried out as part of the issue of non-cash funds both by the Central Bank and privately. The deposit-check form is the basis for non-cash payments that exceed the amount of cash issued.

Most of the issue in the form of non-cash funds is represented by loans. The issuance of credit funds increases the bank multiplier, which ultimately leads to an increase in the money supply.

The issuing bank guarantees the purchasing power of issued credit money only by its own reputation. Protection against possible bank risks is an adequate assessment of the client’s solvency. Borrowed funds are issued for specific purposes, expenses, and payments.

When issuing non-cash funds, the stock is replenished with credit resources according to the following scheme.

If there is a certain volume of goods in a country, it can be balanced by a specific amount of money. The loan is issued from funds that are in other accounts. Although the funds were issued from the funds of other investors, there is no actual reduction in the amount. As a result, the same amount can be taken into account both in the depositor’s current account and as issued borrowed funds. As a result, the money supply increases by the amount borrowed.

After this, the total amount of money will exceed the cost of the goods by the amount of the loan. However, the borrower, having borrowed an amount from the bank, produces a certain product, which then goes on sale, balancing the surplus mass.

One type of process is the issue of securities. This financial instrument involves solving specific tasks. Not only the state, but also commercial organizations have the right to issue securities (shares, bonds).

The procedure for issuing securities is strictly regulated by the current laws of the Russian Federation.

Issue of cash

The following principles for issuing cash apply in Russia:

• the principle of optional collateral (no official ratio is established between the ruble and gold or other precious metals);
• the principle of monopoly and uniqueness (the issue of cash, the organization of its circulation and withdrawal on the territory of Russia are carried out exclusively by the Central Bank of Russia);
• the principle of unconditional obligatoriness (the ruble is the only legal tender on the territory of Russia);
• the principle of unlimited exchangeability (no restrictions on amounts or subjects of exchange are allowed; when exchanging banknotes and coins for banknotes of a new type, the period of their withdrawal from circulation cannot be less than one year and more than five years);
• the principle of legal regulation (the decision to issue money into circulation and withdraw it from circulation is made by the Board of Directors of the Bank of Russia).

Issue of non-cash money

If cash is issued only by the Central Bank, then non-cash money can be created privately. This is usually associated with the issuance of loans.

The bank multiplier is widely known, which increases the money supply due to issued loans. But this is not the only option for non-cash money issue. If a bill of exchange begins to be used in payments for goods or services, then such a bill begins to play the role of additionally issued money.

When loans are returned (bills are repaid), additional credit emission is eliminated (credit compression).

see also

• Loan issue

Links

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See what “Issue of money” is in other dictionaries:

One-time release into market circulation of fairly large quantities of unified debt obligations: treasury bills, commercial paper, mortgages, banknotes, etc. In English: Issue of money See also: Monetary policy... ... Financial Dictionary

Issue of money is a one-time release into market circulation of fairly large quantities of unified debt obligations: treasury bills, commercial paper, mortgages, banknotes, etc. Dictionary of business terms. Akademik.ru. 2001... Dictionary of business terms

money issue- The release of banknotes into circulation in all forms leads to an increase in the money supply in circulation. Topics: accounting... Technical Translator's Guide

MONEY ISSUE- in accordance with Art. 136 of the Constitution of the Republic of Belarus, the National Bank of the Republic of Belarus has the exclusive right to issue money. According to Art. 28 BC The National Bank has the exclusive right to issue money. Issue of money... ... Legal Dictionary of Modern Civil Law

For the development of commodity production and the growth of commodity exchange, it is necessary that the amount of money supply correspond to this process. When this balance is disrupted, the state begins to issue new money. How many and what kind of banknotes are needed is decided by experts, since excess money supply can also lead to negative phenomena in the economy.

Money emission - what is it? Goals and essence of the procedure

The issue of new banknotes in the state is carried out almost constantly, because worn and damaged banknotes have to be replaced (their service life is up to 5 years). As a result of such a replacement, the total amount of money in circulation does not increase. If, with the release of new coins and banknotes, the money supply begins to grow, then we can talk about emission. Its main goal is the formation of working capital to expand production.

Carrying out money issue in Russia is based on several principles:

• Monopoly . Only the State, represented by the Central Bank, has the right to issue new banknotes, withdraw funds from circulation and redistribute cash flows.
• Obligations . The ruble on the territory of the Russian Federation is the only official means of payment for settlements.
• Exchangeability . The Russian ruble can be exchanged in any amounts upon presentation of identification documents by the subject.
• Lack of binding . The ratio of the ruble to gold and other precious metals is not established.

As a result of money emission, the increase in the monetary base is exchanged for part of the national income, due to which the influx of funds into commercial banks increases and enterprises are credited.

Main types of money issue and organization conditions

Experts distinguish 2 types of money issue:

1. Spot . This is when new banknotes and coins of various denominations come into circulation to stimulate the country's economy. The printing press can be started when wages increase, prices for consumer goods rise, trade turnover increases, and so on.
2. Cashless . It is characterized by an increase in the volume of funds in bank accounts when financial and credit structures carry out active operations. In terms of volume, this type of emission prevails over cash emission.

At first, non-cash emission is carried out, so it is primary. Only then are additionally issued funds transferred to the accounts of commercial banks in the form of budget allocations or loan proceeds from the Central Bank. These funds are used to issue loans to entrepreneurs and the population.

When issuing cash, additionally issued banknotes are transferred to banks, and then similar amounts are debited from their correspondent accounts by bank transfer.

During the circulation process, money of one type can be easily converted into another, since they are interconnected. For example, cash that clients deposit at the bank's cash desk is credited to their accounts and transferred to the non-cash category. If part of the amount is somehow withdrawn from the account, then the non-cash money again becomes cash.

Who issues money in Russia?

In accordance with the legislative framework, the Central Bank has a monopoly right to issue money in Russia. The Board of Directors makes responsible decisions on the issue of new money supply or the withdrawal of part of the funds from circulation. The Central Bank pays special attention to the development of new banknotes, their design, durability and ways to protect money from counterfeiting.

Coins are minted in the mints of Moscow and St. Petersburg. Paper money is printed in specialized printing houses, where banknotes are provided with an increased level of protection.

The process of making money is strictly controlled by the Central Bank . It determines the required volume of emission and distributes cash evenly among the constituent entities of the Russian Federation.

How money is issued in the Russian Federation: procedure and mechanism of the procedure

To determine the size of the proposed issue, the Central Bank collects data on the passage of cash through the cash desks of commercial banks and identifies regions where there is a need for additional infusion of funds. Since it is very difficult to transport cash from the Center to remote areas, there are cash settlement centers (CCCs) in the regions, where banknotes are stored in reserve. In the generally accepted understanding, this is not money yet. They will have such a function only after they are put into circulation.

The RCC also has circulating cash desks, where commercial banks deposit all cash, and then it is distributed among them based on requests.

If the amount of cash receipts in bank accounts begins to exceed the established limit, then the money is withdrawn from circulation and transferred to the reserve fund. When the need for them arises again, the reverse process occurs with the permission of the Central Bank.

What will the excess emission of money lead to: possible problems in the country’s economy

An increase in cash in circulation would seem to stimulate consumer demand and enhance economic potential. But in fact, an excess money supply contributes to rising prices for goods and services without affecting the development of production. As a result of excessive money emission . And as a result, there is a redistribution of income. A person with a fixed salary has a decrease in purchasing power, while entrepreneurs with a hot commodity have unreasonable income. The country's balance of payments is disrupted.

Only financial institutions, exchanges and exporters benefit from inflationary processes. Ordinary citizens, as always, lose, losing not only from rising prices, but also from the abolition of wage indexation and so on. Prices are also rising for imported products, since the state cannot regulate the foreign exchange and food markets. Credits become unavailable.

Thus, we can conclude that the positive effect of money emission is possible only in conditions of stable production growth.

Topic 2. Issue and release of money into economic circulation

Issue of non-cash money

Cash emission.

Money supply and its elements.

Concept, essence and types of money issue

The concepts of “issue of money” and “issue of money” are unequal concepts.

Issue of money turnover happens all the time. At the same time, the amount of money in circulation does not increase.

Under emission of money is understood such release of money into circulation that will lead to a general increase in the money supply in circulation.

l Main purpose of the issue –– meeting the additional need of the economy for funds to expand production and form working capital.

lEmission can be of two types: budget (treasury), credit (banking).

lTo finance the state budget deficit, the Treasury issues treasury notes –– budget issue . It is determined not by the needs of real economic turnover, but by the size of the budget deficit.

lBut a significant part of the money is created by commercial banks as a result of credit operations.

lThis process is called bank issue and occurs through an increase in cash balances in bank accounts, the issuance of banknotes and the creation of electronic money.

There are two forms of credit emission: deposit (non-cash) and cash (banknote).

lIn accordance with the Banking Code of the Republic of Belarus, the National Bank has a monopoly right to issue. The issue of money is carried out by the National Bank through the release of non-cash and cash money into circulation. Cash is issued into circulation in the form of banknotes and coins.

Money issuance is carried out by the National Bank through short-term (up to one year) refinancing of banks in order to

maintaining the liquidity of the banking system of the Republic of Belarus and the stability of money circulation, the purchase by the National Bank of government securities freely tradable on the money market and carrying out operations in the domestic and foreign money markets aimed at increasing gold and foreign exchange reserves. The issue of money for long-term (over one year) refinancing of banks is prohibited.

2. Issue of non-cash money

l Non-cash money issue –– this is an increase in the volume of funds in bank accounts in the process of banks conducting active operations (operations related to the placement of their credit resources). Non-cash emission always precedes cash emission.

The National Bank issues non-cash money when it buys foreign currency, precious metals and stones, as well as government securities freely tradable on the money market or in the short-term (up to one year) refinancing of banks or the banking system as a whole and the stability of monetary circulation when providing loans Government of the Republic of Belarus, local authorities.

Money issued by the National Bank is credited to the appropriate accounts: correspondent accounts of banks, the Main State Treasury of the Ministry of Finance of the Republic of Belarus, its territorial bodies or local budgets. In the future, these funds either remain in circulation and are used for payments as non-cash payments, or are transformed into cash.

After the National Bank has issued a certain amount of money, banks are included in the emission process. Their participation is due to the existence of the multiplier effect (banking, credit, monetary, deposit multiplier). Bank multiplier is a mechanism for increasing the money supply in deposit accounts compared to the initial amount of money in the process of movement of non-cash funds through the system of commercial banks.

3. Cash emission

l The issue of cash represents their release into circulation, which increases the amount of cash in circulation.

l Technically emission –– this is the write-off of funds from the reserve funds of the National Bank to its working cash desks.

In market conditions, the Central Bank predicts the size of the expected issue.

In particular, the volume of cash circulation, the direction of cash flows, the distribution of the money supply in the country, and its aggregates are determined. The National Bank, as an issuing center, is entrusted with the task of organizing cash circulation, including the production, issue, storage, withdrawal and destruction of cash banknotes.

The production of banknotes and their issuance includes the following steps:

l determination of the level of need for new banknotes;

lprinting banknotes and minting coins, establishing means of protecting banknotes from counterfeiting;

lorganization of storage of non-issued banknotes and coins;

ldirect release of money into circulation.

lTo determine the need for cash, banks make forecasts of the expected receipts of cash at their cash desks, as well as possible withdrawals of money from their cash registers. The forecast of cash turnover is made based on the analysis of data from business entities served, individual entrepreneurs, and the population.

lThe consolidated forecast is compiled by the Central Bank (NB), using data from the forecast of the main directions of the country’s socio-economic development, and additional data is involved (statistical, forecast of retail turnover, volume of paid services of the population, data from communications and insurance authorities).

The National Bank ensures the publication of descriptions of cash in official media, which gives the public the opportunity to distinguish genuine signs from counterfeits.

4. Money supply and its elements

lThe most important object of regulation by the central bank is the amount of money or money supply in circulation.

Broad money supply is the totality of funds intended for payment for goods, works and services, as well as for the purpose of accumulation by non-bank financial institutions, commercial and non-profit organizations, individual entrepreneurs, individuals – residents of the Republic of Belarus in Belarusian rubles and foreign currency.

According to world standards, the expansion of money supply aggregates occurs as the degree of liquidity decreases.

Money supply aggregates M0, M1, M2, M2* are calculated in Belarusian rubles.

Unit M3 additionally includes transferable and time deposits in foreign currency, funds in securities (except for shares) in foreign currency, deposits in precious metals.

Unit M0 (cash)–– the most liquid part of the money supply. Includes banknotes and coins in circulation in the hands of individuals and in the cash registers of legal entities.

Unit M1–– aggregate M0 plus transferable deposits (balances of legal entities and individuals – residents of the Republic of Belarus on current, deposit and other demand accounts in Belarusian rubles).

Unit M2 –– (money supply in national definition) – M1 unit plus other deposits (time deposits), opening in banks to legal entities and individuals - residents of the Republic of Belarus in Belarusian rubles.

Aggregate M2* (ruble money supply)–– aggregate M2 plus funds in securities (except for shares) of legal entities and individuals – residents of the Republic of Belarus in Belarusian rubles.

Aggregate M3 (broad money supply)–– aggregate M2* plus transferable and time deposits in foreign currency, funds in securities (except for shares) in foreign currency and deposits in precious metals of legal entities and individuals – residents of the Republic of Belarus.

Cash foreign currency is not included in the broad money supply due to the limited use of it as a means of circulation and payment and due to the impossibility of accurately assessing its volume.

The main initial guidelines for determining the aggregates of the money supply are the data from the consolidated balance sheet of the National Bank and the consolidated balance sheet of banks of the Republic of Belarus

There must always be a certain amount of money in circulation, which depends on the volume of GDP, the rate of economic growth, the degree of development of the banking system, financial markets, the structure of money turnover, the velocity of money circulation, and the monetary policy of the state. Additionally, one should take into account the size and structure of the population’s monetary income, the relationship between supply and demand for money.