Credit restriction. Monetary regulation of the economy by the central bank Credit restriction involves
CREDIT RESTRICTION
Limitation of loan amounts by banks and the state in order to prevent the leakage of gold reserves abroad, to avoid the collapse of banks and inflationary processes.
Large legal dictionary. 2012
See also interpretations, synonyms, meanings of the word and what CREDIT RESTRICTION is in Russian in dictionaries, encyclopedias and reference books:
- CREDIT RESTRICTION
- limiting the size of loans by banks and the state in order to prevent the leakage of gold reserves abroad, to avoid the collapse of banks and inflationary... - RESTRICTION
CREDIT - see CREDIT RESTRICTION... - CREDIT in the Dictionary of Economic Terms:
RESTRICTION - restriction by banks and the state of the size of the loan in order to prevent the leakage of gold reserves abroad, to avoid the collapse of banks and ... - RESTRICTION in the Dictionary of Economic Terms:
(lat. restrictio - restriction) - 1) restriction of the production, sale and export of certain goods carried out by monopolies in order to artificially maintain ... - CREDIT in the Dictionary of Economic Terms:
SYSTEM - a set of credit relations existing in the country, forms and methods of lending, banks or other credit institutions that organize and implement... - CREDIT in the Dictionary of Economic Terms:
NON-BANKING ORGANIZATION - see... - CREDIT in the Dictionary of Economic Terms:
ORGANIZATION - a legal entity that, in order to make profit as the main goal of its activities, on the basis of a special permit (license) of the Central Bank ... - CREDIT in the Dictionary of Economic Terms:
MARGIN - the difference between the cost of goods fixed in loan agreements and the amount of the loan issued for the purchase... - CREDIT in the Dictionary of Economic Terms:
LINE - a legally formalized obligation of the bank to the borrower to provide him with loans (open a line of credit) within a certain period within ... - CREDIT in the Dictionary of Economic Terms:
COOPERATION - an association of small commodity producers to meet the credit needs of its members. Its funds are formed through share contributions and... - CREDIT in the Dictionary of Economic Terms:
REVOLVER CARD - see REVOLVER CREDIT CARD... - CREDIT in the Dictionary of Economic Terms:
CARD - personalized monetary document; a form of payment in which the bank assumes the risk of immediate payment for goods and services of its... - CREDIT in the Dictionary of Economic Terms:
APPLICATION - a client’s application for a loan. K.z. drawn up in any form, in which the following must be indicated: the full name of the client, his... - CREDIT in the Dictionary of Economic Terms:
DISCIPLINE - compliance by borrowers with lending rules and obligations arising from the terms of the loan transaction. In case of violation of K.d. credits apply... - CREDIT in the Dictionary of Economic Terms:
DISCRIMINATION - creation by a lender of less favorable conditions for receiving, using or repaying borrowed funds for some borrowers compared to others... - CREDIT in the Dictionary of Economic Terms:
VOINA - enhanced credit incentives for the export of competing goods to a certain ... - CREDIT in the Dictionary of Economic Terms:
BLOCKADE is one of the types of economic blockade of a country or group of countries by other countries or international financial and credit organizations, consisting of... - RESTRICTION in Medical terms:
(lat. restrictio restriction) destruction of foreign deoxyribonucleic acid under the influence of endonucleases ... - RESTRICTION in the Big Encyclopedic Dictionary:
(from Late Lat. restrictio - restriction) restriction of production, sale and export of goods, carried out with the aim of raising prices and obtaining monopoly profits; ... - RESTRICTION
(from Late Latin restrictio - restriction), restriction of production, sales and exports carried out by monopolies and especially international cartels with the aim of inflating prices... - RESTRICTION in the Modern Encyclopedic Dictionary:
- RESTRICTION
(from Late Latin restrictio - restriction), limiting the production, sale and export of goods, in order to increase prices, limiting the size of banks and the state ... - RESTRICTION in the Encyclopedic Dictionary:
and, f. 1. eq. Limiting the production, sale and export of goods in order to increase their value and obtain high profits. 2. ... - RESTRICTION
RESTRICTION (from Late Latin restrictio - restriction), restriction of the production, sale and export of goods, carried out with the aim of increasing prices and obtaining monopoly ... - CREDIT in the Big Russian Encyclopedic Dictionary:
CREDIT SYSTEM, a set of forms and methods of credit within one country; the totality of the country’s credit institutions (banks, insurance companies, pawnshops and... - CREDIT in the Big Russian Encyclopedic Dictionary:
CREDIT REFORM, a set of state acts aimed at changing credit... - CREDIT in the Big Russian Encyclopedic Dictionary:
CREDIT CARD, personal name. a document issued by a credit institution, certifying the identity of the owner of a bank account and giving him the right to purchase... - CREDIT in the Big Russian Encyclopedic Dictionary:
CREDIT BLOCKADE, refusal state or international finance organization to provide loans to a country or group... - RESTRICTION in the Complete Accented Paradigm according to Zaliznyak:
restriction, restriction, restriction, restriction, restriction, restriction, restriction, restriction, restriction, restriction, restriction, restriction, ... - RESTRICTION in the New Dictionary of Foreign Words:
(lat. restrictio restriction) 1) restriction of production, sales and exports carried out by capitalist monopolies with the aim of inflating prices for goods and ... - RESTRICTION in the Dictionary of Foreign Expressions:
[ 1. restrictions on production, sales and exports carried out by capitalist monopolies in order to inflate the prices of goods and obtain high profits; ... - RESTRICTION
restriction, restriction enzyme, ... - RESTRICTION in Lopatin’s Dictionary of the Russian Language:
restriction... - RESTRICTION in the Complete Spelling Dictionary of the Russian Language:
restriction... - RESTRICTION in the Spelling Dictionary:
restriction... - RESTRICTION in the Modern Explanatory Dictionary, TSB:
(from Late Latin restrictio - restriction), restriction of production, sale and export of goods, carried out with the aim of raising prices and obtaining monopoly profits; ... - RESTRICTION
and. 1. Reducing or lowering the level of loans from the country's central bank to commercial banks in order to curb inflation. 2. Limitation of production, sales... - NON-BANK CREDIT ORGANIZATION in the One-Volume Large Legal Dictionary:
- a credit institution that has the right to carry out certain banking operations. acceptable combinations of banking transactions for non-profit organizations are established by the Central Bank of the Russian Federation... - NON-BANK CREDIT ORGANIZATION
- a credit institution that has the right to carry out certain banking operations. Acceptable combinations of banking transactions for N.k.o. are established by the Central Bank... - CREDIT CARD in the Dictionary of Financial Terms:
a form of payment in which banks assume the risk of immediate payment for goods and services purchased by their depositors. The bank loan is repaid... - FINANCE COMPANY in the One-Volume Large Legal Dictionary:
- a credit institution that carries out certain banking operations. in international practice f.k. specialize in providing consumer loans, loans to small and medium-sized... - FINANCE COMPANY in the Big Legal Dictionary:
- a credit institution that carries out certain banking operations. In international practice, F.K. specialize in providing consumer loans, loans to small and medium-sized... - SYSTEM in the Dictionary of Economic Terms:
CREDIT - see CREDIT...
(from Latin creditum - loan, debt), economic relations between various individuals, social groups and states that arise when value is transferred to ...- COOPERATIVE MOVEMENT in the Great Soviet Encyclopedia, TSB:
movement, social and economic activities aimed at creating and developing cooperatives (consumer, credit, production, supply and marketing, housing, etc.). The emergence of a cooperative... - BANKS (ECONOMICAL) in the Great Soviet Encyclopedia, TSB:
special economic institutions that carry out: accumulation of funds and savings, provision of credit, carrying out cash payments, issuing certain types of money into circulation, ... - ENZYME in the Russian Synonyms dictionary:
amidase, amylase, aminopeptidase, protein, gastricin, hydroxylase, hydrolase, glycolidase, dehydrase, dehydrogenase, desmolase, diastase, zymase, isomerase, isoenzyme, invertase, invertin, kallikrein, carbonic anhydrase, carbonohydrase, ... RESTRICTED in the Large Modern Explanatory Dictionary of the Russian Language:
adj. 1. ratio with noun restriction, associated with it 2. Characteristic of restriction, characteristic of it. 3. Limiting, enclosing. Ott. ...
The “dear money” policy is applied in conditions of rising general price levels.
Tools used by the Central Bank during credit restriction:
Sale of securities (the process of withdrawing money from circulation is underway);
A parallel increase in the reserve norm and the discount rate.
Eventually:
The money supply decreases;
Interest rates of commercial banks are increasing;
The volume of investment by enterprises is reduced;
Price increases are decreasing.
Factors of efficiency of credit expansion and restriction:
1. speed of decision-making by the Central Bank (as a rule, decisions to change fiscal policy are made by parliament and for a long time are being discussed);
2. the degree of isolation of Central Bank managers from the pressure of lobby groups. A lobby is a political group of people.
Main goals of PrEP:
Increase in real GDP
Decrease in unemployment rate
Price stabilization
Achieving balance of payments stability.
Choosing the right concept of monetary policy in Russia is very difficult. This is due to the fact that, on the one hand, there are inflationary factors in the country that require a reduction in the money supply, which involves the use of credit restriction, but, on the other hand, the state needs investment, for which it is necessary to pursue a policy of credit expansion. Therefore, monetary policy must be combined with flexible budgetary, tax and structural policies of the Government of the Russian Federation. (from December 18, 2017, the refinancing rate is 7.75%. However, loan rates in other banks may be lower where there is government support. For example, Koshelev Bank, 5% rate for a specific project)
Today, the Bank of Russia quite clearly defines the goal of monetary policy – inflation targeting – and specific measures aimed at maintaining the stability of domestic prices and the exchange rate of the Russian ruble.
According to Article 34.1 of the Federal Law “On the Central Bank of the Russian Federation (Bank of Russia)”: “The main purpose of monetary policy is to protect and ensure the stability of the ruble by maintaining price stability, including to create conditions for balanced and sustainable economic growth.”
Methods Monetary policy is a set of techniques and operations through which subjects (banks, tax services, etc.) of monetary policy influence objects (tax rate, loan rates, etc.) to achieve their goals. The modern system of monetary policy methods can be classified according to various criteria.
1. Depending on the connection between the monetary policy method and the goal set, direct and indirect methods are distinguished.
Direct methods are administrative measures in the form of various directives from the central bank regarding the volume of money supply and prices in the financial market. Limits on lending growth or deposit attraction are examples of quantitative controls. Maximum interest rates on loans or deposits (bank deposits) are examples of interest rate controls. The introduction of direct restrictions for individual banks regarding the timing, size and other conditions of granting loans is a direct (administrative) method.
The implementation of these methods gives the fastest effect from the point of view of the central bank's control over the maximum volume or price of deposits and loans, over quantitative (money supply) and qualitative (demand for money) variables of monetary policy. When using direct methods, time lags (intervals) of monetary policy are reduced.
Direct methods are easier to use, they require less costs, and the consequences of their use are more predictable.
At the same time, direct methods of monetary policy are crude methods of external influence on the functioning of money market entities and affect the fundamentals of their economic activity. They may contradict the microeconomic interests of credit institutions, lead to ineffective distribution of credit resources, restrictions on interbank competition, and difficulties in the emergence of new financially stable institutions in the banking market.
Indirect methods of regulating the monetary sphere affect the motivation of behavior of business entities using market mechanisms and have a longer time lag. The consequences of their use are less predictable than when using direct methods, but their use does not lead to market distortions. Naturally, the effectiveness of using indirect methods of regulation is closely related to the degree of development of the money market. Setting the official discount rate is an indirect method.
2.Depending on the relationship between supply and demand and the set goals, monetary policy is distinguished:
1. Methods of regulating money supply. The money supply is understood as the money supply in circulation and consisting of the corresponding monetary aggregates. Methods for regulating money supply depend on the goals set within the monetary policy of a particular country:
1. If the goal of monetary policy is to maintain a constant level of the amount of money in circulation, then a strict restrictive policy is carried out mainly by methods of quantitative restrictions.
2. The goal of the state’s monetary policy may be to maintain a fixed interest rate to stimulate or, conversely, to restrain investment. This monetary policy is called flexible. If a flexible monetary policy is chosen, regulation of the money supply will allow fluctuations in the money supply depending on changes in the interest rate.
Money supply is the totality of cash in circulation and non-cash account balances held by individuals, legal entities and the state.
2. Methods of regulating money demand. The demand for money as an object of monetary policy is formed from the demand for money as
2.1.medium of exchange (for example, the demand for money for transactions)
2.2.demand for money as a store of value (otherwise, demand for money as assets, demand for reserve value or speculative demand).
Demand for money as an asset is the demand for liquid assets that people want to have at a given point in time at a given level of income.
Demand for money as a reserve value is a stock of value as a means of storing value.
Speculative demand is the demand for money based on speculators' belief that interest rates will rise, causing bond prices to fall. Therefore, it will be wise to hold your money until this fall and only then invest.
2.1. The demand for money as a medium of exchange is determined by the level of nominal GDP (directly proportional). The greater the income in a society, the more transactions are made, the higher the price level - the more money will be required to implement economic transactions within the national economy.
2.2. The demand for money as a store of value depends on the value of the nominal interest rate (inversely proportional). It should also be noted that when owning money in the form of cash and checkable deposits, which do not bring interest to the owner, certain opportunity costs arise (part of the money is eaten up by inflation) compared to using savings in the form of securities (since the growth of monetary mass due to interest).
Nominal interest rate - This is the interest rate on a security that is a fixed percentage of its face value (rather than its market value).
Nominal GDP– GDP calculated at current prices.
From 1991 to early 1995, the Central Bank of the Russian Federation pursued a policy of credit restriction. The refinancing rate was increased from 20% as of January 1, 1991 to 210% as of October 15, 1993. In the period from April 29, 1994 to August 24, 1994, the rate was gradually reduced to 130%, but already from October 12, 1994, the Bank of Russia again raised it to 170%, and soon to 180% and 200% per annum (as of on 11/17/94 and 01/06/95, respectively). During this period (1991 – early 1995), the Bank of Russia increased the required reserve ratio. Thus, as of June 1, 1991, the required reserve ratio was 2%. Gradually increasing this standard, the Bank of Russia, from February 1, 1995, introduces differentiation of required reserve standards depending on the terms and currency of commercial banks’ obligations: for demand accounts and time-limit obligations up to 30 days - 22%, for time-limit liabilities of banks from 30 days to 90 days - 15%, for term obligations over 90 days - 10%, for current accounts in foreign currency - 2%.
As a result of these tough measures of the main bank on monetary regulation of the economy, the following results were achieved:
Table 1.4.1
during 1991 – 1995
Analyzing the data in the table, we can conclude that the annual value of the consumer price index significantly exceeds the corresponding value of the growth rate of the money supply, which indicates the implementation of a monetary policy aimed at compressing the volume of money supply. Monetary regulation measures carried out to curb inflation achieved their goal, as evidenced by the dynamics of the consumer price index.
Since the spring of 1995, the Central Bank of the Russian Federation has been implementing a policy of credit expansion. The refinancing rate was reduced from 195% as of May 16, 1995 to 21% as of October 6, 1997. During the same period, the required reserve standards change, as evidenced by the table data: Table 1.4.2
Changes in required reserve ratios from May 1, 1995 to May 1, 1997.
| Date of change | Reserve requirements depending on the terms of obligations of commercial banks, % |
|||
| required reserve ratio | On demand and up to 30 days | 30-90 days | Over 90 days | For current accounts in foreign currency |
| 1.05.95 | 20 | 14 | 10 | 1,5 |
| 1.05.96 | 18 | 14 | 10 | 1,25 |
| 1.06.96 | 20 | 16 | 12 | 2,5 |
| 1.08.96 | 18 | 14 | 10 | 5 |
| 1.11.96 | 16 | 13 | 10 | 5 |
| 1.05.97 | 14 | 11 | 8 | 6 |
As the table data shows, the required reserve ratios for the obligations of credit institutions in rubles in the analyzed period are slightly reduced, but for accounts in foreign currency they increase significantly - 4 times.
As a result of the implementation of these activities, the following indicators were achieved:
Table 1.4.3
Dynamics of the consumer price index and the rate of annual growth of the money supply for the M2 aggregate during 1996–1997
Analyzing the data in the table, we can conclude that there has been a change in the relationship between the dynamics of the consumer price index and the growth rate of the money supply for the M2 aggregate: the growth rate of the money supply exceeded the inflation rate for the analyzed indicator. In general, during 1996-1997 the positive trend of decreasing inflation rates continued. The situation changes in 1998 as a result of the August crisis. Trying to prevent a crisis, the Bank of Russia, as a monetary regulatory authority, increases the refinancing rate. Initially, the rate was increased to 28% as of November 11, 1997, then to 42% as of February 2, 1998, after which a chaotic change in the refinancing rate occurred: in the period from July 11, 1997 to August 1, 1998, the rate changed 10 times , both in the direction of increase and in the direction of decrease. During the same period, reserve requirements for funds attracted by banks in foreign currency increase: up to 9% as of November 11, 1997 and up to 11% as of February 1, 1998. Despite the measures taken, the crisis could not be prevented. To reduce the negative impact of the crisis of August 24, 1998, the Bank of Russia is introducing a single standard for funds raised by credit institutions in rubles and foreign currency in the amount of 10%. For Sberbank of Russia, the required reserve requirement for attracted funds in rubles was reduced to 7%, after which a week later, on September 1, 1998, reserve requirements for attracted funds in rubles and foreign currency for Sberbank of Russia and credit organizations with a share of investments in government securities (GKO-OFZ) in working assets is 40% or more, reduced to 5%; for credit institutions whose share of investments in government securities in working assets is 20-40%, reserve requirements for funds raised in rubles and foreign currency are set at 7.5%.
Despite the implementation of these measures, the Bank of Russia was unable to prevent an inflationary surge, while the consumer price index for 1998 was 84.4%, and the growth rate of the money supply for the M2 aggregate was 20.9%.
In the post-crisis period, the Bank of Russia continues to implement a policy of credit expansion, gradually reducing the refinancing rate. However, at the same time, the main bank of the country increases reserve requirements, as a result of which two instruments of monetary regulation of different directions operate simultaneously, which led to the following results: Table 1.4.4.
Dynamics of the consumer price index and rates
annual growth of money supply according to the M2 aggregate
during 1999 – 10 months of 2001
Analyzing the table data, we can draw the following conclusions: the growth rate of the money supply exceeds the inflation rate according to the consumer price index. With a significant increase in the money supply (by 55.6% in 1999 and 62.5% in 2000), prices for consumer goods increased by 36.5% and 20.2%, respectively. Positive dynamics of decreasing inflation rates were also observed in 2001. Consequently, the increase in the total volume of money supply did not lead to the development of inflationary processes, which also demonstrates the regulatory role of the main bank of the country.
The monetary policy of the state is a set of actions taken by the state in the field of regulating money circulation and credit.
The main instruments of monetary policy are:
1. operations on the open market, i.e. transactions with government bonds (purchasing them from banks and the population leads to an increase in money in circulation; sales to banks and the population reduces the volume of money supply);
2. changes in reserve norms of commercial banks (an increase in reserve norms leads to a decrease in the amount of money in circulation; a decrease in required reserves increases the amount of money);
3. changes in the discount rate (accounting, or discount policy), i.e., the interest rate at which central banks collect payments on loans to commercial banks (increasing the rate limits the supply of money; decreasing it reduces).
In addition, direct regulation by the state of the interest rate and the establishment of lending limits for commercial banks are applied.
Monetary policy is the main instrument of state regulation, according to economists of the monetarist school. This direction was formed as a kind of protest against Keynesianism, because monetarists consider money, which is practically not present in numerous Keynesian models, as the main instrument of influence on the economy. The ideological sources of monetarism must be sought “in the quantitative theory of money, on which classical monetary theory was based”1.
According to the leader of monetarists M. Friedman, monetary regulation has a significant impact on the cyclical nature of economic processes, and this impact manifests itself with a certain time lag. Thus, fluctuations in the money supply lead to both “peaks” of the cycle, which are delayed by 16 months, and to crises, the delay of which is equal to one year.
M. Friedman recommends completely abandoning a consistent monetary policy, which still leads to cyclical fluctuations, and adhering to the tactics of constantly increasing the money supply, and empirically, the American scientist came to the conclusion that the optimal growth of money in the economy should be 4% per year.
For this rule to apply, M. Friedman believes, it is required:
1) determine the stock of money to which it relates;
2) establish how the rate of growth should be determined;
3) establish what assumptions need to be made for intra-annual or seasonal changes.
One of the reasons for the crisis in the Kazakh economy in the early 90s. Many authors consider attempts to import into Kazakhstan some monetarist structures, for example, a tight monetary policy aimed at combating inflation and budget deficits. However, supporters of the implementation of this model in Kazakhstan did not take into account the lack of congruence between the Western and national economies with their specific regional, sectoral and technological features.
The main types of monetary policy are:
1) credit expansion (cheap money policy) - a policy aimed at stimulating credit relations in the country and money emission;
2) credit restriction (policy of expensive money) - limitation of emission and lending.
1. The cheap money policy is used in conditions of cyclical decline in production volumes and rising unemployment. The Central Bank resorts to purchasing securities (bonds, treasury bills) from the population and commercial banks, lowers the reserve ratio and lowers the discount interest rate (or refinancing rate, i.e. the rate at which the state bank collects payments on loans issued to commercial banks ).
As a result of these measures, the so-called transmission (transmission) mechanism is activated, leading sequentially to:
1) growth in money supply;
2) a fall in interest rates of commercial banks;
3) growth of investment expenses of enterprises;
4) increase in real net national product.
Credit expansion also leads to the inclusion of transmission at the level of the country's international relations. What happens sequentially:
1) reduction in demand for national currency abroad;
2) depreciation of the national currency;
3) increase in net exports.
2. The policy of dear money is applied in conditions of rising general price levels. The central bank sells securities, thereby increasing the reserve ratio and the discount rate. As a result, the supply of money decreases, interest rates of commercial banks increase, the volume of investment by enterprises decreases, and price growth decreases.
Credit restriction at the international level leads to an increase in demand for the national currency abroad, an increase in the value of the national currency and a reduction in net exports.
The effectiveness of credit expansion and restriction depends on the following components:
a) on the speed of decision-making by the central bank (as a rule, decisions on changes in fiscal policy are made by parliament and are discussed for a long time);
b) insulating central bank managers from pressure from lobby groups.
In general, the main goals of monetary policy can be considered1:
1. increase in real GDP;
2. reduction in unemployment;
3. price stabilization;
4. achieving balance of payments stability.
The main types of monetary policy are credit expansion and credit restriction.
^
Credit expansion
(eng. credit expansion), or cheap money policy
(eng. easy money policy) – a policy aimed at stimulating credit relations in the country and money emission.
The cheap money policy is used in conditions of cyclical decline in output and rising unemployment.
Tools credit expansion:
purchase of securities (bonds, treasury bills) from the public and commercial banks;
lowering the reserve ratio;
lowering the discount rate (or refinancing rate, i.e., the rate at which a state bank collects payments on loans issued to commercial banks).
As a result of these measures, the so-called transmission (transmission) mechanism is activated, leading sequentially to:
growth of money supply;
falling interest rates of commercial banks;
growth of investment expenses of enterprises;
increase in real net national product.
Reduced demand for national currency abroad;
Depreciation of the national currency;
Increase in net exports.
^
Credit restriction
(English credit restriction), or tight money policy - restriction of emissions and lending.
The policy of dear money is applied in conditions of rising general price levels.
Tools, sold by the Central Bank during the implementation credit restriction:
sale of securities;
parallel increase in the reserve rate and discount rate.
Eventually:
the money supply is reduced;
interest rates of commercial banks increase;
the volume of investment by enterprises is reduced;
price increases are decreasing.
growing demand for national currency abroad;
increase in the value of the national currency;
reduction in net exports.
speed of decision-making by the central bank (as a rule, decisions on changes in fiscal policy are made by parliament and are discussed for a long time);
the degree to which central bank managers are insulated from pressure from lobby groups.
Main monetary policy objectives In general we can consider:
increase in real GDP;
reduction in unemployment;
price stabilization;
achieving balance of payments stability.
7ORGANIZATION OF THE BANKING SYSTEM
7.1Banking system and central bank
Currently, the banking system in most countries of the world consists of two levels:
central (state) bank (in the USA it is called the “Federal Reserve System”);
commercial banks and specialized financial institutions (investment and pension funds, insurance companies, etc.) performing certain banking operations.
Within a command economy, the banking system is one-tier: commercial banks are prohibited; the state bank alone carries out the corresponding banking functions.
Main functions of the central bank are:
emission function - is to issue paper and metal money into circulation;
the function of lending to commercial banks - i.e. the Central Bank is a kind of “bank of banks”, issuing loans to commercial banks, usually during financial crises;
the function of carrying out non-cash payments, so-called clearings;
function of storing gold and foreign exchange reserves of the state;
function of lending and settlement operations for the government;
function of storing reserves of commercial banks.
^ Bank reserves represent a certain share of commercial bank funds received from its depositors; A commercial bank is obliged to store these funds in the Central Bank and has no right to use them for lending.
First of all, the creation of reserves aims to guarantee the return of at least part of the deposits to depositors in the event of the collapse of commercial banks. By increasing the required reserve ratio, the Central Bank actually reduces the money supply, and vice versa.
The amount of bank reserves may differ for deposits of individuals and legal entities, as well as deposits in foreign currency.
Deposit policy policy of regulation of reserve norms by the Central Bank.
There are two main type of deposit policy
:
expansive – involves a decrease in reserve norms;
restrictive - on the contrary, leads to an increase in the norms of required reserves.
Central Bank Balance Sheet consists of the following components:
assets:
precious metals;
funds placed with non-residents and securities of foreign issuers;
loans and deposits (including to resident credit organizations; for servicing external debt);
securities (including government securities);
other assets (including fixed assets);
cash in circulation;
funds in accounts with the central bank (including funds from the government and resident credit institutions);
funds in settlements;
issued securities;
other liabilities;
capital;
profit of the reporting year.
In 1998, the European Central Bank (ECB), whose headquarters is located in Frankfurt am Main, began to function. The authorized capital of the Euro-Central Bank is 5 billion euros.
Among the main tasks of the main bank of Europe:
development and implementation of eurozone monetary policy;
management of official exchange reserves of eurozone countries;
issue of euro banknotes;
ensuring the inflation rate within the eurozone does not exceed 2%.
In accordance with Article 4 of the Federal Law “On the Central Bank of the Russian Federation (Bank of Russia)”, among functions of the Bank of Russia the following stand out:
The Bank of Russia establishes the rules for making payments in the Russian Federation;
establishes the rules for conducting banking operations;
carries out servicing of budget accounts at all levels of the budget system of the Russian Federation, unless otherwise established by federal laws, through settlements on behalf of authorized executive authorities and state extra-budgetary funds, which are entrusted with the functions of organizing and executing budgets;
organizes and carries out currency regulation and currency control in accordance with the legislation of the Russian Federation;
determines the procedure for making payments with international organizations, foreign states, as well as with legal entities and individuals, etc.
The State Bank of the RSFSR was founded in 1921; in 1923 it was renamed the State Bank of the USSR, which included formally independent organizations: Stroybank and Vneshtorgbank; The State Bank also included savings banks that attracted deposits from the population.
The main task of the Stroybank of the USSR (All-Union Bank for Financing Capital Investments) was long-term lending and financing of housing, cultural, communal, and some other types of construction.
Vneshtorgbank (Bank for Foreign Trade of the USSR) was formally a joint-stock company; among its “shareholders” were: the State Bank of the USSR, the Ministry of Finance of the USSR, the Ministry of Foreign Trade of the USSR, foreign trade organizations “Exportles”, “Soyuz-promexport”, “Tekhmashimport”, “Soyuzpushnina”, etc.
12/20/1991 The State Bank of the USSR was abolished and all its assets, liabilities and property were transferred to the Central Bank of the RSFSR.
Basic structural divisions of the Bank of Russia:
consolidated economic department;
Department of Research and Information;
cash circulation department;
Department of regulation, management and monitoring of the payment system of the Bank of Russia;
settlement regulation department;
accounting and reporting department;
Department of Licensing of Activities and Financial Recovery of Credit Institutions;
Department of Banking Regulation and Supervision;
Main Inspectorate of Credit Institutions;
financial market operations department;
department for support and control of operations in financial markets;
Department of Financial Monitoring and Currency Control;
balance of payments department;
Department of Methodology and Organization of Servicing Budget Accounts of the Budget System of the Russian Federation;
legal department;
Information Systems Department;
personnel department;
Department for work with territorial institutions of the Bank of Russia;
Finance Department;
Department of Internal Audit and Revisions;
Department of International Financial and Economic Relations;
Department of External and Public Relations;
administrative department;
General Directorate of Real Estate;
Main Directorate of Expertise;
Main Directorate of Security and Information Protection;
Department of Field Institutions.