Presentation on the topic of money and banks. How banks create money
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Presentation on the topic: Money and banks
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Money is the universal abstract equivalent of all commodities. Money is the universal abstract equivalent of all commodities. The development of the economy is based on the division of labor and specialization, which necessitates the exchange of produced goods. Initially, goods were exchanged for goods randomly. A simple form of value emerged. Then, as the economy developed, it became possible to choose when exchanging. The owner of the goods could, during the exchange, choose from a number of offered goods. A full or detailed form of value has arisen. The prototype of money was an equivalent commodity, for which other goods were increasingly exchanged. In different areas, these were different goods: axes, sheep, furs, shells. This is how the universal form of value appeared. Then came the monetary form of value, since simple natural exchange was inconvenient and therefore inefficient. Metal money is put forward for the role of the universal equivalent.
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At first, a bimetallic system functioned, when coins were made from both silver and gold. At the end of the nineteenth century, it was replaced by a monometallic system associated with the discovery of large deposits of gold in America. At first, a bimetallic system functioned, when coins were made from both silver and gold. At the end of the nineteenth century, it was replaced by a monometallic system associated with the discovery of large gold deposits in America. In the era of the formation and flourishing of commodity production and free competition, metal money was freely minted. The amount of money in circulation was automatically regulated by the rise in the price of goods. The disadvantages of metal money were: cumbersomeness in calculations when it came to big transactions. losses due to abrasion of coins per year, these losses amounted to three thousand kilograms. unproductive costs of maintaining the gold circulation. when using gold money, there was no necessary elasticity in relation to the expansion and contraction of the process of production of goods. the money supply was difficult to control.
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The demonetization of gold began. In this regard, gold ceased to be a money commodity, but remained a market commodity. Currently, gold is used for the needs of the electronics industry, for dental and medical purposes. The demonetization of gold began. In this regard, gold ceased to be a money commodity, but remained a market commodity. Currently, gold is used for the needs of the electronics industry, for dental and medical purposes. The credit form of money is associated with the appearance of paper money. The forerunners of paper money were warehouse receipts, which were used in ancient Rome by jewelers and bankers. Jewels were deposited with them, and in return they issued receipts that could be transferred or paid with them. Then banknotes appeared - debt obligations of bankers to pay a certain amount of money, and they no longer had a private, but a public guarantee, i.e. had liquidity. Later, the state took over the issue of money, and treasury notes appeared. They represent a promise to pay, not the payment itself. When replacing banknotes by the state, the Copernicus-Gresham law applies: “Inconvenient money crowds out convenient money from the sphere of circulation.”
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Currently, several types of money are used: Currently, several types of money are used: Natural money, in their role is a product with intrinsic value. The concept of intrinsic value applies to money that will have value even when it is not being used as money. They include all types of goods that were universal equivalents at the initial stages of the development of commodity circulation (cattle, grain, furs, shells, etc.), as well as money from precious metals. Paper (declared, symbolic) money is money devoid of intrinsic value. Symbolic money includes paper and credit money. Small change Bank papers: deposits, checks, bills of exchange All of the above is money, because. people accept them as payment, expecting, in turn, that money will be accepted from them when buying products. The main reason people accept money is the government's ability to guarantee the stability of money.
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Money performs the following functions: Money performs the following functions: A measure of value - in money, the cost of producing goods is kept, the prices of goods are measured. Means of circulation - money is an intermediary in the exchange of goods. Means of payment - this function is associated with the discontinuity in time of the movement of money and goods. An example is the provision of goods on credit (movement of goods occurred, but no movement of money) or the moment of receipt of wages (there was only movement of money). Store of value - this function does not work during inflation, the goods of inflationary demand are cars, real estate, jewelry. World money - when the national currency is used in international trade transactions. Basic properties of money: Liquidity Exchangeability Security Inflation
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All functions of money are described by Fisher's equation: All functions of money are described by Fisher's equation: MV = PQ M - amount of money in circulation; V is the rate of circulation of the monetary unit per year; P is the price level of goods; Q - the level of real output (the number of goods produced in the national economy for a certain period of time). The money supply indicator M includes: M1, M2, M3, ... banknotes current (checking) accounts bank deposits of households bank deposits of enterprises purchase of bank certificates government debt bills
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LAW OF MONETARY CIRCULATION - the amount of money needed for circulation depends on the sum of the prices of goods to be sold and the rate of circulation of money. LAW OF MONETARY CIRCULATION - the amount of money needed for circulation depends on the sum of the prices of goods to be sold and the rate of circulation of money. VELOCITY OF MONEY is the number of revolutions of the money supply per year. where each turnover serves the expenditure of income: V = (РхQ)/M Р - price level; O is the level of real output; M - the amount of money Money makes a turnover at an unequal speed, it depends on many factors, in particular, on the type of goods they serve for sale, and in general, on the state of the economy. FACTORS AFFECTING THE RATE OF MONEY TURNOVER principles of the financial system. habits, opinions and views on the future of the population. distribution of the money supply between various types of organizations and layers of people with different incomes
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The monetary system is a combination of financial institutions, various forms and methods of lending. Credit relations always arise there. where temporarily free cash is formed from some persons and a temporary need for additional cash resources from others. Banks are intermediaries in credit relations. MONETARY AND CREDIT SYSTEM includes: National (central) bank. commercial banks. Specialized banking institutions (investment banks, foreign trade banks, mortgage banks). Credit and financial institutions of non-bank type (insurance funds, pension funds, savings banks, investment funds).
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Private lending institutions include: Private lending institutions include: Insurance companies engaged in commercial risk or health insurance. Investment companies that ensure the initial issue of securities, invest individual savings of citizens in securities and carry out trading operations with them. Factoring companies are created to meet payment deadlines and collect funds. Bank (from Italian banco - a bench, a table on which money changers laid out coins) - a financial institution. Foreign banks based entirely on foreign capital can be created in the country. They are engaged in the fact that they specialize in international operations. issue loans to local national companies. perform operations on the national market with securities. select potential trading partners for their national firms. provide economic information about the peculiarities of the market of the host country.
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The functions of the National Bank are: The functions of the National Bank are: monetary regulation of the money supply and the level of the interest rate. organization of interbank settlements and cash services for commercial banks. establishing, together with the Ministry of Finance, cash execution of the state budget through commercial banks. registration of commercial banks and control over their compliance with the established mandatory standards, application of banking legislation and regulations issued by the National Bank. control over the opening of branches and representative offices of foreign banks in the country. organization of international payments. regulation of foreign economic banking activity. streamlining the credit market. ensuring a unified accounting and reporting procedure in the banking system. exercising a monopoly right to issue money. granting loans to commercial banks in case of difficulties. issue and redemption of government securities. national treasure trove.
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The work of commercial banks is based on two postulates: risk and profit. The main sources of credit resources of commercial banks are: the funds of the statutory fund, time deposits of the population and enterprises, demand deposits of the population and enterprises, profits received Commercial banks perform important functions in creating normal conditions for the development of the public economy: they are intermediaries in the accumulation and redistribution of monetary resources, act as the main creditors of business activities, including the state as a business entity, provide current settlement transactions for clients, including check services for clients, are engaged in the placement of securities among investors, carry out foreign exchange transactions, and carry out trust transactions.
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There are the following TYPES of LOANS: There are the following TYPES of LOANS: Short-term - a loan for up to 1 year provided for the formation of working capital serving the current economic turnover Medium-term - for up to 5 years, necessary for expanding and improving production. Long-term - up to 10 years, which is a source of capital investments in new construction, reconstruction. This loan is repaid in installments from the profit Loan interest is the payment of the person taking the loan for the use of funds. Rate of loan interest = amount of loan interest / amount of loan capital The rate of loan interest depends on the average rate of profit in the country, usually it does not exceed the rate of profit. It is determined based on the ratio between supply and demand in the financial market and the refinancing rate of the National Bank.
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Conditions for obtaining a loan: Conditions for obtaining a loan: Providing a business plan. Provision of collateral: pledge of property. pledge of securities. insurance in insurance companies of the risk of default. bank guarantees. Conditions for issuing loans: The term of the loan (the loan is issued for a certain period). Loan repayment. Target nature of the loan, i.e. A loan is issued by a bank for strictly specified purposes. Loan security in the form of a pledge of property or securities or bank loan insurance. Loan payment - for the use of bank money, a percentage is charged from the profit of the enterprise.
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There are the following FORMS of LOANS: There are the following FORMS of LOANS: INVESTMENT LOAN is a loan taken to create or expand an enterprise. Borrowed funds are used as capital that generates profit. The resulting profit breaks down into entrepreneurial income, which remains with the borrower, and loan interest, which is returned to the lender. COMMERCIAL LOAN - this term is used in two cases: When a bank issues a loan to a trade organization for the implementation of any trade commercial transaction, for example, the purchase of a large consignment of profitable goods. In case of deferred payment for goods or services provided to the buyer by the seller of the goods.
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FINANCIAL LEASING is the provision of a loan for the rental of equipment. FINANCIAL LEASING is the provision of a loan for the rental of equipment. The leasing company at the expense of its own and borrowed funds buys equipment on behalf of the client. Simultaneously with the purchase of equipment, the leasing company signs a lease agreement with the client. After the end of the contract, the equipment can become the property of the tenant. CONSUMER CREDIT is the sale of goods to the public on the terms of payment in installments within a certain period. A MORTGAGE LOAN is a loan issued on the security of property (house, car, cottage), which must be insured.
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Multiplicative expansion and reduction of deposits - the creation (withdrawal) of non-cash money, the fundamental property of the banking system to expand deposits in the process of lending by multiplying any additional resources coming from outside this system (mainly the central bank by providing them with loans, buying securities, foreign currency) , as well as to reduce deposits while reducing these resources. Multiplicative expansion and reduction of deposits - the creation (withdrawal) of non-cash money, the fundamental property of the banking system to expand deposits in the process of lending by multiplying any additional resources coming from outside this system (mainly the central bank by providing them with loans, buying securities, foreign currency) , as well as to reduce deposits while reducing these resources.
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In order to understand the mechanism of the functioning of the monetary market, it is necessary to consider the demand for money and their supply. In order to understand the mechanism of the functioning of the monetary market, it is necessary to consider the demand for money and their supply. DEMAND FOR MONEY is the money needed by households and businesses to complete purchase and sale transactions. FACTORS AFFECTING MONEY DEMAND: The amount of goods, services and factors of production offered for sale.
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The graph shows that the demand for money is inversely proportional to the movement of interest rates, both in the case of choosing between buying bonds and putting money in a bank, and in the case of taking a loan The graph shows that the demand for money is inversely proportional to the movement of interest rates, both in the case of choosing between buying bonds and depositing money in a bank, and in the case of taking a loan
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The price level for the offered goods, services for factors of production. A higher price level requires more money. The price level for the offered goods, services for factors of production. A higher price level requires more money. The amount of total income that determines the number of purchased goods. The rate of turnover of money - the higher it is, the less money is required. Let's summarize the above: "The higher the total income and prices, the lower the turnover rate, the more money is needed to service the movement of goods, the services of factors of production" Let's express this in the form of a formula: (PxY) / V + L (r) D - demand for money . P - prices for goods. Y - the amount of total income. V is the rate of money turnover. r - level of interest rates.
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The MONEY SUPPLY is organized by the state represented by the National Bank through the issue of money and through the management of commercial banks. The MONEY SUPPLY is organized by the state represented by the National Bank through the issue of money and through the management of commercial banks. MONEY ISSUE - issuance of paper money by the National Bank. It is he who determines how many of them will be in circulation. Let us introduce such a concept as MONEY AGGREGATES, i.e. joint MONEY OFFER. Let us clarify that aggregation is the combination of individual units or data into a single indicator. Unit M1 is the supply of money in the form of cash in circulation (paper and metal) and deposits in banks, on which checks can be drawn. The appearance of bank deposits is connected with the fact. that payment for goods can be both in cash - using paper money, and non-cash, by transferring the required amount from account to account. A non-cash form of payment is preferable, firstly, it is safer, and secondly, 80% of all cash payments do not make a profit. Aggregate M2 is the supply of money in cash and checkable deposits plus highly liquid financial assets. The MZ aggregate is a combination of the M2 aggregate and large term deposits (deposit certificates of enterprises)
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There are believed to be three main reasons why people choose to keep their savings in cash and checking accounts: There are three main reasons believed to be why people choose to keep their savings in cash and checking accounts: Transaction motive - cash is easier to pay for the purchase if necessary. Precautionary motive - it may be necessary to urgently pay for the purchase and the money must be at hand. Speculative motive - arises from the desire of a person to avoid capital losses in the event of an unsuccessful investment in bonds, stocks or other securities. Keynes drew attention to the following trend: the magnitude of the demand for money gradually falls with the fall in the rate of interest on the securities market.
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CHANGE IN THE RATE RATE CHANGE IN THE RATE RATE is the percentage at which the National Bank lends to commercial banks. Commercial banks from time to time feel the need for financial resources. They act as borrowers and can apply to another commercial bank or to the National Bank of the Republic. The National Bank, providing loans to commercial banks, may pursue a policy of "expensive" or "cheap" money. An increase in the discount rate reduces the desire of banks to take out loans and thereby reduces the aggregate money supply. CHANGING THE MANDATORY RESERVE RATE MANDATORY RESERVE is a part of credit funds of commercial banks, which must be transferred to a special reserve account with the National Bank without fail. The required reserve ratio is established by the National Bank of the Republic. Firstly, this is done in order to insure part of the deposits of bank customers if a commercial bank becomes insolvent. Secondly, by increasing the required reserve ratio. The National Bank restricts the use of funds by the bank and thereby extinguishes the business activity of entrepreneurs. And vice versa, reducing the reserve ratio. The National Bank facilitates the release of funds and thus contributes to the increase in business activity.
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OPERATIONS IN THE OPEN MARKET OPERATIONS IN THE OPEN MARKET This is the purchase or sale of government securities - government bonds, treasury bills in order to regulate the money supply. This is a market measure that does not involve any coercion on the part of the state. The initiator of operations on the open market is always the state. It operates through the National Bank. The second participant in transactions are commercial banks or the public. Depending on the policy pursued by the state, economic entities act either as sellers or as buyers. CARRYING OUT THE DENOMINATION DENOMINATION is the enlargement of the monetary unit in order to give greater usefulness to the national currency. Denomination is carried out if, as a result of high inflation, money has greatly reduced its purchasing power.
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An increase in national income shifts the demand curve for money upwards to the right. The money supply remained at the same level. To replenish cash reserves, economic entities will begin to sell securities and apply for loans. This will lead to the fact that the market price of securities will decrease and the rate of loan interest will increase. An increase in national income shifts the demand curve for money upwards to the right. The money supply remained at the same level. To replenish cash reserves, economic entities will begin to sell securities and apply for loans. This will lead to the fact that the market price of securities will decrease and the rate of loan interest will increase.
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Now suppose that the money supply has changed as a result of a change in the monetary policy of the National Bank. He sold securities on the open market, reducing the amount of money in circulation. Now suppose that the money supply has changed as a result of a change in the monetary policy of the National Bank. He sold securities on the open market, reducing the amount of money in circulation.
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An increase in demand shifts the demand curve upward to the right. The MS money supply curve is fixed at 10%. An increase in demand shifts the demand curve upward to the right. The MS money supply curve is fixed at 10%. The shift in demand tends to increase interest rates. The National Bank, not wanting to allow this, buys securities from banks. Bank reserves are increasing, the money supply is growing, the target has been reached, rates have remained at the same level.
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Using this model, you can explore the interaction of money and goods markets. You can find out how stable their joint equilibrium is, how long it lasts, how certain options for state regulation will affect it. Using this model, you can explore the interaction of money and goods markets. You can find out how stable their joint equilibrium is, how long it lasts, how certain options for state regulation will affect it.
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MECHANISM OF THE MONEY MARKET is as follows: MECHANISM OF THE MONEY MARKET is as follows: If the interest rate exceeds the equilibrium level, then the speculative demand for money will decrease, since the owners of savings will direct them to purchase securities. The demand for these securities will increase, and hence their prices, which will affect the rate of interest. It will begin to decline to the level of equilibrium. This is explained by the fact that the situation on the securities market is connected with fluctuations in interest rates. If interest rates are high, then securities are comparatively cheap (an alternative to savings). If the interest rate is below the equilibrium level, then the number of people who want to keep their savings in securities will decrease and the demand for them will fall. This will lead to an increase in the level of interest rates to a state of equilibrium. This is because the owners of a certain amount of money believe that at a low rate of interest, securities are too expensive. They refuse to purchase them, waiting for more favorable conditions.
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You can quickly make a decision and put it into practice You can quickly make a decision and put it into practice Monetary policy is more flexible in the socio-political sense. The return from it is faster. If fiscal policy affects the commodity market, then monetary policy affects the financial market. If the demand for money has changed due to changes in the velocity of money, then in this case one should separate the real economic processes and the consequences of changes in the velocity of money. To do this, the amount of money in circulation must change according to the velocity of circulation of money, naturally, in the opposite direction. If the shift in the demand for money was due to changes in the volume of production due to a change in the phase of the economic cycle, then it is necessary, depending on the phase, to either increase interest rates (rise phase) or lower them (decline phase). If the demand for money is due to rising prices, then it is recommended to keep a constant amount of money in circulation, making the rate of interest free.
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Since the introduction of the kroon, the principle of Estonian monetary policy has been a currency committee, that is, a currency is pegged to the rate of another currency and their rates simultaneously change relative to other currencies, remaining unchanged relative to each other. At first it was 1 Deutschmark = 8 crowns, now 1 Euro = 15.65 crowns. The Estonian kroon is not listed on the world market, so for small countries the principle of the currency board has a stabilizing value. Eesti Pank does not have the right to additionally issue money other than a technical need (replacement of worn banknotes). Estonia does not have a system of pegging to the gold reserve. Since the introduction of the kroon, the principle of Estonian monetary policy has been a currency committee, that is, a currency is pegged to the rate of another currency and their rates simultaneously change relative to other currencies, remaining unchanged relative to each other. At first it was 1 Deutschmark = 8 crowns, now 1 Euro = 15.65 crowns. The Estonian kroon is not listed on the world market, so for small countries the principle of the currency board has a stabilizing value. Eesti Pank does not have the right to additionally issue money other than a technical need (replacement of worn banknotes). Estonia does not have a system of pegging to the gold reserve. The government and the Bank of Estonia remain fully committed to the currency committee system and the current fixed kroon/euro ratio. This is considered to provide sufficient framework conditions for participation in the European Monetary Union (ERM2).
OUTLINE: Introduction. 1. Money The origin of money. 1.2.Functions of money. 2. Banks. The emergence of banks. Bank operations. 3. Settlement part. Conclusion. List of used literature.
INTRODUCTION Nowadays, money has become the meaning of life for many people. A lot of people spend all their time making money, sacrificing their family, relatives, personal life. "Money bewitches people. Because of it they suffer, they work for it. They think of the most skillful ways to spend it. Money is the only commodity that cannot be used except to get rid of it. It will not feed you, will not clothe you, will not they will give shelter and will not entertain until you spend or invest them. People will do almost everything for money, and money will do almost everything for people. Money is a captivating, repetitive, mask-changing mystery "(Honoré de Balzac).
Having a surplus of money, people invest it in real estate, developing their business, etc. But in a market economy, this can be risky and does not always lead to an increase in income. Money, like any commodity, can be bought and sold on the market. And just as business cannot exist without the exchange of money and goods, so the circulation of money is unthinkable without the participation of intermediaries - banks. Due to the fact that at present the activities of banking institutions are very diverse, their true nature is uncertain. Today, banks are engaged in various types of operations. In addition to organizing money circulation and credit relations, insurance operations, the purchase and sale of securities, intermediary transactions and property management, and financing of the national economy are carried out through them.
Each person is already or can be a potential client of banks. That is why the topic of this study is relevant in our time. Objectives of the research work: 1) determination of the place and role of money and banks in modern society; 2) to show on concrete examples the essence of banking operations, as well as their profitability for both the bank client and the bank itself.
1. MONEY The origin of money. Many thousands of years ago, people invented something that after a short time began to be valued more than anything else. What made a real revolution in the sphere of the movement of material goods, and the economic life itself pushed several stages forward. The historical periods of the development of money circulation are quite consistent with the types of monetary units, so it would be best to consider the following milestones in the development of money: 1) Quasi-money - this includes all means of exchange that do not fit into the modern idea of \u200b\u200ba person about money. 2) Metal money. They are understood as money made from various metals, whether it be gold, silver or copper. 3) Paper money. 4) Electronic signs of modern network payment systems. The main criterion in this classification is not the source material with which money is made, but the method of their circulation, circulation in commodity circulation.
The first money invented by mankind least of all resembled a banknote, and few people would turn their tongues to call them money in the traditional sense of the word. Nevertheless, they could perform the main monetary function - the function of the general commodity equivalent, therefore, accordingly, they were money. Strictly speaking, initially the role of money was played by commodities exchanged for each other in certain quantitative and qualitative ratios. So, for example, products were exchanged for valuable goods with a long shelf life: furs, grain, rare stones, sea and river shells, and so on. Cattle became a commodity by which all other commodities were valued, and which was also readily accepted everywhere in exchange for them. In a word, cattle acquired the function of money and served as money already at this stage. With such necessity and rapidity, the need for a special commodity, money, developed already at the very beginning of commodity exchange. With the division of social production into two large main branches, agriculture and handicrafts, commodity production arises, and with it, trade. From now on, noble metals (they are not amenable to chemical attack, and even relatively rare in nature) begin to become the predominant and universal commodity money, but at this time they are not yet minted, but only exchanged simply by weight.
Coins began to be made at the beginning of the 6th century BC in the territory of Lydia. Several forms of production (issue) of metal money are known: Monometallism. Occurs when coins are made from a single metal. For example, from copper (Ancient Rome), gold (Western European countries) or silver (Russia). Bimetallism. With him, a mixture of metals (not necessarily precious) took place. This form is inherent in all countries at a late stage in the development of capitalist relations. Base metals, such as copper, very often initially served as money, and then were already supplanted by noble metals. Copper, and after the introduction of the gold currency, silver, ceased to be measures of value, although copper and silver coins continue to function as a medium of exchange in petty trade. They began to correspond now to certain weight parts of gold. The value they represent varied according to the real value of gold and was not in the least affected by fluctuations in the value of silver and copper.
The first paper money originated in medieval China. The first mention of paper money dates back to the 11th century. Paper money can only replace gold money as a medium of exchange, but not as a measure of value. They can replace them only insofar as they represent certain quantities of gold. Paper money can never be more valuable than metal money, or represent more gold than can be absorbed by the circulation of commodities.
1.2. FUNCTIONS OF MONEY. Economists identify five main functions of money. 1. Measure of value: money measures the value of goods through prices, thereby comparing goods with qualitatively different consumer properties. In other words, money serves as a kind of "ruler" for measuring prices. This function is so important that money is most often defined precisely as a universal equivalent. In fulfilling the role of a measure of value, money is necessary as mentally represented money. For example, to assert that a kilogram of pears is twice as expensive as a kilogram of apples, it is enough to have prices; money itself in any material form is not needed at all for this comparison.
2. Medium of circulation: money plays the role of intermediaries in the exchange of goods. Instead of directly exchanging one commodity for another, which is called barter, commodity producers receive money for the commodity they sell, with which they purchase other goods they need. This function is described by the formula commodity-money-commodity. When money plays the role of an intermediary, the acts of buying and selling do not coincide in time and space. A commodity producer gets the opportunity, for example, to sell one commodity today, and buy another only in a day, a week, a month, and so on. Further, he can sell his goods in one place, and buy the goods he needs in a completely different place. Thus, money as a means of circulation overcomes the temporal and spatial limitations of exchange relations.
3. Store of value: Money creates a store of wealth. We are talking about the ordinary accumulation of funds before buying any expensive goods (or accumulation for other purposes). For example, to buy a car, you need to save money for a number of years until the required amount is accumulated. There is a break in the chain: instead of commodity-money-commodity, first commodity-money occurs, and only then, after a considerable period of time, money-commodity. Money is temporarily withdrawn from circulation and is "in the hands" of commodity producers, the sale of one product is not accompanied by an immediate purchase of another. For the effective performance of this function (as well as for the function of a measure of value), it is very important that money retains its value, that is, does not depreciate. 4. Means of payment: the movement of money "breaks away" from the movement of goods, lags behind it. This happens when credit develops. So, the buyer can buy a car on installments, as a result of which he immediately becomes its owner, but still makes installments for it for a long time. 5. World money: manifested in the free circulation of certain types of money outside their national borders. Today, this role is played by the most reliable national currencies. This is, first of all, the dollar and the euro.
2. BANKS. The emergence of banks. Bank operations. Already in ancient times, usury was widespread - the issuance of money at interest. The difference between the amount that was returned to the usurer and that which was originally taken from him was called interest. So, in Ancient Babylon it was already 20% or more! This meant that an artisan who took 1,000 monetary units from a usurer for a period of one year returned to him after a year at least 1,200 of the same units. It is known that in the XIV - XV centuries. banks were widespread in Western Europe.
Banks at that time were called institutions that lent money to princes, merchants, artisans, financed long-distance travels, conquests, etc. Of course, banks did not give money disinterestedly: they took a fee for the use of the money provided, just like usurers in antiquity. This fee was usually expressed as a percentage of the amount of money lent.
Those who borrow money from a bank are called borrowers, and a loan, i.e. The amount of money borrowed from a bank is called a loan. The main part of the money that banks issue to borrowers is the money of depositors, which they deposit in the bank for safekeeping. Part of the profit that the bank receives, it transfers to depositors in the form of a fee for using their money. This fee is also usually expressed as a percentage of the value of the contribution. Thus, the funds deposited in the bank, after a certain period of time, bring some income equal to the amount of interest accrued over this period.
So, on the one hand, banks accept deposits and pay interest on these deposits to depositors, and on the other hand, they give loans to borrowers and receive interest from them for using this money. The difference between the amount that the bank receives from borrowers for granted loans, and the amount that it pays on deposits, is the bank's profit. Thus, the bank is a financial intermediary between depositors and borrowers.
One of the most common ways to attract savings from citizens, firms, etc. to the bank. is the opening of a savings account by a depositor: the depositor can deposit additional amounts of money into his account, can withdraw a certain amount from the account, can close the account, completely withdrawing the money stored on it. At the same time, the depositor receives a fee from the bank in the form of interest for using the money to issue loans to entrepreneurs, firms, the state, other banks, etc.
3. CALCULATION PART. Let's consider schemes for calculating a bank with depositors. Depending on the method of accrual, interest is divided into simple and compound. Simple interest: the increase in the So deposit under the simple interest scheme is characterized by the fact that the interest amounts during the entire storage period are determined based only on the initial amount of the So deposit, regardless of the storage period and the amount of interest accrued.
Let the depositor open a savings account and deposit S o rubles into it. Let the bank undertake to pay the depositor at the end of each year p% of the initial amount S o. Then, after one year, the amount of accrued interest is S o p / 100 rubles and the amount of the contribution will be equal to S \u003d S o (1 + p / 100); here p% is called the annual interest rate. If, after one year, the depositor withdraws the accrued interest S o p / 100 from the account, and leaves the amount So, the bank will again accrue So p / 100 rubles, and in two years 2 S o p / 100 rubles. After n years, the contribution according to the simple percentage formula will be: S n= S o (1 + (pn): 100) (2)
Consider another way of calculating the bank with the depositor. It consists in the following: if the depositor does not withdraw the amount of accrued interest from the account, then this amount is added to the main deposit, and at the end of the next year the bank will accrue p% already on a new, increased amount. This means that the bank will now charge interest not only on the principal deposit, S o , but also on the interest that is relied upon. This method of calculating "interest on interest" is called compound interest. S n= S o (1 + p:100), (2) where n is the term of the deposit = 1, 2, 3, …
Example 1. The bank pays depositors every year 8% of the deposited amount. The client made a contribution in the amount of rubles. What amount will be in his account in 5 years, in 10 years? To solve this problem, we use formula (1): 1) S= (1+85:100)= ,4= (rubles) – in 5 years; 2) S= (1+810:100)= ,8= (rubles) – in 10 years.
Example 2. A depositor opened a bank account, depositing 2,000 rubles on a deposit with an annual income of 12%, and decided not to take interest charges for 6 years. How much will he have in his account after 6 years? Because the depositor does not take interest accruals, then the amount of the deposit with interest will be calculated according to the formula (2), i.e.: S=2000(1+12/100), where n=6; S=20001, ~3947.65 (rub.)
Example 3. At what interest rate will a deposit of 500 rubles increase to 650 rubles in 6 months? Let the interest rate be x%. Then we will express it from the formula for calculating simple interest (1), substituting the already known data: 500(1+6x:100)=650; 5(100+6x)=650; X=650; X=5 (%).
Example 4. The bank gave the client a loan in rubles. at 20% per annum for 3 months. What amount will the client have to return to the bank after the deadline? Let's define the monthly interest: Р months =20/12=1, And since the client took a loan for 3 months, then: Р=1, =5. Let's find the refund amount using the formula (1): S=100000(1+5:100)= (rub.)
Example 5. According to the previous problem, determine the real interest rate of the bank if it services 3 more customers one after the other on the same terms, while issuing a loan in the amount of the returned amount with interest. 1) S 1 (example 4) = rubles. 2) S 2 \u003d .05 \u003d (rubles) 3) S 3 \u003d .05 \u003d 115762.5 (rubles) 4) S 4 \u003d 115762.51.05 \u003d 121550.63 (rubles) The total amount of interest received is: p = ,63=52563.13 Thus, the real interest rate is not 20%, but: Р real =52563.13: ~ 52.56%.
Example 6. A bank issued a loan to a client on the following terms: initial amount - rubles, interest rate - 170% per annum, loan term - 2 years. Determine how many times the amount of debt at the end of the loan period will exceed the original amount of debt. According to formula (1), we determine the amount of the return: S=200000(1+2170:100)= (rubles). The amount of debt by the end of the loan term will exceed the initial amount of debt by: :200000=4.4 (times)
Example 7. The bank issued a loan in the amount of rubles for 3 years at 50% interest per annum on the terms of simple interest with the requirement of a uniform monthly repayment of the debt during this period. How much does the client have to return each month? Using formula (1), we find the amount of debt with interest for 3 years: S=24000(1+350:100)=60000 Therefore, every month the client will have to repay: 60000:3:12=1666.67 (rubles)
Example 8. The client put rubles in the bank. During the first year and a half, the interest rate on the deposit was 20% per annum, then the rate was raised to 40% - this rate was six months, after which it rose to 50%. How much after four years will the bank have to return to the client? S 1 \u003d 20000 (1 + 1.520: 100) \u003d 26000 (rubles); S 2 \u003d 26000 (1 + 0.540: 100) \u003d 31200 (rubles); S 3 \u003d 31200 (1 + 250: 100) \u003d 62400 (rubles).
TO REVEAL THE ESSENCE OF A CREDIT, LET'S CONSIDER THE FOLLOWING EXAMPLE. Example 9. A credit institution provided an individual with a special-purpose loan in the amount of rubles for a period of 3 years at 25% per annum. It is necessary to calculate monthly payments of the client to the bank.
Solution. Loan term = 3 years = 36 months. Calculate the monthly repayment of the principal amount: RUB. : 36 months = 2,777.78 rubles. Those. the client must pay 2,777.78 rubles monthly. But this is an incomplete amount, because This does not include interest on loans. Let's calculate their sum for 1 month: .25: 12 = 2083.33 (rubles). Thus, the client must pay the bank in the first month: 2777.33 = 4861.11 (rubles)
To calculate payments for the 2nd month, it is necessary to subtract the monthly principal installment from the amount of the loan received, and then accrue interest on the amount received, i.e.: - 2777.78 = 97222.22 (rubles) 97222.22 0.25 : 12 = 2025.46 (rubles) Thus, the total amount of payments in the 2nd month will be: 2777.46 = 4803.24 (rubles)
To calculate payments for using the loan in the 3rd month, it is necessary to subtract the amount of the monthly installment from the amount of the principal debt received when calculating the installment in the 2nd month, and then calculate the interest: 97222.22 - 2777.78 = 94444.44 (rubles) 94444, 44 0.25:12 = 1967.59 (rubles) Thus, the amount of payments by the client in the 3rd month: 2777.59 = 4745.37 (rubles) The payments for the remaining months are calculated in a similar way. We will draw up a payment schedule for the client.
Month InstallmentInterestAmountBalance 1678.244456.781620.374398.781562.494340.781504.624282.781446.754224 ,781388,884166,781331,014108,781273,144050,781215,273993.58
Thus, the client pays the bank for using the loan the amount of 38541.5 rubles. The total amount paid is: .5 = .5 (rubles)
CONCLUSION. The existence of mankind without money in a market economy is impossible, since they play a very important role, manifested in their main functions: means of circulation, means of payment, means of accumulation. The circulation of money is unthinkable without the participation of intermediaries - banks. They are at the center of economic life, serve the interests of producers, linking industry and trade, agriculture and the population with cash flow. All over the world, banks have significant power and influence, they manage the huge money capital flowing to them from enterprises and firms, from merchants and farmers, from the state and private individuals.
Banks have firmly entered our lives. Although the role of banks has been so often ignored in Russia, their economic purpose has been reduced to such an extent that even now, when our country has begun to live according to different economic laws, many people do not give the activities of banks the attention that they deserve. The question of what a bank is is not as simple as it seems at first glance. In everyday life, banks are stores of money. At the same time, this and similar worldly interpretation of the bank not only does not reveal its essence, but also hides its true purpose in the national economy. Based on the examples given in the research work, it can be concluded that for bank customers, keeping money in a bank is not only reliable, but also profitable.
The banks themselves, being a mechanism for making a profit for their customers, also make a profit when making operations to place funds attracted to deposits. Therefore, the cooperation of banks with their depositors is mutually beneficial, which is shown when solving problems in this research work.
LIST OF USED LITERATURE 1.Money. Credit. Banks. Ed. Prof. E.F. Zhukov. - M.: UNITI, Money, credit, banks: Textbook / ed. O.I. Lavrushin. M.: Finance and statistics, 2007; 3. Zaichenko N.A. A primer for the Rockefellers. Tutorial. - St. Petersburg: SMIO Press, Studenetskaya V.N., Sagatelova L.S. Mathematics: a collection of elective courses. - Volgograd: Teacher, 2007.
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Lesson on economics Lesson topic: Tamara Muratovna Trenyusheva, teacher of economics, MBOU "Kuvakinskaya secondary school"
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LESSON TASKS DEFINE THE FUNCTIONS OF A CENTRAL BANK DEFINE THE FUNCTIONS OF A COMMERCIAL BANK GET TO KNOW THE TYPES OF DEPOSITS GET TO KNOW THE TYPES OF BANK RESERVES CONSIDER THE DEPOSIT EXPANSION MULTIPLIER AS A BAN CI MAKE MONEY
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MONEY is a special kind of commodity for which any good or service can be exchanged. MONEY SUPPLY is the amount of symbolic and bank money that is in the hands of the population. BANK MONEY is a medium of exchange in the form of checks, invoices issued by banks. MONETARY BASE is the sum of bank reserves and cash in the hands of the population. SYMBOLIC MONEY is a means of payment whose value or purchasing power is many times greater than the cost of production. CENTRAL BANK - an organization established by the authorities of the country, which is responsible for controlling the circulation of money and credit conditions, control over the financial system, which is a bank of banks, accepting deposits from commercial banks, as well as a state banker.
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LESSON PLAN: 1. Money heart of the market; 2. Central Bank and its functions; 3. Commercial banks and its functions; 4. Spend today - pay tomorrow; 5. How banks create money.
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"Since the beginning of time, mankind has made three great discoveries: fire, the wheel, and the central banking system." Will Rogers (1879-1935)
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BANKING SYSTEM Prior to 1989 three-tier system State Bank of the USSR Promstroybank Agrobank Zhilsotsbank Sberbank Vnesheconombank SPECIALIZED BANKS BRANCHES OF SPECIALIZED BANKS (ABOUT 6,000)
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Functions of the Central Bank is the issuing center of the country; government banker; bank of banks; interbank settlement center; the custodian of the country's gold and foreign exchange reserves; determines and implements monetary (monetary) policy.
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Functions of a commercial bank: acceptance and storage of any types of financial assets; implementation of credit operations; money creation; organization of payments; buying and selling securities.
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Operations of banks active Operations on placement by banks of the resources at their disposal passive Operations through which banks form their resources for credit and other operations receipt of income from the placement of securities, etc.
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BANK DEPOSITORS ENTREPRENEURS CREATION OF NEW FORMS OF MONEY % ON % ON LOANS TO DEPOSITS = MARGIN
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Lending - (from lat. Creditum - loan, debt) provision of money for temporary use and for a fee
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REMINDER TO THE DEVELOPER: 1. Before entrusting your savings to the bank, make inquiries about it. Try to choose a reliable bank. An established bank is better protected from bankruptcy than a new one. 2. Term deposits are best made for the shortest possible time. 3. It is risky to place large sums of money in one bank. 4. If the bank reduced the interest rate on the deposit, that is, unilaterally changed the terms of the agreement with the depositor, then the bank violated the rights of the client.
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R \u003d D x rr, vol. R vol. - the amount of required reserves, D - the amount of deposits, rr - the rate of reserve requirements. K=R ex. = D - R vol. =D – D x rr =D(1 – rr) K - bank's credit facilities, Rex. - excess (above mandatory) reserves.
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1,000 rubles Bank 1,800 rubles 200 rubles Bank 2,640 rubles 160 rubles Bank 3,512 rubles 118 rubles Bank 4,409.6 rubles 102.4 rubles Bank 5 81.92 rubles 327.68 rubles …
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M \u003d D1 + D2 + D3 + D4 + D5 + D6 + ... \u003d 1000 + 800 + 640 + 512 + 409.6 + 327.68 + ... that is, the sum of an infinitely decreasing geometric progression with base (1 - rr) M \u003d D x 1 (1-(1-rr)) = D x 1 rr In our case: M = 1000 x 1 0.2 = 1000 x 5 = 5000
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Results of the study of the topic: Banks carry out business operations and earn profits. They provide depositors with the safety of their money, checking services for their deposits. Banks provide loans and guarantee the stability of the payment system. They minimize the cost of finding loans, take on the risk of cash transactions and offer clients highly liquid funds for investment; Commercial banks are required to hold reserves as part of their deposits in case of significant withdrawals. Commercial banks use balance sheets to control their operations, which provide information on the movement of assets, liabilities and equity of the bank;
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The most important link in the banking system is the Central Bank. It is the bank of the government. The main function of the Central Bank is to ensure three main macroeconomic objectives: sustainable economic growth, high employment and, especially, a stable price level. The Central Bank establishes the required reserve ratio, controls the activities of commercial banks and other financial intermediaries, and issues fiat money; The central bank, as a rule, has a significant degree of independence. The facts show that the higher the independence of the Central Bank, the lower the rate of inflation in a given country; Acting jointly, commercial banks carry out lending operations using excess reserves. Credit expansion of banks depends on the value of the deposit expansion multiplier. The value of the multiplier is influenced by the reserve ratio, the conversion of a part of the check turnover into cash and the desire of many banks to keep the volume of reserves above the required norm.
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Economics lesson
- Lesson topic:
- How banks create money
- LESSON PLAN:
- 1. The Central Bank and its functions;
- 2. Commercial banks and their functions;
- 3. Spend today - pay tomorrow;
- 4. How banks create money.
- It's no secret that life in a market economy requires people to master elementary economic concepts and acquire market behavior skills.
- Therefore, the choice of this topic is not accidental, because knowledge of the structure of the banking system, the features of its functioning and understanding of how banks create money are simply necessary to increase the level of economic literacy of any person.
- - to determine the main functions of the Central Bank;
- - to find out the functions of commercial banks;
- - talk about ways to attract money to banks;
- - explain what a bank deposit is;
- - show the features of bank lending;
- - to consider what bank reserves are, why
- they are needed, how they affect the ability of banks
- create money.
- Lesson objectives:
- form ideas about the activities of banks, explain the features of their functioning and how banks create money.
- http://festival.1september.ru/articles/612238/
- https://prezentacii.org/prezentacii/prezentacii-po-ekonomike/4476-den-gi-kredit-banki.html
- http://www.referatbank.ru/referat/preview/40704/referat-banki-zarabatyvayut-dengi.html
- MONEY is a special kind of commodity for which any good or service can be exchanged.
- MONEY SUPPLY - a set of cash in circulation and balances of non-cash funds on accounts owned by individuals, legal entities and the state.
- CENTRAL BANK - an organization established by the authorities of the country, which is responsible for controlling the circulation of money and credit conditions, control over the financial system, which is a bank of banks, accepting deposits from commercial banks, as well as a state banker.
- “Since the beginning of time, mankind has made three great discoveries:
- fire, the wheel and the central banking system.
- Will Rogers (1879-1935)
- The banking system is compared to the circulatory system of the human body. It is so important for the economy of the state. Indeed, in the modern economy, banks play a key role.
- Banks are financial intermediaries, because, on the one hand, they accept deposits (deposits), attracting money from depositors, and on the other hand, they provide them at a certain percentage to various economic agents (firms, households, etc.), i.e. issue loans.
- Commercial banks are private organizations that have the legal right to raise free cash and make loans for profit. Operations performed by banks are divided into active And passive.
- Active- these are operations for the profitable placement of funds (the bank gives loans, buys securities, etc.).
- Passive- these are operations to attract customer funds to their accounts (opens deposits, accepts deposits, etc.). Everything that the bank has for its activities is assets, and the sources of bank funds (loans) are liabilities.
- Currently in Russia
- two-tier system
- Central
- Bank "B"
- Bank "B"
- Bank "G"
- 1st level
- 2nd level
- Jar"
- COMMERCIAL BANKS
- emission center of the country;
- government banker;
- bank of banks;
- interbank settlement center;
- custodian of gold reserves
- countries;
- defines and implements
- monetary (monetary)
- politics.
- Functions of the central bank:
- It has:
- value for money project
- Needs: money capital
- Ready:
- share the income for the right to use the money to implement your project
- It has:
- saving
- Needs to:
- savings income
- Ready:
- refrain from consuming their savings and allow them to be used for a fee
- Commercial banks
- Specialized
- Universal
- 1. By goals:
- - investment;
- - innovative;
- - mortgage.
- 2. By industry:
- - construction;
- - agricultural;
- - foreign economic.
- 3. By clients:
- - only firms;
- - population only.
- reception and storage of any kind
- financial assets;
- implementation of credit operations;
- money creation;
- organization of payments;
- buying and selling
- valuable papers.
- Functions of a commercial bank:
- Operations
- banks
- Active
- Operations on placement by banks of available in their
- resource management
- Passive
- Operations through which banks form their resources for lending and other operations
- deposit
- credit
- settlement
- currency
- cash
- and etc.
- attraction
- and keeping funds in accounts
- accepting deposits
- receiving
- bank loans
- income generation
- from accommodation
- valuable papers
- and etc.
- A deposit in a bank is an amount of money that is deposited with a bank in order to receive income in the form of interest on the deposit. The bank uses this money for its own purposes, in return paying the depositor a reward - interest.
- Depositors give money to the bank for use not forever, but for a while. Therefore, the bank has the right to dispose of each ruble of its deposits only for a certain number of months or years. Deposits- these are all types of funds transferred by their owners for temporary storage to the bank with the right to use this money for lending.
- Deposits
- demand deposits- these are current accounts from which the depositor can withdraw money at any time
- term deposits- these are urgent accounts from which the depositor undertakes not to take money before the expiration of a certain period
- Accordingly, the bank can also invest the money it has received at its disposal for a certain period of time - no longer than the depositor has allowed it to use this money.
- REMINDER TO THE INVESTOR:
- 1. Before you entrust your savings to the bank,
- inquire about it. Try to choose
- reliable bank. An old bank is better
- protected from bankruptcy than new.
- 2. Term deposits are best made for the shortest
- terms.
- 3. It is risky to put large sums of money in one
- bank.
- 4. If the bank has reduced the interest rate on the deposit,
- that is, unilaterally changed the conditions
- agreement with the depositor, the bank violated the rights
- client.
- Lending -
- (from lat. Creditum - loan, debt)
- provision of money for a temporary
- use and for a fee
- Types of loans
- short
- medium term
- long-term
- up to 1 year
- From 1 year to 5 years
- over 5 years
- Lending - granting to a person in need of money the right to carry out his expenses at the expense of the bank, subject to guaranteed reimbursement to the bank of the amounts spent and payment of fees for the use of bank funds.
- The principle of lending is simple: a loan is granted for use on specified period and must be returned on time. But for the bank itself, compliance with this principle requires very painstaking work to assess creditworthiness of borrowers.
- Banks lend mostly other people's money entrusted to them by depositors. In order to protect this money from losses, banks, along with an analysis of the borrower's creditworthiness, have long begun to use another method of insurance: to require the borrower to secure a loan (collateral) or even provide them with direct collateral (mortgage).
- Creditworthiness- this is the ability of the borrower to fulfill its obligations under the loan agreement on time.
- Loan security (collateral) is the property of the borrower, which can be seized from him by the bank and sold to cover his debts, which he is unable to repay.
- INVESTORS
- ENTREPRENEURS
- CREATION
- NEW
- MONEY
- % SW % SW
- LOANS TO DEPOSITS
- = MARGIN
- Margin (from the English "margin" border) - bank income
- "Money Makes Money"
- "Money to Money"
- Banks were able to achieve a key role in the economy due to the fact that they learned ... create money! No, we are not talking about printing paper money and minting metal coins. There is just nothing complicated about this. Banks manage legally, without printing money, to increase the money supply and, on this basis, regulate the entire economic life.
- Banks have the ability to create money, that is, to increase the money supply. Banks' ability to create money is based on their excess reserves and the principle of the deposit multiplier.
- The required bank reserve ratio is the percentage of total deposits that commercial banks are not allowed to lend, and which they keep in the Central Bank in the form of interest-free deposits. If the amount of required reserves is subtracted from the total amount of deposits, then we get the amount of credit opportunities or excess reserves (in excess of the required ones).
- It is from these funds that the bank provides loans. If a bank lends out all of its excess reserves, this means that it has used its full credit facilities. In this case, K \u003d R est.
- Bankers around the world have long understood that, according to the theory of probability, the number of customers who want to withdraw money from an account is equal to the number of customers who deposit money.
- = D*rr,
- - the amount of required reserves,
- - amount of deposits,
- - the rate of reserve requirements.
- K=R
- = D - R
- =D - D * rr =D*(1 - rr)
- K - bank's credit capabilities,
- - excess (above mandatory) reserves.
- The process of creating money is called credit expansion or credit multiplication. It begins if money enters the banking sector and deposits of a commercial bank increase, i.e. if cash turns into non-cash. If the amount of deposits decreases, i.e. the client withdraws money from his account, then the opposite process will occur - credit compression.
- If a bank has received a deposit, then after deducting the required reserves, the bank has funds (its credit capabilities) and they can be put into circulation so that they earn money for both the bank and depositors. So the banker does, and at this moment there is a monetary “trick”. Money begins to multiply, that is, credit emission begins.
- The essence of credit emission is that banks borrow money from the future. In essence, the bank takes the risk and gives the client the right to pay with money that has not yet been “earned by the country”, i.e. behind them there are no real commodities whose value they must turn back upon themselves, valuables in the form of precious metals or commodities. goods. The purchasing power of credit money is guaranteed only by the reputation of the country's banking system.
- Credit issue- this is an increase by the bank of the country's money supply by creating new accounts for those customers who received loans from it.
- Banks always issue loans for a reason, but for certain needs and projects. As a result, it turns out that money gives rise to goods, and then new money. Thus, with the help of banks, “money makes money”, thus increasing the wealth of the people and the country.
- So, in this presentation, we got acquainted with the concepts of a central bank, a commercial bank. Considered their functions, interrelation and importance for the economy.
- We dealt with the operations that commercial banks perform, paid special attention to deposit operations and lending operations.
- We found out what the required bank reserves are and were able to understand how banks create money.
- Thank you for your attention!