Centralized Finance

Centralized finance - this is the relationship that the state has in the process of forming, distributing and using trust funds. This type of finance (if you consider it as a collection of funds), as a rule, first accumulates in the public accounts of the central bank of the country, and then distributed to the budget and extrabudgetary funds.

They contribute to the realization of the main goal that the state seeks to achieve, the financing of basic social and economic programs, the provision of the state apparatus of government and the military reserve of the country. The financial system of any country includes a centralized and decentralized sector. The latter presupposes the existence of financial relations that develop in the process of interaction of various economic entities.

As noted above, centralized finances form a set of relationships regarding the accumulation and disposition of funds in the municipal and public sector. The basis of such relationships is the money turnover - a single process that connects a cashless and cash flow of money, ensuring the satisfaction of claims and obligations of counterparties. In other words: thanks to them an expanded reproduction process is carried out. Centralized finance is in close relationship with the decentralized. Thus, the state of the budget and the amount of incoming funds to the treasury depend to a large extent on the activities of individual enterprises and the development of certain sectors of the economy.

Centralized and decentralized finance performs the same functions.

Planning for the fundamental goals that are of paramount importance for the country's economy. The establishment of the main landmarks is of great importance for the further activities of both individual enterprises and state bodies. If we talk about a centralized sphere, then this function is manifested in the approval of annual budgets and planned balances.

The organizational function assumes a clear structure, each element of which is endowed with special powers and responsibilities. And to facilitate and streamline the activities of each structural element, that is, a state-authorized body, a clear classification of budgets is developed, which significantly speeds up the process of allocating finances.

Centralized finance performs a stimulating function. It manifests itself in the redistribution of funds to more needy enterprises and organizations in order to maintain a strategically important industry for the economy.

In addition, government agencies monitor the activities of all elements of the economic system and determine the degree to which they meet the established criteria, norms and standards. The supervisory function stipulates the development and approval of a whole body of legislative acts and administrative and legal norms. The dominant position is the control over the targeted use of funds received from the budget. Thus, centralized finance is subject to strict supervision.