Elements of the monetary system

The monetary system is the historically formed form of circulation of money in the state. Such a structure exists in every country. The concept of the monetary system is fixed by the legislative order. Like any other, this structure consists of certain components.

The monetary system, which includes a subsystem of cash and non-cash transfers, contains, first of all, the principles in accordance with which its organization is carried out. They are rules for the formation of a structure that are established by the state. These rules, and other elements of the monetary system have a close relationship. In this case, the former have a direct effect on all other components.

For the developed countries of the world can identify the main elements of the monetary system.

The monetary unit is a sign established by the legislative order. It is used when measuring and expressing the value of all goods. As a rule, this component is formed historically. However, in some cases, a new name of the mark may be established.

The scale of prices is considered as a choice of a monetary unit of the state and as a method of expressing commodity value by means of the weight content of a monetary metal in a given selected unit. The latter concept, however, has lost its economic significance. This is due to the fact that credit money is not endowed with its own value and can not express the value of other goods.

Types of money are legal means of payment. As a rule, these elements of the monetary system are treasury and bank notes, coins. As a rule, in states, industrially developed, treasury tickets are not issued. In some developing countries, paper money is very common.

The provision of money in one form or another is established by the state. So, precious metals, insurance policies, commodity-material values, government and bank guarantees, gold, currency, freely convertible, and so on can be used. Violation of established rules or use of other types of collateral should not be allowed.

The issuing system is the procedure for circulation and release of money, established by law. Corresponding operations (for withdrawal and release) are carried out by the Central Bank and the Treasury. The Central Bank enjoys the monopoly right to issue banknotes, which constitute a significant part of the cash circulation. The Treasury, as the executive body, issues treasury coins and tickets. These elements of the monetary system are made from cheap metal grades. On them in the developed countries it is necessary about ten percent of release of a cash.

The Central Bank conducts equity transactions in three areas: providing loans to credit institutions in the form of rediscounting existing commercial bills, lending to the treasury for securing securities, and issuing banknotes by exchanging them for foreign currency.

In an effort to reduce the likely fluctuations in economic processes, the state takes various measures to regulate the production process. In this case, two systems are used - money and credit. It should be noted that these structures are interrelated with each other, especially in connection with the dominance of borrowed funds.

Under the influence of increased inflation and crisis phenomena in many countries with developed industry in the mid-seventies of the 20th century, "targeting" was spread. Thus, target targets were set for resolving the increase in circulation of money supply and credits.