Money circulation and its essence

Since money changes the form of value (money-commodity, commodity-money), they constantly balance between three entities, the first of which are physical persons, the second - economic entities, and the third are the state authorities.

Money circulation is a movement of money, occurring in cash or non-cash form. The basis of this process is the division of labor in society and the level of development of production. With the help of the existing currency, it is possible to exchange products of social production, as well as provision of services and circulation of capital.

The principle of commodity-money relations is based on the fact that they require a certain amount of financial income for circulation.

Money circulation has two priority forms of manifestation:

- Cash. Such currency is used to provide goods and services, as well as to pay pensions, salaries and other benefits to the population. This type of monetary circulation is implemented through banknotes, metal money, checks, credit cards and bills.

- Non-cash. This form is characterized by a movement of value, where cash does not directly participate. The calculation is made on the accounts of credit institutions.

Money circulation, based on cashless payments, is divided into two groups. The first of these includes the payment of certain goods and services. As for the second, it includes payments to the budget (taxes), as well as extrabudgetary payments, interest payments for loans and repayment of bank loans.

Note that cash and non-cash circulation has a certain connection, the existence of which is natural. The fact is that money is characterized by the property of transition from one form to another. Therefore, the types of circulation constitute the financial turnover of the state, united by a single currency.

There is such a thing as the law of money circulation, formulated by Karl Marx. The essence of it is that it sets the amount of capital, which is a necessary condition for the performance of its functions as a means of communication and payment.

Money circulation for proper functioning requires a certain amount of capital, which depends on several factors, for example:

- Sold goods and services

- Product price levels and tariffs.

- Speed of circulation of capital, which is affected by both general economic factors (production development) and the structure of payment turnover.

The amount of money in circulation is directly related to the conditions of production: if the division of labor in society is optimally developed, there is a high volume of goods sold and services provided. If the productivity of labor is high, the cost of goods and prices will be much lower. Also the amount of money directly depends on certain conditions, for example:

- The volume of goods and services in circulation.

- From the level of prices and tariffing services.

- On the degree of development of non-cash settlement.

- On the speed of circulation of money, among which are credit.

Money circulation is characterized by a certain speed, which is determined by the number of revolutions of a monetary unit for a certain period of time. The fact is that one and the same currency passes from hand to hand and works for the sale of goods and services.

At that time, when gold coins were in use, their quantity in the market was maintained spontaneously. In the role of regulator was a treasure function, which was designed to establish a balance between goods needed for circulation, and the money supply. When there were extra money, they acted in treasure. If they were necessary, because the quantity of goods increased, they were withdrawn from there.