Banking. Indicators of the volume and structure of money supply in circulation in the Russian Federation (lecture notes)

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Banking. Indicators of the volume and structure of money supply in circulation in the Russian Federation (lecture notes)

Lecture notes, cheat sheets

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Indicators of the volume and structure of the money supply in circulation in the Russian Federation

The most important quantitative indicator of money circulation is the money supply, which is the total volume of purchasing and payment means serving the economic turnover and owned by individuals, enterprises and the state.

To analyze quantitative changes in money circulation on a certain date and for a certain period, as well as to develop measures to regulate growth rates and the volume of money supply, various indicators (monetary aggregates) are used.

In the financial statistics of industrialized countries, the following set of basic monetary aggregates is used to determine the money supply:

▪ aggregate M-1 - includes cash in circulation (banknotes, coins) and funds in current bank accounts;

▪ aggregate M-2 - consists of aggregate M-1 plus time and savings deposits in commercial banks (up to four years);

▪ aggregate M-3 - contains aggregate M-2 plus savings deposits in specialized credit institutions;

▪ M-4 unit - consists of M-3 unit plus certificates of deposit of large commercial banks.

In the United States, four monetary aggregates are used to determine the money supply, in Japan and Germany - three, in England and France - two.

An analysis of the structure and dynamics of the money supply is of great importance in the development of monetary policy guidelines by central banks.

To calculate the total money supply in circulation in the Russian Federation, the following monetary aggregates are provided:

▪ unit M-0 - cash;

▪ aggregate M-1 - equal to aggregate M-0 plus settlement current and other accounts (current accounts, special accounts, capital investment accounts, letters of credit and check accounts, local budget accounts, accounts of budgetary, trade union, public and other organizations, State Insurance funds, long-term loan fund); plus deposits in commercial banks; plus demand deposits in Sberbank;

▪ aggregate M-2 - equal to aggregate M-1 plus time deposits in Sberbank;

▪ aggregate M-3 - equal to aggregate M-2 plus certificates of deposit and government bonds.

The use of various indicators of the money supply allows a differentiated approach to the analysis of the state of money circulation.

A change in the volume of money supply can be the result of both a change in the mass of money in circulation and an acceleration of their turnover. The velocity of circulation of money is an indicator of the intensification of the movement of money when they function as a means of circulation and a means of payment. It is difficult to quantify, so indirect data are used to calculate it.

In industrialized countries, two indicators of the growth rate of money turnover are mainly calculated:

▪ indicator of the speed of circulation in the circulation of income - the ratio of the gross national product (GNP) or national income to the money supply, namely to the M-1 or M-2 aggregate, this indicator reveals the relationship between money circulation and economic development processes;

▪ indicator of money turnover in payment circulation - the ratio of the amount of transferred funds in bank current accounts to the average value of the money supply.

In the Russian Federation, in the practice of statistical work, depending on the completeness of coverage of the circulation of cash, they distinguish: firstly, the rate of return of money to the cash desks of the institutions of the Central Bank of Russia as the ratio of the amount of money received to the bank's cash desks to the average annual mass of money in circulation; secondly, the velocity of circulation of money in cash circulation, calculated by dividing the amount of receipts and disbursements of cash, including the circulation of mail and Sberbank institutions, by the average annual supply of money in circulation.

The change in the velocity of money depends on many factors, both general economic (cyclical development of the economy, economic growth rates, price movements) and purely monetary (the structure of payment turnover, the development of credit operations and mutual settlements, the level of interest rates in the money market, etc. .).

The acceleration of the circulation of money is facilitated by the replacement of metallic money with credit, the development of a system of mutual settlements, the introduction of computers in banking, the use of electronic means of monetary settlements.

When money depreciates, consumers increase their purchases of goods in order to protect themselves from a fall in the purchasing power of money, which speeds up money circulation. Ceteris paribus, the acceleration of the velocity of money is equivalent to an increase in the money supply and is one of the factors of inflation.

Author: Shevchuk D.A.

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