Release of money into economic circulation

Cash turnover consists of the turnover of cash and non-cash money.

Cash represented by banknotes and change coins.

Non-cash money - these are funds on accounts in commercial and Central Banks, i.е. deposits (deposits) on demand or termless deposits.

In addition, the unity of the forms of money is achieved by a special organization of the processes of issuing money into economic circulation and withdrawing it from circulation, which are carried out by the Central Bank, the Treasury and commercial banks.

Central Bank. His money consists of cash and non-cash money ("deposits"). The mechanism for issuing money into circulation and withdrawing it from circulation is based on the operations of the Central Bank with business entities and commercial banks. The issue or creation of money by the Central Bank occurs when it acquires certain assets (various securities or currency) from business entities or provides loans to commercial banks. In the first case, he makes a payment under the transaction with his own money, and in the second he provides them on a return basis. Central Bank money can be provided in cash (banknotes, coins) or non-cash (by transferring funds to a deposit opened with the Central Bank) and are, in fact, its monetary obligations to partners in these transactions. As a result, Central Bank money goes to commercial banks and the non-banking sector of the economy, i.e., it is released into economic circulation. The most widespread in a market economy are credit operations of the Central Bank. Withdrawal of money from circulation occurs when the bank sells its assets or loans are returned to it.

In modern monetary systems, along with the money of the Central Bank, non-cash money of commercial banks plays an important role. To commercial bank money include deposits of the non-banking sector in these banks. These deposits represent the monetary claims of clients to their banks and, accordingly, the monetary obligations of banks in relation to the clientele.

The actual release (withdrawal) of non-cash money of a commercial bank into circulation can only be discussed in relation to its operations for the purchase (sale) of assets (securities or currency) from its customers (to its customers) or when issuing (returning) loans. In these cases, the commercial bank pays its perpetual obligations or repays them.

The flow of money into the channels of circulation, their rush into circulation is called "issue of money into circulation". He is a sustainable process of transfer by banks to legal entities and individuals of certain amounts of money in cash and non-cash forms as a result of credit transactions.

The central place in the analysis of the state of the monetary system is occupied by the study of the issue of money.

Issue of money represents issuance of money leading to a general increase in the money supply in circulation.

It is advisable to subdivide the issue of money into the issue of non-cash and cash money. The latter is called "issue of money into circulation".

Author: Shevchuk D.A.

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