There are many ways to stimulate the country's economy. It is important to take into account many factors and not to be mistaken. One of the most effective is to increase the income from the issue of money. With this procedure it will be possible not only to improve the economic situation in the whole country, but also to issue new banknotes, replacing the damaged ones.
What is the issue of money?
The issue of money is the release of new notes for free circulation. Such a money issue is carried out by the state and it is regulated by law. This function must be shared by the state authorities between the central bank and the treasury. The first is issuing credit money - banknotes (banknotes). The second issues special treasury tickets, as well as coins. Among the main forms of emissions are:
- Issue of credit funds - banknotes.
- Deposit-check.
- Valuable papers.
What is the issue of money for?
This procedure, like everyone else, has its own tasks. So, the target money issue is carried out in order to replace the spoiled banknotes and to stimulate the country's economy. As a result of the issue of securities, the company can expand its own production, modernize it, or solve other problems, as additional material resources appear. However, it is important to understand that the issue of new shares that come to the market, rather than being distributed among the company's managers, reduces a portion of the original holders of shares.
The issue of money - the pros and cons
Such a process as the issue of money has not only advantages, but also its negative consequences. It is important to remember the danger of money issue. Thus, as a result of this process, the purchasing power of money may decrease. That is, we can say that the issue of money leads to inflation. Among the advantages of money issuance:
- Modernization company.
- Stimulation of the country's economy.
- Possible expansion of production of the enterprise or company.
Who conducts the issue of money?
An important financial procedure is the issue of money only by state central banks. The issue of new banknotes and coins in circulation is to replace unsuitable bills or to improve the economic situation. The base of non-cash payments is a deposit-check issuance of securities, which can be made by commercial banks. In many cases, non-cash issuance implies the issuance of credit to organizations and individuals.
Issue of money and its types
There are such types of money issue:
- Cash - it is associated with an increase in commodity turnover in prices, since money can serve procedures in special markets.
- Non-cash money - it is carried out by means of crediting the issued money to the accounts of correspondents of commercial banks in the form of loans.
- Budget issue - it is associated with the issuance of special treasury notes and government securities for the specific purpose of financing the state budget deficit.
- Credit emission - is associated with the receipt of credit funds in the course of the loan procedures.
Issue of non-cash money
This economic process is an increase in the amount of funds on bank accounts after the active operations by financial institutions. This procedure in relation to cash is primary. The issuance of non-cash money is carried out by banks that issue cash to customers in cases where they have money in bank accounts. At the same time, non-cash funds are written off from the customer's accounts for the amount of the issue.
One nature of cash and non-cash funds is capable of conditioning the unity and interconnection of emission processes. In the modern world, two types of emissions are of a credit nature. In other words, additional payment means, regardless of their form, can enter into circulation on the basis of specific credit transactions.
Cash issue
This procedure is understood as the release of cash in circulation, which should increase the amount of money in circulation. The issue of cash is carried out by state central banks. It is important here not only to establish the projected emission size, but also to distribute it throughout the country. The procedure for issuing cash is usually decentralized.
Due to the fact that the need for commercial financial institutions in cash depends on the need for them not only legal but also for individuals, it is changing. Cash transfers from non-cash, which are on deposit accounts and at the same time are an important part of the cash flow created by commercial banks as a result of the functioning of the bank multiplier.