The nature and functions of money

Money serves as a necessary element of an active and integral part of the economic activity of the society, the relationship between the various actors and the links of the reproductive process.

The essence of money is characterized by their participation in:

• implementation of the various types of social relations, the nature of money can not be the same: it must reflect the development of economic relations in society and changes in the money itself;

• the distribution of the gross national product (GNP) in the acquisition of real estate and land. Manifestation of the essence here is not the same, as the different possibilities of money due to different socio-economic factors;

• determining the price of expressing the value of the goods. Manufacture of goods (services) carried out by people with the tools, using objects of labor. Produced goods have a value that is determined by the combined volume of the transferred value of implements and objects of labor and the newly created living labor cost.

However, the magnitude of the value of certain goods manufactured by individual producers, the price is expressed, depending not so much on the individual costs individual producers, many of the existing society in the level of costs for production of certain goods. Therefore, when the owner of the goods can claim only on the price due to the level of socially necessary costs of production of certain goods.

This means that the price determined in accordance with the level of socially necessary costs of production of certain goods, the goods-can qualify for other goods in an amount equal to the value of goods produced. This is facilitated by the requirement of equivalence, carried out with the help of money. The latter also create the possibility of regulatory assessment of individual goods and acquisition (purchase) a certain part of the social product.

Money is the universal equivalent of a trademark.

Furthermore, the nature of money is characterized in that:

• serve as a means of universal exchangeability of goods, real estate, art, jewelry, etc. This feature of the money becomes apparent when compared with the direct exchange of goods (barter). The fact that some products are also able to communicate to other barter. However, as already noted, these frameworks are limited opportunities to exchange mutual needs and compliance requirements of the equivalence of such operations. Only money inherently universal direct exchangeability of goods and other valuables;

• improve the condition of conservation value. When you save the cost in money and not in goods reduced storage costs and prevents spoilage. It would be preferable to preserve the value of money.

In characterizing the money often draws attention to them by commodities and therefore commodity nature. Commodity origin of money can hardly be in doubt. Gradually, however, including in connection with the transition from the use of high-grade money to the use of banknotes that do not have their own value, and in connection with the development of non-cash payments, money loses its inherent feature of the goods, as that they have value and use value.

In modern conditions, banknotes and money non-cash operations do not have their own value, but may be possible to use them as an exchange value. This suggests that money is more different from the goods and turned into an independent economic category of preserving some of the properties that give them similar to the goods.

The essence of money is manifested in their functions, which reflect the capabilities and usage, as well as the money was to achieve with them certain results.

Money function are inherent stability, stability, they are little subject to change, whereas, for example, as money in different conditions may vary.

Money acts as:

• a measure of value;

• means of treatment;

• the means of payment;

• means of accumulation.

In addition to these functions, often recognized perform the function of global money laundering (for international payments) in which they are used for monetary transactions between countries. The performance of such functions with the existence of gold money, or a freely convertible currency is not in doubt. In modern conditions, the monetary unit of Russia - ruble - does not have its own value and the fixed gold content. Typically, the Euro does not apply to payments to other countries that do not function as world money.

Performance of functions of money is the measure of value in assessing the value of the goods by setting prices.

The basis for the pricing of goods is the value of their cost, which depends primarily on the value of the expenditure of socially necessary labor to manufacture goods. When setting the price of the original value is not an individual's level of labor costs in the production of a single commodity producers, and the required level of public expenditure. Accordingly, the prices fixed by the socially necessary costs of production of certain goods.

Money as a medium of exchange used to pay for goods purchased. At the same feature of this function of money is the fact that the transfer of goods to the buyer and payment occur simultaneously. In this function, used cash currency. It should be borne in mind that in Russia it can perform only the Russian currency (rubles). The use of foreign currency in the sale or purchase of goods is not permitted.

As a means of payment for purchased goods money is used briefly. The same bills could be used multiple times in various transactions, moving from one to the other contracting parties. Here, great importance is the velocity of money: the faster the turnover occurs, the less money is needed for the circulation of goods. Accordingly, the velocity of money is important to regulate the quantity of money needed for treatment.

The total volume of traffic, which involves money as a function of medium of exchange, is relatively small and is only a fraction of the aggregate cash flow.

Widely used money as a means of payment. Such a function is performed by providing money and repayment of cash loans to payments for goods and services provided, at a cash relationship with the financial authorities (tax payments, receipt of funds from financial bodies), as well as the repayment of wage arrears, etc.

Perform the function of a means of payment and cash, mainly in the relationship, which involved individuals. Only a small part of the payments of legal entities (mostly not very large sums of money) is made in cash. However, the major part of cash flow, in which money acts as a means of payment, account for non-cash payments between entities in a certain part of the calculations of individuals (transfer of funds from the deposit in the bank for the payment of utility bills, etc.).

When making some of the money circulation in the means of payment, unlike the revolutions in the function of a medium of exchange, is allowed in addition to the use of the Russian currency (rubles) a foreign currency. This occurs, for example, citizens installment cash foreign currency deposits in banks and the subsequent production of the bank's investment.

In the economic literature, especially the works of foreign authors who are often considered to be fulfilled money in circulation is only one function - a medium of exchange instead of two functions - the means of circulation and means of payment. If this position is taken into account for transfers of similarity money in payment for goods and for payment of debts. For example, when describing a single function - a means of circulation - notes that there are the "... the money used to pay for goods and services, as well as for payment of debts. " In other words, the function of a medium of exchange and means of payment combined into one function - a means of circulation.

Money is not directly involved in trafficking, including in the functions of a medium of exchange and means of payment, form a monetary savings and act as a means of accumulation.

The composition of cash savings include cash balances held with individuals, as well as residues of money in bank accounts. Education cash savings of individuals due to: excess of revenues over expenditures, the need to establish a reserve for the upcoming major and seasonal expenses.

Availability of cash savings allows the public to use them in future periods to pay for purchased goods and repayment of the various commitments. Money in the function of the storage means are also from the residue accumulated by enterprises and organizations in their bank accounts.

Implementation of the functionality of the accumulation of money is an important prerequisite for the development of credit relations, through which it is possible to use temporary free funds generated in the various segments of the economy and the population for the provision of loans to enterprises and organizations of other parts of the economy and individual citizens. Emerging and systematically revolving credit relations promote judicious use of the resources sector, the development of production and to better meet the needs of the population. These are the results of the national economic use of money in the discharge of functions of the storage means.

Despite the differences in the functions of money, there is a relationship between them and the unity due to the essence of money. Thus, the function of the measure of value is realized in the functions of a medium of exchange and means of payment. However, money can alternately serve as a medium of exchange and means of payment, as well as serve as a means of accumulation. In turn monetary savings can be used as a means of treatment or as a means of payment.

The function of world money is manifested in the relationship between countries or between legal and natural persons who are in different countries. In such relationships the money is used to pay for goods purchased in the commission of credit and certain other operations. In the application of the various countries full of money, which has its value, there is no any serious complications with their use in international relations. Here some of the money could be used to make payments to other countries on the basis of the actual value of the currency of each country.

When the transition has been made to the defective money, the former practice was not acceptable. In the new calculations were made between countries with freely-convertible currencies (U.S. dollars, euros, yen, etc.), or in international units like ECUs (Europian Currency Union).

If the payer is in Russia, a non-convertible currency, he can swap it for hard currency at the applicable exchange rate and with permission to carry out the transfer to other countries. On the contrary, when entering from abroad freely convertible currency, it shall be credited to the transit account.

With this account can be made part of the implementation of the received hard currency for local currency at the applicable rate, and if you have permission, you can use part of the exchange for payments to foreign correspondents.

This means that the function of world money can perform currencies freely convertible currencies. Non-convertible currencies such function can not perform because

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