Monetary unit - what is it? Definition of the monetary unit and its types

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

The monetary unit serves as a measure for expressing the value of goods, services, labor. On the other hand, each monetary unit in different countries has its own measure of measurement. Historically, each state sets its own unit of money. Usually, a monetary unit is a certain amount of valuable metal, such as gold or silver, which determines the real price of a coin.

Money in different states has different price content and name, being the national currency of the country

Metamorphoses of money

In the pre-capitalist era, the role of money belonged to precious metals: silver, copper bronze.

Few countries could boast of using gold as the currency of the state. For example, these were Egypt and Assyria, where already in the second millennium BC, gold was used in the exchange of goods.

With the increase and development of crafts and the cost of goods in many countries, it was necessary to use a more expensive equivalent - such as gold.

With a small weight and volume, it had a large price and, accordingly, exchange value. The first paper money to replacemetal were issued in the 1st century, in China. And the earliest official banknotes were issued in Stockholm in 1661.

In our country bank notes or paper money were first issued during the reign of Catherine the Great, in 1769. Money in Russia often changed its name and appearance.

After all, until the 18th century, silver mines in Russia were not open, and imported raw materials were not always supplied. The first silver was mined in Transbaikalia in 1704.

What were the monetary units in Russia

There is an opinion that the Russian word "money" originated from the Turkic "tenge". In turn, the word "ruble" comes from the verb "to chop, cut".

In ancient Russia, a coin was called money, the cost of which was half a kopeck or two hundredth of a ruble. Polushka meant half money, altyn meant three kopecks, five- altynnik meant fifteen kopecks. There were also such names as half a ruble or half a ruble, a penny - two kopecks. The ruble was also called tin in another way, from the word tinat or minted with a special hammer - minted. From ancient times to the present day in Russia, a monetary unit is an object of improvement and change, working in the interests of the state; mobile and rationally changeable quantity.

In the period from 1924 to 1947, ten rubles were called chervonets, they were equal to 7.74 grams of pure gold. Along with the chervonets, the ruble was issued, which was equal to one tenth of the chervonets. Currently, the currency of the Russian Federation has become the ruble, equal to 100pennies.

Not only gold

In many countries of the world, since the beginning of the seventies of the 20th century, there has been a monetization of gold reserves, that is, the actual loss of monetary functions by gold. All countries of the world have switched to using fiat money as a price equivalent. Fiat - this means banknotes guaranteed within the cost indicator by the state issuing them, regardless of whether they are confirmed or not by reserves of precious metals.

From now on, the national banks of countries determine the denomination of the monetary unit, which can sometimes be fixed by constitutional law. For example, in Russia, the use of the ruble is enshrined in Article 75 of the Constitution of the Russian Federation:

The currency in the Russian Federation is the ruble. Money emission is carried out exclusively by the Central Bank of the Russian Federation. The introduction and issue of other money in the Russian Federation is not allowed.

Spectrum of influence

The influence of money on the development of the national economy, the standard of living of the population is difficult to underestimate. The main areas of applied meaning of money are expressed in the following areas:

• first of all, the monetary unit of the state is the denomination of the state monetary system, implemented through the designation of the denominations of banknotes and coins in multiple or fractional terms;
• monetary sign is a measure and an element of the account in the financial system of the state, where money itself is a commodity involved incirculation system;
• the monetary unit used in the settlement system is backed by the mass of precious metals established by law;
• serves as a unit of account, regulating the scale and ratio of prices, expressing the cost of goods and other elements of the gross product and the economic indicators of the national economy in comparable values.

At a time when paper equivalents of money were just emerging, the concept of "monetary unit" was used. At the same time, the country's monetary unit is the basic concept of the economic term "country currency" or national currency.

Settlements in the international sphere

Starting from the thirties of the last century, the concept of uniformity of banknotes began to be applied in international settlements. Special international monetary units were created, with the help of which settlements were carried out on international markets. For example, a gold franc was used with a content of 0.29 grams of pure gold.

At the end of the fifties of the 20th century, in the field of European payment unions, a monetary unit called the European Payment Unit, equivalent to one US dollar, began to be used. In the seventies, the ECU (or currency unit) was used in international payments. By the beginning of the millennium, the payment currencies were replaced by the euro, or rather, it happened in 1999.

The basic rule in the circulation of international currencies is the acquisition of special drawing rights, which are issued by the International Monetary Fund.

Manycountries prefer to give up their own national money, acquiring borrowing rights and using conventional monetary units in international settlements. This means that the market uses popular borrowing currencies for international settlements, most often US dollars or euros.

Clink of metal

As noted in the previous sections of the article, in the seventies of the last century there was widespread demonetization of gold.

Practically gold has lost its monetary functions, has ceased to be used as a measure of commodity exchange. Therefore, instead of such monetary units, which corresponded to a certain mass of the precious metal, fiat money began to be used in international settlements, for which the gold content is not established. And gold itself has become a commodity measured by money.

Nevertheless, there are a number of countries that continue to use private and local monetary units that have a value equivalent in gold in their payment systems.

This applies to currencies such as digital gold, gold dinar and silver dirham. These currencies claim to receive the status of international monetary units of the Middle East.

In 2011, a project was submitted to the Swiss National Council on the introduction of an additional monetary unit for international settlements, which would contain a fixed amount of gold equal to the gold franc. However, until now, this project has remained on paper, having not received support from international financial institutions.circles.

Reality is far from ideal

Based on the fact that money is a monetary unit, it is impossible not to mention the following concepts: countable, ideal and real coins.

Supplementing each other, these concepts are at the same time different in meaning and actual application.

Counting coin or counting-money as types of monetary units, means a certain conditional value, which is not really embodied in a coin or gold. A counting coin is used in accounting and for non-cash payments. The concept of a counting and ideal coin is opposed to the concept of a real one.

The ideal coin or ideal unit is characterized by fixing the net weight of the contained precious metal, and not substituting the equivalent of small coins. Thus, with any change in the amount of silver in small coins, the content of the ideal coin will not change, but it will be equal to a larger number of similar small coins.

At the same time, a counting coin, when changing the denominations of small moments, will include their previous number while the equivalent, expressed in pure silver, falls.

Everywhere money, money, money…

Money affects the formation of the monetary system of the state. In turn, this system must comply with the following rules:

• at the legislative level in the state, the name of the national currency is adopted, the accepted abbreviations in its spelling, the replacement with signs and symbols, the number of fractions and theirratio;
• the types of banknotes are established - paper and metal, their face value;
• the state regulates the structure of money circulation, the amount of cash in circulation, the rules of cash and non-cash payments;
• regulates the issue or reissue of banknotes to replace worn out, insolvent, establishes the rules for the withdrawal of monetary units from circulation;
• legally establishes the procedure for exchanging the national currency for other national currencies of countries, sets exchange rates;
• determines the order and rights of the emission center;
• regulates the rules for the emergence of commercial banks.

All these rules govern the monetary policy of the state, affecting the life of the country's economy and national economy.

Play by the rules

To ensure the smooth operation of the monetary system in the state, laws are adopted that regulate this activity.

In Russia, the parameters and boundaries of the monetary system are specified in the following laws:

• Constitution of the Russian Federation;
• laws and regulations, additions and clarifications on banks and banking activities:
• law on the Central Bank of the Russian Federation;

Also, the quality of the monetary system is determined in the adopted laws on currency regulation and control, the fight against corruption and countering anti-state and terrorist activities.