2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16
No normal life is possible without cash flow. Money has always been there. Cash is put into circulation when commercial institutions issue funds to their customers from special operating cash desks. So what is emission? This is the process of issuing money into circulation, as a result of which the money supply grows significantly. The issue is made to meet the additional needs of market entities in funds for the implementation of negotiable transactions.
Emission - market regulator?
There are different forms of issuing money. Lending is one of them. Banks have the right to issue loans only within the framework of available funds and resources, which are represented by a combination of their own, borrowed, as well as borrowed funds. As prices rise, there is an additional need for money. And here comes the need for emissions. What is emissions in a command economy?This is the release into circulation of funds (according to credit plans). An increase in the money shaft is possible only if it fills the real sectors of the economy. If we take Russia, then the main reason for the significant increase in the volume of money supply over the past few years has been the acute state budget deficit.
In 1992-1994, it was repaid by issuing money into circulation with a parallel reduction in trade due to a decline in production rates. Since we are talking about emission, it is worth mentioning the term, which is often found within the framework of this topic. We mean the prospectus for the issue of shares. This document discloses information to investors regarding the proposed issue of securities. The prospectus usually contains information about the current issue. It contains information about each tranche, principles for calculating interest payments, credit rating and other useful information.
Types of issue
There are two types of emission: cash and non-cash money. Consider what is the issue of cash? First of all, it must be said that it is carried out by the Central Bank. At the heart of the emission mechanism, in fact, are the operations of this financial institution with other commercial financial institutions. In addition to lending, other actions of the Central Bank also play a significant role in issuing money. In countries with advanced market economies (USA, Great Britain, Germany), such operations include the acquisition of government securities, bills of exchangeleading companies. For the Russian Federation and other countries with economies in the development stage, the purchase of hard currency from exporting organizations and financial commercial structures plays an important role.
It is necessary to separate the concepts of "issue of funds" and "issue". In the case of issuance, it is not always possible to observe an increase in the money supply in the total turnover, since there are also reverse processes (that is, the withdrawal of funds: repayment of loans, depositing funds into deposit accounts, liquidation of dilapidated banknotes)). In this case, only a change in the structure of the total money supply is carried out. And in the case of the implementation of the second concept, the opposite is observed. After all, in fact, what is emission? This is a direct increase in the money shaft.
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