Money-credit policy - a set of interrelated measures taken by the Central Bank in order to regulate aggregate demand through a planned impact on the state of credit and money circulation.
Monetary policy can be aimed at stimulating credit and money supply. In this case, there is credit expansion. The Central Bank adheres to a similar policy in the face of a decline in production and an increase in unemployment, seeking to revive the market situation. On the contrary, in the event of an economic recovery, in order to prevent the economy from overheating, the Central Bank holds back credit and limits the issue of money. Then there is credit restriction.
An important task of the Central Bank in the field of monetary policy is to control money circulation in order to prevent inflation or reduce its pace. The basic question for such regulation is how much money is needed for circulation, and what principles should be followed in conducting monetary policy.
All monetary policy instruments can be divided into two groups: common tools that affect the money market as a whole; and selective tools designed to regulate specific types of credit or lending to certain industries, large firms.
General Instruments of Monetary Policy of the Central Bank are: open market operations, accounting and interest (discount) policy based on changes in the discount rate; establishment of the required reserve ratio for commercial banks.
Let us give a brief description of the main monetary instruments.
Open market operations is the purchase and sale by the Central Bank of government valuable papers
Sale securities to commercial banks and other financial institutions by the Central Bank leads to a decrease in the reserves of commercial banks. Accordingly, the ability of commercial banks to provide loans to their customers is reduced. As a result the money supply decreases.
Purchase securities from commercial banks gives the opposite result: the reserves of commercial banks and their ability to issue loans are expanding, the money supply rises.
Open market operations are effective in those countries where there is a large market for government securities.
Accounting and interest (discount) policy The Central Bank consists in regulating the size of the interest rate (discount) at which commercial banks can borrow reserves from the Central Bank.
If the Central Bank raises the official discount rate then commercial banks reduce borrowing, which, in turn, leads to a decrease in reserves, higher interest rates and a reduction in lending operations.
Lowering the discount rate. The Central Bank creates conditions for increasing reserves and lowering interest rates, while the volume of credit operations is growing.
The discount rate mechanism worked effectively at the beginning of the 20th century. Subsequently, the use of this instrument of monetary policy yielded lesser results. This was facilitated by the actions of banking monopolies, which set interest rates by collusion, and not under the influence of the market. The internationalization of economic life has also reduced the effectiveness of the interest rate policy: a reduction in the discount rate can lead to an outflow of capital from the country.
Establishment of the required reserve ratio commercial banks is also used by the Central Bank to directly influence the amount of bank reserves. This tool allows you to quickly influence the financial situation.
The monetary policy of the Central Bank is presented in two forms:
The policy of "cheap" money. It is held during a downturn to stimulate investment and expand production.
The Central Bank increases the money supply by:
Decreasing the required reserve ratio;
Reducing the discount rate;
Buying on the open market of government securities.
The policy of "expensive" money is carried out during the period of inflation in order to reduce aggregate demand.
The Central Bank reduces the money supply by:
Increase in the required reserve ratio;
Raising the discount rate;
Selling on the open market of government securities.
The effectiveness of monetary policy. Whether monetary policy can deliver full employment without accelerating inflation remains an open question. This is because using monetary policy for this purpose has its pros and cons. Let's consider them.
To virtues of money -credit policy usually attributed to both its faster action compared to fiscal policy, and the fact that monetary policy is less subject to political pressure than fiscal.
Drawbacks of money-credit policy believe that it is less effective in preventing recession than in curbing inflation. It is also noted that its positive effect can be absorbed by changes in the velocity of money and the fact that it does not always lead to a significant change in investment spending in the economy.
findings.
1. The monetary system is a form of organization of money circulation.
2. The money supply circulating in the country, conditionally subdivided into monetary aggregates (M 1 , M 2 , M 3 , L), differing in the degree of liquidity.
3. The demand for money is a function of the interest rate. The demand for money is determined by transactional and speculative motives.
4. The money supply is relatively stable and is determined by the state.
5. An equilibrium interest rate is formed in the money market.
6. The form of movement of money capital is a loan on the principles of repayment and payment. The credit system includes banks and other financial institutions that are financial intermediaries.
7. Banking system - two-level, includes the Central Bank and commercial banks. Commercial banks carry out passive and active operations in order to extract bank profits.
8. The Central Bank implements monetary policy with the help of the discount rate, the required reserve ratio, and open market operations.
Review questions
1. What are the main functions of money.
2. What are the components of the money supply? Do they differ in terms of liquidity?
3. What determines the demand for money for transactions and the demand for money from assets?
4. What will be the consequences of an increase in the money supply in a part-time economy?
5. Why is there an intermediate target dilemma in conducting monetary policy?
6. Show what happens if the Central Bank increases the reserve requirement.
Types of monetary policy
There are two types monetary policy: 1) stimulating and 2) restraining.
Easive monetary policy is carried out during a recession and is aimed at "invigorating" the economy, stimulating the growth of business activity in order to fight unemployment. Contractionary monetary policy is carried out during a boom period and is aimed at reducing business activity in order to fight inflation.
The stimulating monetary policy consists in carrying out measures by the central bank to increase the money supply. Its instruments are: 1) lowering the reserve requirement, 2) lowering the discount rate of interest and 3) the purchase of government securities by the central bank.
Restraining (restrictive) monetary policy consists in the use by the central bank of measures to reduce the money supply. These include: 1) an increase in the reserve requirement, 2) an increase in the discount rate of interest, and 3) the sale of government securities by the central bank.
The impact of changes in the money supply on the economy
The mechanism by which a change in the money supply affects the economy is called the "money transmission mechanism" or "money transmission mechanism". The monetary transmission mechanism shows how a change in the money supply (change in the money market situation) affects a change in the real volume of output (the situation in the real market, i.e. the market for goods and services).
This mechanism can be represented by the following logical chain of events. If the economy is in a downturn, the central bank buys government securities → the lending capacity of commercial banks increases → banks lend more → the money supply increases multiplicatively → the interest rate (price of credit) falls → firms are happy to borrow cheaper → investment spending increases → aggregate demand increases → output increases multiplicatively. (It should be borne in mind that not only firms react to a change in the interest rate by changing the amount of investment spending, but also households that use consumer credit and, when it becomes cheaper, increase consumer spending, as well as the foreign sector, which increases spending on net exports when the rate is lowered. percent, since this leads to a depreciation of the national currency of a given country and makes its goods relatively cheaper and attractive to foreigners).
Since the impact of stabilization policy occurs in the short term, the impact of stimulating monetary policy on the economy can be graphically depicted as follows (Fig. 1):
This policy, used during a recession, is called the "cheap money" policy.
Accordingly, the policy pursued by the central bank during the boom (“overheating”) and aimed at reducing business activity is called the “policy of expensive money” and can be represented by the following chain of events:
The central bank sells government securities → the lending capacity of commercial banks decreases → the money supply decreases multiplicatively → the interest rate (the price of credit) rises → the demand for expensive loans from firms falls → investment spending decreases → aggregate demand decreases → output falls.
In both cases, the economy will stabilize.
Advantages and disadvantages of monetary policy
The benefits of monetary policy include:
No internal lag. The internal lag is the period of time between the moment of realizing the economic situation in the country and the moment of taking measures to improve it. The decision to buy or sell government securities by the central bank is made quickly, and since these securities are in developed countries If they are highly liquid, highly reliable and risk-free, then there are no problems with their sale to the population and banks.
No crowding out effect. In contrast to stimulating fiscal policy, stimulating monetary policy (an increase in the money supply) causes a decrease in the interest rate, which leads not to crowding out, but to stimulation of investment and other interest-sensitive autonomous spending and to a multiplicative increase in output.
Multiplier effect. Monetary policy, like fiscal policy, has a multiplier effect on the economy, and there are two multipliers. The bank multiplier ensures the process of deposit expansion, i.e. a multiplicative increase in the money supply, and an increase in autonomous spending as a result of a decrease in the interest rate in the face of an increase in the money supply multiplierly (with the effect of a multiplier of autonomous spending) increases the value of total output.
The disadvantages of monetary policy are as follows:
Possibility of inflation. Stimulating monetary policy, i.e. an increase in the money supply leads to inflation even in the short run, and even more so in the long run. Therefore, representatives of the Keynesian trend argue that monetary policy can only be used in case of overheating (inflationary gap) of the economy, i.e. consider the possibility of conducting only a contractionary monetary policy, and in a recession, in their opinion, stimulating fiscal rather than monetary policy should be used.
The presence of an external lag due to the complexity and possible failures in the mechanism of monetary transmission. The external lag is the period of time from the moment of taking measures to stabilize the economy (the decision by the central bank to change the value of the money supply) until the result of their impact on the economy (which is expressed in a change in the value of output) appears. The purchase and sale of government securities by the central bank is fast; the lending capacity of commercial banks is rapidly changing. However, the mechanism of monetary transmission is long and consists of several steps, each of which can fail.
1) The "cheap money" policy pursued by the central bank may provide commercial banks with additional reserves, which expands the lending capacity of banks, but this possibility may not become a reality. There is no guarantee that with an increase in reserves there will be a corresponding increase in the volume of loans issued by commercial banks. In addition, the population may decide not to take loans. As a result, the money supply will not increase.
2) The reaction of the money market to an increase in supply depends on the shape of the demand curve for money. A serious drop in the interest rate will only occur if the demand curve for money is steep, i.e. if the sensitivity of the demand for money to changes in the interest rate is small. If the demand for money is very sensitive to changes in the interest rate (the money demand curve is flat), then an increase in the money supply will not lead to a significant decrease in the interest rate (Fig. 2. (a)).
3) A significant decrease in the interest rate as a result of an increase in the money supply may not lead to a serious increase in investment spending if their sensitivity to changes in the interest rate is low (the investment curve is steep) (Fig. 2. (b))
1) If investment demand is highly sensitive to interest rate movements and investment spending has increased as a result of falling interest rates, then an increase in aggregate spending may not lead to an increase in real output if the economy is at full employment (at potential output), which corresponds to the vertical aggregate supply curve (Fig. 2. (c)).
Thus, a disruption in any link of the transmission mechanism can negate or significantly weaken the impact of monetary policy on the economy.
Moreover, the presence of a significant external lag in monetary policy, i.e. the delay in the impact of changes in the money supply on the economy, due to the multi-stage monetary transmission mechanism (even in the case when there are no failures in its functioning) can lead to destabilization of the economy. For example, a decision to increase the money supply, taken during a recession, may give its result when the economy has already reached a boom, which will cause an increase in inflationary processes. Conversely, the sale of government securities by the central bank to reduce business activity in an overheated economy can have an impact when the economy is in a deep recession, and this will only exacerbate the situation.
Availability side effects caused by changes in the money supply, which also reduce the effectiveness of monetary policy. So, if the central bank increases the money supply, then the interest rate falls, i.e. the opportunity cost of holding cash is reduced. Under these conditions, the population may prefer to transfer funds from deposits to cash, which will reduce the deposit rate (ratio cr equal to the ratio of cash to deposits (cr = C / D)). At the same time, a fall in the interest rate (credit price) reduces the interest of commercial banks to issue loans, increasing their excess reserves (excess reserves), which affects the value of the reserve ratio (the coefficient rr, equal to the ratio of reserves to deposits (rr = R / D) and representing the sum the required reserve ratio (ur) set by the central bank and the excess reserve ratio (er) determined by the commercial banks themselves (rr = ur + er)). An increase in the deposit rate and reserve rate leads to a decrease in the value of the money multiplier, which significantly weakens the effect of the monetary impulse on the economy (Fig. 3.(a)). An increase in the monetary base from H 1 to H 2 can lead to an increase in the monetary base from M 1 to M 2 if the value of the multiplier does not change, and only up to M 3 if the value of the money multiplier decreases due to an increase in the deposit rate (as in this case) and/or redundancy rates.
Inconsistency of targets (dilemma of targets) of monetary policy. The fact is that the central bank cannot simultaneously regulate both the money supply and the interest rate, since both of these indicators determine the coordinates of the money market equilibrium point. If the central bank aims to maintain the interest rate at a constant level, then since with an increase in the demand for money (shift to the right of the money demand curve from M D 1 to M D 2), the interest rate rises from R 1 to R 2 (Fig. 3. (b )), the central bank must increase the money supply to M S 2 , i.e. it cannot control the amount of money supply, and it becomes endogenous from an exogenous value, completely subordinated to the goal of keeping the interest rate at a constant level. Conversely, if the central bank aims to maintain a constant money supply, it loses control over the interest rate, since with an increase in the money supply (from M S 1 to M S 2 in Fig. 3(b)), the interest rate will decrease (from R 1 to R 3), and with a reduction in the money supply, the interest rate will increase.
As a result, monetary policy can lead to destabilization of the economy. If the central bank, in order to stabilize the economy, sets as its task not to control the money supply, but to maintain the interest rate at a constant level, then the growth of income (output) during the recovery period will lead to an increase in the transaction demand for money and, consequently, the total demand for money, which, with a constant the money supply will cause an increase in the rate of interest. To lower the rate to its original level, the central bank is forced to increase the money supply, which as a result can create additional impetus for the economy, turning a healthy recovery into an inflationary boom. During a recession, a policy of keeping the interest rate unchanged will cause the central bank to prevent a fall in the interest rate caused by a decrease in the overall demand for money as a result of a slowdown in business activity, must reduce the money supply, which will further reduce aggregate demand and strengthen recession.
The loss of control over the money supply by the central bank in the context of the dependence of monetary policy on the fiscal policy of the government. In this case, the money supply also turns from an exogenous quantity into an endogenous one. If the activities of the central bank are aimed at solving budgetary problems, i.e. providing financing for the growth of public spending (when the government pursues an stimulating fiscal policy) or financing the state budget deficit, then monetary policy becomes completely subordinate to solving problems of fiscal policy. As is known, the increase in public spending and the state budget deficit can be financed by: a) the purchase of government securities by the central bank or the direct emission of money (the so-called monetization of the state budget deficit); b) purchases of government securities by the public (domestic debt); and c) loans from the foreign sector (external debt). If for some reason debt financing is not possible (usually in economies developing countries and in transition economies) or is considered inappropriate, then the government uses the emission method, which, on the one hand, provokes inflation, and, on the other, deprives the central bank of independence in determining the direction of monetary policy. Monetary policy becomes a "hostage" of solving fiscal problems.
In addition, the monetary policy of the central bank cannot be independent, and the money supply cannot be an exogenous value in an open economy under a fixed exchange rate regime, since a change in the supply of the national currency (currency interventions of the Central Bank), especially in conditions of absolute capital mobility, is subordinated to the goal of maintaining at a constant level exchange rate of the national currency.
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37. and
38.Com banks. Essence, function, types.
The history of the rise of the SNS.
SNA-a way to organize information about households. dei-sti, committed macroec. subjects. Purpose: to give a number of information about the emergence, distribution and nat. product. SNS was developed in the late 20s of the 20th century. a group of Amer. scientists under the guidance of S. Kuznets. The reason arose: the need for macroeconomic information for the development of economic policies, programs and measures to regulate the market economy. The first SNA was created for Polestina in 1936. Date of birth -I SNS-1952. The basis of the SNA consists of consolidated accounts of GDP, HF, income and expenses of households and government agencies, foreign economic operations, balance sheets. Principles: 1.double entry - each operation is reflected twice. 2.sequence (production in the image of income, distribution of income, use of income). 3.Balance sheet (registration of all eq flows in the form of balance sheets). not only to ensure the balance of m / y with the volume of resources and their use, but also for the characterization of the results of the process. 5. “T” forms: all accounts consist of 2 sections.
The structure of the SNS. The main types of SNS.
composed of
Demand for money
Demand for money MV = PQ, where M is the amount of money in circulation, V is the velocity of circulation of money, P is the level of prices in the community, Q is the real V national supply. According to the equation, the amount of money in circulation is directly proportional to the price level. The quantitative equation can be interpreted as an equation for the demand for money. portfolio theory Friedman's theory
Advantages and disadvantages of monetary policy.
Keynesian theory ( 3 motivesBaumol-Tobin model:
The concept of transfer e-ki.
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Read also:
Introduction………………………………………………………………………………………………………………….
Advantages and disadvantages of monetary policy
Chapter I. Credit Policy of the Bank…………………………………………………………….. 5
1.1 Essence and types of credit operations………………………………………………………………. five
1.2. The need to manage credit operations……………………………………. nine
1.3. Stages of lending…………………………………………………………………………………………… 16
Chapter II. Analysis of the effectiveness of managing credit operations of a commercial bank (on the example of AB Capital)…………………………………. 32
2.1. Efficiency of loan operations management………………………………………… 32
2.2. Influence of interest rate policy on profitability of credit operations……………. 38
2.3. Analysis of the client's creditworthiness……………………………………………………………….. 53
Chapter III. Credit Operations Management……………………………….. 60
3.1. Forms and methods of managing credit operations of commercial banks 60
3.2. Credit Risk Management……………………………………………………………………… 73
Conclusion…………………………………………………………………………………………………………. 82
Bibliography…………………………………………………………………………………………. 85
Applications…………………………………………………………………………………………………………. 88
Introduction
Lending to production and trade is the most important and hallmark activities of banks in comparison with other financial and non-financial organizations. But at the same time, in Russia, for a long time, the approach to lending entrepreneurial activity was purely formal. This was also manifested in the fact that both the funds of banks and the funds of enterprises were the property of the state (if you look at the essence this definition, then everything in the country “belonged to the people”, and the state “looked after” this property, that is, the property practically belonged to no one), and therefore the bank (at that time the State Bank of the USSR) could not pursue a full-fledged credit policy. Therefore, with increasing competition for potential borrowers, Russian commercial banks needed to plan their lending activities. They must learn how to manage credit operations in such a way that they bring the highest possible return, but at the same time, banks must strive to reduce the credit risks that are directly related to the conduct of credit operations.
Therefore, the purpose of this work was to study all aspects of the management of credit operations and analyze the effectiveness of credit operations of a commercial bank.
To achieve this goal, the following tasks were solved in the work:
— definition of the essence and characteristics of the types of credit operations;
— consideration of expediency of management of credit operations;
- efficiency mark various methods credit management;
- analysis of the management of credit operations on the example of a particular commercial bank;
— consideration of the risks associated with lending to enterprises and methods to reduce their impact on the bank's lending activities;
The paper uses theoretical, methodological works and developments of domestic and foreign authors on this issue, such as Rose P. S., Suskaya E. P., Usoskin V. M., Pomorina M. A., Lavrushin O. I. and others ., regulatory and reference material, materials of periodicals, as well as officially published reporting data of AB Capital for 1995-1996.
Chapter I. Credit Policy of the Bank
1.1 Essence and types of credit operations
In Soviet economic literature, a loan was understood as the movement of loan (ie money) capital provided on a loan on a repayment basis for a fee in the form of interest. This definition was based on the fact that capital is only alienated under the condition that it is not sold, but only loaned. In general, a loan literally means the disposal of a certain amount of money for a certain period of time, i.e. those who have a surplus of money can lend it to those who are short or need more money.
The role and importance of credit is very great, since it solves the problems facing the entire economic system. Thus, with the help of a loan, it is possible to overcome the difficulties associated with the fact that temporarily free funds are released in one area, while in others there is a need for them. The loan accumulates the released capital, thereby servicing the influx of capital, which ensures a normal reproduction process. Also, the loan speeds up the process of money circulation, ensures the implementation of a number of relations: insurance, investment, plays an important role in the regulation of market relations.
The sources of loan capital are, firstly, the funds released from the circulation: funds intended for the restoration of fixed capital (ie, the depreciation fund); part of working capital released in cash due to the mismatch between the sale of goods and the purchase of raw materials, fuel, materials; capital temporarily free in the period between the receipt of funds from the sale of goods and the payment of wages.
Another source of loan capital is cash income and savings in the private sector. It should be noted that, starting from the 50-60s of our century, there is a tendency to increase the attraction of monetary savings of the population. This was facilitated, first of all, by the improvement of the socio-economic situation in developed countries, changes in the structure of consumption.
The third source of loan capital is the state's cash savings, the size of which is determined by the scale of state ownership and the share of the gross national product.
Thus, we can conclude that temporarily free funds arising on the basis of the circulation of industrial and commercial capital, monetary accumulations of the personal sector and the state form sources of loan capital, which are accumulated within the framework of financial institutions.
The price of loan capital is interest. Unlike the price of ordinary goods and services, which are the monetary expression of value, interest is a payment for the use value of loan capital. The source of interest is the income received from the use of the loan.
A more accurate picture of the cost of a loan is given by the rate of interest, or interest rate. The rate of interest is the ratio of the annual income received on loan capital to the amount of the loan, multiplied by 100. The rate of interest depends on the profit, which is divided by interest and entrepreneurial income. The interest cannot exceed the rate of profit, since the price of loan capital does not express its value, its changes are not governed by the law of value.
The rate of interest depends on the ratio of supply and demand, which are determined by many factors. Among them: the scale of production; the amount of money savings and savings of the whole society; the ratio between the size of loans provided by the state and its debt; inflation rates; market conditions; state regulation of interest rates; competition between banks, etc.
In connection with the foregoing, we can conclude that the change in the rate of interest is associated with the market mechanism, and also depends on state regulation.
Loan interest performs two functions: the redistribution of part of the profits of enterprises or the income of the private sector and the regulation of production through the rational allocation of loan capital.
The dynamics of credit during cyclical fluctuations is interesting. Loan capital serves mainly the circulation of functioning capital, the laws of its movement are due to cyclical fluctuations in production. During a period of revival of industrial growth, the increase in the volume of loan capital lags behind the expansion of production and commodity circulation, the demand for loan capital and the rate of interest increase. During crises, a reduction in production and an excess of real capital are combined with an acute shortage of loan capital and a sharp increase in the rate of interest. During a period of depression, when part of the productive capital takes the form of money, the accumulation of loan capital overtakes the accumulation of real capital, and the average profit and the rate of interest decrease.
A special place in modern conditions is occupied by commercial credit - the supply of goods by one company to another on terms of deferred payment, as well as leasing - the lease by an enterprise of machinery, equipment, transport with debt repayment over several years.
From the above, we can conclude that the very concept of "credit" is changing, it can no longer be revealed by the previous definition as a form of transfer of loan capital from the lender to the borrower. In modern conditions, a credit transaction can be called any economic or financial transaction leading to the indebtedness of one of the participants. The repayment of the debt is made by the debtor in cash at a time or in installments, and the total amount of the payment, in addition to the debt, includes a surcharge in the form of interest.
From all other forms of providing funds (subsidies, subventions, grants, etc.), credit as an economic category is distinguished by three fundamental principles - urgency, repayment and payment.
At the same time, urgency means predetermined terms for the return of borrowed funds to the lender; under repayment - the obligatory payment to the creditor of the amount of the principal debt on the agreed terms. Paid means that in this economic transaction, money is a specific product and, based on the law of value, its price is expressed as a percentage.
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The advantages of monetary policy include the following: No crowding out effect. Multiplier effect. Den credit policy has a multiplier effect on the bank account. Absence of internal lag. Internal lag is the time period between the moment of awareness of the situation in the country and the moment of taking measures to improve it. High probability of inflation. It should be noted that only stimulating monetary policy leads to inflation. Contradictory goals of monetary policy. The presence of an external lag due to the complexity and possible failures in the transmission den mechanism. The presence of side effects caused by changes in the supply of money also reduce the effectiveness of monetary policy. Loss of control over the supply of money by the Central Bank in the context of the dependence of the government's monetary policy on the fiscal one.
37. Measurement of den mass.Den aggreg. The most important indicator of the currency of circulation is the money mass, which is the total volume of purchase and payment funds serving the household turnover and owned by individuals, enterprises and the state. To analyze the number of changes in the currency of circulation for a specific date and for a specific period; to develop measures to regulate the growth rate and volume of den mass, various indicators are used - den aggregates. Den aggregate - any of several specific groupings of liquid assets that serve as alternative meters of den mass. and den wed-in, differing from each other in the degree of liquidity. Den aggregates are indicators of the structure of den mass. The composition of den aggregates varies by country. on demand; -M2-cash, checks, demand deposits and small time deposits; -MZ-cash, checks, deposits; -L-cash, checks, deposits, securities. In m / unar statistics in the volume of den mass, except for cash, deposit money is taken into account. The IMF calculates a common measure of M1 for all countries and a broader measure of "quasi-money" (term and savings bank accounts and the most liquid financial instruments circulating on the market).
38.Com banks. Essence, function, types.
Com bank is a credit institution that organizes the movement of loan capital and regulates the payment turnover in order to make a profit. CB belongs to a special category of business enterprises called financial intermediaries. They attract capital, savings from the population and other money released in the course of business activities, and provide them for temporary use to other agents who need additional capital. Banks create new requirements and obligations, which become a commodity on the den market. So, by accepting customer deposits, the bank creates a new obligation-to-deposit, and by issuing a loan, a new requirement for the borrower. This process of creating new obligations is the essence of financial intermediation. This transformation makes it possible to overcome the difficulties of direct contact between savers and borrowers, which arises from a mismatch between the proposed and required amounts, their terms, and profitability. The main operations of the bank include: accepting deposits; making payments and settlements; issuance of loans. The main f-mi KB yavl-Xia: 1 attraction of temporarily free money sr-in; 2 granting loans; 3 dens of settlements and payments in the household; 4 issuance of credit sr-in circulation; 5 consulting and provision of eq and financial information.
Transactions of commercial banks that create money. money multiplier
The transactions of money-creating CBs include: issuing loans to bank customers; buying CB government securities from the population. shows how many times the total value of non-cash money supply is greater than the amount of excess reserves. Den multiplier is calculated as the ratio of den mass to den base. m = Ms / MB; Ms = m * MB, where m is den multiplier; Ms- supply of money; MB-monetary base.
The history of the rise of the SNS.
SNA-a way to organize information about households. dei-sti, committed macroec. subjects. Purpose: to give a number of information about the emergence, distribution and nat. product. SNS was developed in the late 20s of the 20th century.
Advantages and Disadvantages of Monetary Policy
a group of Amer. scientists under the guidance of S. Kuznets. The reason arose: the need for macroeconomic information for the development of economic policies, programs and measures to regulate the market economy. The first SNA was created for Polestina in 1936. Date of birth -I SNS-1952. The basis of the SNA consists of consolidated accounts of GDP, HF, income and expenses of households and government agencies, foreign economic operations, balance sheets. Principles: 1.double entry - each operation is reflected twice. 2.sequence (production in the image of income, distribution of income, use of income). 3.Balance sheet (registration of all eq flows in the form of balance sheets). not only to ensure the balance of m / y with the volume of resources and their use, but also for the characterization of the results of the process. 5. “T” forms: all accounts consist of 2 sections.
The structure of the SNS. The main types of SNS.
The national product is calculated according to the SNA, which represents the relationship between economic development indicators at the macro level. The SNA is a description of the MEih indicators that characterize the results and proportions of the country's economic development to provide a comprehensive analysis of the process of creating a national product and national income. The SNA studies and records the process of creating, distributing and redistributing a national product and national income in the country. A feature of the SNS is its comprehensive character. The SNA studies operations m / y sub-ami nat ek-ki. To economic entities (agents) nat ek-ki here include household units that perform ek-s transactions with mothers or financial assets. Economy agents are grouped in 6 sectors: 1) non-financial enterprises; 2) financial institutions and org-ii; 3) state institutions, rendering services; 4) private non-commercial organizations; 5) household house; 6) abroad. Modern SNS composed of 3 interconnected blocks. The first allows you to compare investments and savings, to give a count of the creation, distribution and final use of national income. The second is designed to analyze the creation and distribution of the product by m / y industries. The 3rd block is an account of fund flows and reflects the movement of financial assets in the form of purchases and sales in the money market.
Demand for money
Demand for money- the total amount of money that households, entrepreneurs want to have at the moment. There are different concepts of demand for money. Quantitative theory of money by I. Fisher: MV = PQ, where M is the amount of money in circulation, V is the velocity of circulation of money, P is the level of prices in the community, Q is the real V national supply.
According to the equation, the amount of money in circulation is directly proportional to the price level. The quantitative equation can be interpreted as an equation for the demand for money. portfolio theory: Cambridge equation - M = kPQ. The coefficient k (liquidity indicator) is inversely proportional to the velocity of money circulation: the less cash, the greater the velocity of their circulation. Friedman's theory: money is one of the types of assets. He considered bonds, stocks, durables, etc. as alternative assets. One of his models: MD = f(P, rb, ra, P/P, Yn/r), where MD is the planned demand for nominal cash balances, rb, ra are the return on bonds and shares, respectively, P/P is the rate inflation, Yn / r - total property. The demand for money is directly proportional to income on bonds and stocks and total im-wu, inversely proportional to the inflation rate. Keynesian theory (liquidity preference theory): the demand for money depends on how highly eq-ing subjects value the property of liquidity, and what proportion of their assets they prefer to have in the form of highly liquid money. Keynes singles out 3 motives, encouraging people to keep part of the money in the form of cash: transactional motive (the need for cash for trade transactions); precautionary motive (the possibility of unforeseen purchases, expenses); speculative motive (the intention to save some reserve in order to take advantage of better, compared to the market, knowledge of what the future will bring). The speculative demand for money is based on the inverse relationship between the m / y interest rate and the bond rate. According to Keynes, the demand for money is in direct dependence on ur national income and inversely on the interest rate. Baumol-Tobin model: transactional model, which considers that money is stored econ. subjects only as a medium of payment. Formula: , where Pb-nominal costs. The demand for money is directly dependent on nominal income Y and inversely on the level of interest rate i. All theories of demand for money distinguish 3 main factors that determine the nominal demand for money: 1) it is directly dependent on the absolute price level; 2) it is directly proportional to the real volume of national pr-va (income); 3) it is inversely dependent on ur% rate.
The concept of transfer e-ki.
Transformation (transitional) ek-ka-ek-ka of countries transitioning from centralization managed system economy to a system based on market principles. Transformation period-time, during the cat. society implements radical economic, watered and social transformations, and the country's economic system is moving into a new, qualitatively different state in connection with the reforms of the system's eq. har-ny mixture, a combination of kondno-administrative. systems and modern markets eq. 2) a special initial state preceding the transition process is planned eq. 3) instability of the state. -Xia sots-ek costs: a decline in production, inflation processes, a decline in the life of the population. 6) there is a change in systemic connections and relationships.
Monetary policy-a set of activities of the central bank and government in the field of monetary circulation and credit.
The monetary policy of the central bank (monetary policy) is a set of government measures that regulate the activities of the monetary system, the loan capital market, the procedure for non-cash payments in order to achieve a number of general economic goals: price stabilization, economic growth, strengthening the monetary unit.
Monetary policy is essential element macroeconomic policy.
All impacts are reflected in the value of the total social product and the national product.
The main objectives of the state monetary policy:
- 1. Curbing inflation
- 2. Ensuring full employment
- 3. Regulating the rate of economic growth
- 4. Softening cyclical fluctuations in the economy
- 5. Ensuring the sustainability of the balance of payments
- 6. Principles of monetary and credit regulation of the economy
Monetary regulation of the economy is carried out on the basis of the principle of compensatory regulation, which implies the following:
- 1. the policy of monetary restrictions, which involves limiting credit operations by increasing the reserve funds for participants in the credit system in the central bank; raising the level of interest rates; limiting the growth rate of the money supply in circulation compared to the mass of commodities;
- 2. policy of monetary expansion, which involves stimulating credit operations; reduction of reserve norms for subjects of the credit system; falling lending rates; acceleration of the turnover of the monetary unit.
The development and implementation of monetary policy is the most important function of the central bank. It has the ability to influence the volume of money supply in the country, which in turn allows you to regulate the level of production and employment.
The main tools of the central bank in the implementation of monetary policy:
Regulation of official reserve requirements is a powerful means of influencing the money supply. The amount of reserves (the part of banking assets that any commercial bank is required to keep in the accounts of the central bank) largely determines its lending capacity. Lending is possible if the bank has enough funds in excess of the reserve. Thus, by increasing or decreasing reserve requirements, the Central Bank can regulate the lending activity of banks and, accordingly, influence the money supply.
The main tool for regulating the money supply is the purchase and sale of government securities by the Central Bank. When selling and buying securities, the Central Bank tries to influence the volume of liquid funds of commercial banks by offering favorable interest. By buying securities on the open market, he increases the reserves of commercial banks, thereby contributing to an increase in lending and, accordingly, an increase in the money supply. The sale of securities by the Central Bank has the opposite effect.
Traditionally, the Central Bank provides loans to commercial banks. The rate of interest at which these loans are issued is called the discount rate of interest. By changing the discount rate of interest, the central bank affects the reserves of banks, expanding or reducing their ability to lend to the population and enterprises.
The factors that affect demand, supply, and interest rates can be grouped under the heading "monetary policy instruments".
The Central Bank sets minimum interest rates for its operations. The refinancing rate is the rate at which a loan is granted by commercial banks, or it is the rate at which the Central Bank rediscounts their bills.
The Bank of Russia may set one or more interest rates on various types operations or pursue an interest rate policy without fixing the interest rate. The Bank of Russia uses interest rate policy to influence market interest rates in order to strengthen the ruble.
The Bank of Russia regulates the total volume of loans issued by it in accordance with the accepted guidelines of the unified state monetary policy, while using the discount rate as an instrument. Bank of Russia interest rates are the minimum rates at which the Bank of Russia carries out its operations.
The interest rate policy of credit institutions, being part of the national monetary policy, has a significant impact on the development of the national economy and its stability. Commercial banks are usually free to choose specific interest rates on loans and deposits and use some indicators reflecting the state of the short-term money market as benchmarks in the implementation of interest rate policy. On the other hand, the central bank, in the process of targeting, sets intermediate monetary policy goals that it can influence, as well as specific tools to achieve them. This may be the refinancing rate or interest rates on central bank operations, on the basis of which the short-term interbank lending rate is formed, etc.
The problems of identifying factors influencing the interest rate policy of commercial banks have been of concern to specialists since the formation of economic theory. However, answers to many questions have not yet been found. Modern research, aimed at identifying the optimal rules for the implementation of national monetary policy, are largely based on econometric models.
In theory and practice, methods of direct and indirect regulation of national monetary policy are considered. From the point of view of interest rate policy in the narrow sense (rates on credit and deposit operations, the spread between them), the instrument of its direct regulation is the setting by the central bank of interest rates on loans and deposits of commercial banks, indirect instruments are the setting of the refinancing rate and the rate on central bank operations in the money and open markets.
Interest rates on loans and deposits as instruments of direct regulation are not often used in world practice. For example, the People's Bank of China sets rates that are considered indicative for the banking system. At the same time, the bank's policy is aimed at reducing the spread, which in the first half of 2006 was 3.65%, and by the end of 2009 - 3.06%, which indicates sufficient liquidity of the Chinese banking system.
In many countries, including Russia, the refinancing rate has become more of an indicative indicator, giving the economy only an approximate guide to the value of the national currency in the medium term, since it has been in an unchanged state for a long time, while real rates in the money market change every day.
According to existing legislation, commercial banks are required to allocate part of the funds raised to special accounts with the Central Bank.
Since January 2004, the Central Bank has established the following amounts of deductions to the mandatory reserve fund of the Bank of Russia: for ruble accounts of legal entities and foreign currency of citizens and legal entities, as well as for ruble accounts of citizens - 3.5%.
The maximum amount of deductions, i.e., the required reserve ratios, is 20% and cannot change by more than 5% at a time.
This ratio allows the Bank of Russia to regulate the liquidity of the banking sector.
Reserves serve as a current regulation of liquidity in the money market, on the one hand, and as a limiter on the issue of credit money, on the other.
In case of violation of the required reserve ratios, the Bank of Russia has the right to recover in an indisputable manner from the credit institution the amount of outstanding funds, as well as a fine in the established amount, but not more than the double refinancing rate.
Operations on the open market, which are understood as the purchase and sale by the Bank of Russia of government securities, corporate securities, short-term transactions with securities with the conclusion of a reverse transaction later. The limit of operations on the open market is approved by the board of directors.
In accordance with the law of July 10, 2002 No. 86-FZ (as amended on October 27, 2008) “On the Central Bank Russian Federation(Bank of Russia)" The Bank of Russia has the right to buy and sell bills of commodity origin with a maturity of not more than 6 months, buy and sell bonds, certificates of deposit and other securities with a maturity of not more than 1 year.
Refinancing - lending by the Bank of Russia to banks, including accounting and rediscounting of bills. The forms, procedure and conditions for refinancing are established by the Bank of Russia.
Refinancing of banks is carried out by providing intraday loans, overnight loans and holding Lombard loan auctions for up to 7 calendar days.
Currency regulation should be considered from two sides. On the one hand, the Central Bank must monitor the legality of foreign exchange transactions, on the other hand, the change in the exchange rate of the national currency against other currencies, avoiding significant fluctuations.
One of the methods of influencing the exchange rate is the conduct of foreign exchange interventions or motto policy by central banks.
Foreign exchange intervention is the sale or purchase by the Central Bank of foreign currency in the foreign exchange market in order to influence the exchange rate and the total demand and supply of money. These, obviously, should also include transactions for the purchase and sale of precious metals on the domestic market of the Russian Federation, the procedure for which is regulated by the letter of the Central Bank of the Russian Federation dated December 30, 1996 No. 390.
The main tasks of the exchange rate policy in Russia are to strengthen confidence in the national currency and replenish gold and foreign exchange reserves. At present, the monetary base is fully secured by gold and foreign exchange reserves.
Under the direct quantitative restrictions of the Bank of Russia, the establishment of limits on the refinancing of banks, the conduct by credit institutions of certain banking operations are accepted. The Bank of Russia has the right to apply direct quantitative restrictions in exceptional cases for the purpose of pursuing a unified state monetary policy only after consultations with the government of the Russian Federation.
The Bank of Russia may set growth targets for one or more indicators of the money supply based on the main directions of the unified state monetary policy. In Russia, the main aggregate is the monetary aggregate.
To date, the monetary policy of central banks is guided by monetarist principles, where the Central Bank is tasked with tightly controlling the money supply, ensuring a stable, constant and long-term growth rate of the amount of money in the economy, equal to the GDP growth rate.
Other factors that affect demand, supply and interest rates include:
- 1. the situation in the real sector of the economy;
- 2. return on investment in production;
- 3. the situation in other sectors of the financial market;
- 4. economic expectations of business entities;
- 5. the need for banks and other business entities in cash to maintain their liquidity.
Politics of cheap and expensive money
Depending on the economic situation in the country, the central bank pursues a policy of cheap or expensive money.
Cheap money policy
Characteristic of a situation of economic recession and high unemployment. Its goal is to make credit money cheaper, thereby increasing aggregate spending, investment, production, and employment.
To implement a cheap money policy, the central bank may reduce the discount rate on loans to commercial banks or purchase government securities on the open market or reduce the reserve requirement, which would increase the money supply multiplier.
Dear money policy is carried out in order to reduce the rate of inflation by reducing aggregate spending and limiting the money supply.
Includes the following activities:
- 1. Raising the discount rate of interest. Commercial banks begin to take less loans from the Central Bank, hence the money supply is reduced.
- 2. Sale of government securities by the central bank.
- 3. Increase in the norm of reserve requirements. This will reduce the excess reserves of commercial banks and reduce the money supply multiplier.
All of the above instruments of monetary policy referred to indirect (economic) methods of influence. In addition to these general methods of monetary regulation, the whole bank also uses direct (administrative) methods designed to regulate specific types of credit. For example, a direct limitation on the size of bank loans for consumer needs.
Monetary policy has pros and cons. Strengths include speed and flexibility, less dependence on political pressure compared to fiscal policy. Problems in the implementation of monetary policy are created by cyclical asymmetry. The effectiveness of monetary policy can also be reduced as a result of an opposite change in the velocity of money.
The monetary policy of the Central Bank of the Russian Federation is a set of government measures that regulate the activities of the monetary system in order to regulate the economic situation and achieve a number of general economic goals: strengthening the monetary unit, stabilizing prices, restructuring the economy, stabilizing economic growth rates.
There are two main types of monetary policy:
- 1. Restrictive monetary policy. It is aimed at implementing measures that regulate the activities of the monetary system by limiting the volume of credit operations of commercial banks and raising interest rates. Its implementation is usually accompanied by an increase in taxes, a reduction in government spending, and other measures aimed at curbing inflation and improving the balance of payments. This policy can be used both to fight inflation and to smooth out cyclical fluctuations in business activity.
- 2. Expansionary monetary policy. It is characterized, as a rule, by the expansion of the scale of lending, the weakening of control over the increase in the amount of money in circulation, the reduction in tax rates, and the lowering of interest rates.
Both types of monetary policy can be either total or selective. With a total policy, the measures of the Central Bank of the Russian Federation apply to all CBs, with a selective policy - to individual credit institutions. When using a selective policy, it is practiced to use the following set of instruments or their combinations: setting limits on accounting and re-registration operations (by industry, region, etc.), limiting certain types of CB operations, setting a margin when conducting various financial and credit operations, regulating the conditions for issuing certain types of loans to different categories of borrowers, setting credit ceilings, etc.
Selective politics are resorted to when development is weak financial markets when they are not able to provide a sufficiently effective redistribution of funds and investments in the right directions.
This policy contributes to a change in credit flows in certain sectors of the economy, on the other hand, it hinders the normal functioning of the credit and financial system due to the creation of preferential lending conditions for certain counterparties. Choosing a Specific Type of Monetary Policy
The Central Bank of the Russian Federation is carried out on the basis of the state of the economic situation. At present, the Central Bank of the Russian Federation is pursuing a policy of a managed floating exchange rate of the ruble against major foreign currencies. This allows you to increase the saturation of the economy with money. In practice, the Central Bank of the Russian Federation combines both types of monetary policy, which allows creating conditions for a gradual reduction in inflation and ensuring sustainable economic growth.
Bank credit policy- the program and direction of the credit institution in the field of loans to legal entities and individuals. Credit policy is based on acceptable financial organization the risk-return ratio of the operations.
Factors affecting credit policy
The credit policy of the bank is determined on the basis of macroeconomic external and microeconomic internal factors.
Its macroeconomic components are the general economic situation in the country; political stability; the stage of the economic cycle that the state goes through; the level of inflation and interest rates; state of the national currency; competition in the banking sector. In general, these are factors that a credit institution cannot influence on its own.
A special place is occupied by legal issues. Thus, regulators can have a significant impact on the credit policy of the banking system by issuing directives, changing interest rates, the amount of required reserves, etc.
The microeconomic factors influencing the credit policy include, first of all, the resource base, the cost of attracting financial resources, the client base; bank specialization; liquidity of the credit institution. Not the last role is played by the qualifications of the staff, their readiness to work with various categories of borrowers.
Goals and objectives of credit policy
The main goal of the bank's credit policy is to obtain maximum profit with a minimum level of risk. Based on the possible ratio of these components, as well as available resources, the credit institution determines the current tasks:
- directions of lending;
- technology of credit operations;
- control over the lending process.
Credit policy in work with legal entities
As a rule, the credit policy of banks when working with legal entities is aimed at developing long-term relationships with borrowers. At the same time, determined criteria for selecting clients for cooperation are the basis. Typically, the following requirements are presented: transparency of the company's income generation schemes, stability and profitability of the business, successful experience in various economic conditions, the availability of equity capital, the ability to provide security.
When interacting with small businesses and individual entrepreneurs, the personality of the manager, his reputation and credit history play an important role.
Credit policy for individuals
Based on the credit policy, bank employees build their work with retail clients, choose one or another scoring model, and develop loan products.
At the same time, based on the credit policy, the bank can focus on such segments as retail lending in retail chains (POS lending), car loans when interacting with dealers, providing mortgage loans, etc.
The credit policy determines the requirements for borrowers: age, minimum work experience, income level and other indicators.
In addition, it affects the offered banking products: secured or unsecured, targeted or non-dedicated loans, loan terms, etc.
Based on the credit policy, the bank determines interest rates that correspond to the risk of a particular borrower. At the same time, the credit policy of different banks can vary greatly. Thus, some financial institutions focus primarily on providing loans at points of sale - for example, Home Credit Bank, Russian Standard, etc. Alfa-Bank is also noticeable in this market. A number of credit organizations are actively involved in express lending: OTP Bank, National Bank "Trust", etc.
The interest on these types of loans is higher, but the banks take on higher risks.
Other credit institutions, on the contrary, focus mainly on customers with large account balances. So, for example, subsidiaries of foreign credit organizations often act - Citibank, Raiffeisenbank, etc.
Implementation of the bank's credit policy
The developed credit policy of the bank is the general main directions of activity. Its further implementation is to draw up appropriate instructions and other documents regulating the conduct of certain operations, defining the criteria for assessing customers and the stages of interaction with them.
Credit policy is not something once and for all determined in the bank. It should be revised depending on changing economic conditions.