Monetary Weight and Monetary Aggregates
Money supply and monetary aggregates - these concepts are interrelated and interdependent.
Money supply is the collection of payment, purchasingand accumulated funds belonging to physical, as well as legal entities and the state itself, involved in the process of servicing economic ties. The money supply characterizes the movement of money according to the quantitative indicator.
Under the weight of money understand and cash, andnon-cash means. In structure, it is divided into the active part (those funds that serve the economy) and the passive part (accumulations and balances in bank accounts, which are potential settlement means).
The mass of money is not simple and does not coincide with cashmeans. In fact, the share of cash in the mass of money is not so great, since all business entities make transactions with each other on the basis of non-cash payments through bank accounts.
The level of development of the country determines the stabilityand the share of cash in the total mass of money. For example, in the USA this indicator does not exceed 5-10%, with the CIS countries - 30%. The more cash in the total mass of the country's money, the less flexible is the monetary system itself. The money supply and monetary aggregates should be in the right ratio to ensure the normal functioning of the monetary system.
As part of the mass of money are allocated suchcomponents that can not be directly used as payment and purchasing means. These are funds on time accounts, deposits, savings deposits, shares, etc. They are called "quasi-money" (from Latin "almost"). This part of money in the overall structure of money turnover is a very significant and significant part.
The structure of the mass of money and its composition constantly changing. At different stages of the development of commodity exchange and payment relations, it was different. With gold circulation at the beginning of the last century, the structure of the mass of money in developed countries was approximately the following: 40% were gold coins, 40% banknotes, 10% balances on accounts of various types of lending institutions. Immediately before the First World War, these indicators respectively changed: 15%, 22%, 67%.
To analyze the movement of money and changes in this process over a certain period, money supply and monetary aggregates different categories.
Monetary aggregates are indicators of the quantity of money or financial assets, of which the mass of money consists.
Money supply and monetary aggregates in this senseare mutually intertwined. The so-called aggregates represent a stepwise hierarchical structure, in which each subsequent aggregate includes the previous ones. Each subsequent indicator at the same time includes less liquid assets. They are expressed by such concepts as monetary aggregates m1 m2 m3, m4, and also m0.
Unit M0 - money in circulation (coins, banknotes, treasury notes).
The Ml unit includes the M0 unit and funds on the current accounts used for non-cash settlements.
The M2 unit includes Ml and deposits in commercial banks, short-term government securities, which can become cash or check accounts.
The MH unit includes M2 and savings deposits in credit institutions, as well as money market securities.
The M4 unit includes M3 and deposits with credit institutions.
Monetary aggregates in Russia for the calculation of monetaryThe masses are of the following order: they are M0, Ml, M2 and M3. The money supply of Russia is characterized by a high share of cash, and this trend is not going to decline. The money supply and monetary aggregates of Russia for a more promising development of the monetary system should go into the mainstream of the greater weight of non-cash settlements.
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