Credit and monetary aggregates

In modern economics money supply is regarded as the amount of money and other financial resources, money supply identical.It is believed that monetary aggregates have the liquidity of close to unity.

Throughout most of the time using this economic category, it was assumed that the main monetary aggregates act as the main objects of the credit policy.

In economics discusses monetary aggregates such as:

  • cash (M0);
  • financial assets: cash, credit and demand deposits (M1);
  • aggregates M2 type - formed by adding M and various types of fixed-term deposits;
  • units type M3 - formed by adding M and a number of large time deposits (certificates of deposit);
  • aggregates form L -The wide of the units, including the synthesis without exception financial assets.

In today's economy more and more important in the structure of monetary aggregates acquire credit.And it is directly determined by the need to expand the functions of the credit.

In matters of the list of functions of credit and their characteristics, economists have not come to a consensus.Often the same characteristic function names refer to different functions, or, conversely, different functions are identified.

example, identified the function of replacement signs of money and credit functions of circulation, as is stated that in both cases the credit acts as a category of exchange.However, these functions should be separated, because it is obvious that the issue of credit money (the fact that the replacement signs of money) and the treatment of credit money is not identical and affect monetary aggregates and their types in terms of their composition and structure.

In characterizing the distribution function in the literature highlights the productive nature of the redistribution of credit resources.However, the functioning of credit is not always productive nature, that is redistributed to return, but not backfilled credit cost, which is not included in the monetary aggregates.In this regard, in addition to the steam distribution function, the function should be offered incentives to save the resource, which is responsible for the performance nature of the movement cost of credit and the ability to create a new credit value as a self-expanding.

In the economic literature there are three main features of the loan - the distribution, control and replacement, as well as a number of other functions that determine the active role of credit as part of the money included in the monetary aggregates.That is why, on the basis of known functions formed classification functions remain relevant with the addition of a new feature of the loan: the conversion of the dormant capital in the functioning.

It provides:

  • bond loan with the economy as a whole:
  • creation of a new credit value as self-expanding value;
  • credit creation means of circulation (credit and non-credit money);
  • loan servicing of money turnover (real and modern, so-called credit money);
  • replacement of cash (cash and credit lending bank money).

role of credit as a result of the implementation of its functions, will ensure the acceleration of the circulation of funds, which in turn have a positive impact on monetary aggregates.

principle of construction of such a model is a hierarchy defined purpose, direction, detail functions.The classification functions inherent to create a new credit value as a self-expanding, and the end result involves the conversion of the dormant capital in the functioning.