Money issue is the process of issuing banknotes and coins into circulation. Specialists can talk about its impact on the economy of a country for hours, since there are many contradictions. After all, it is considered a tool that can lead to both improvements and deteriorations in the financial sector.
First of all, it is worth noting that money issue is a privilege that belongs to a national bank. It regulates the money supply: it releases when it is short and withdraws as necessary. There are two forms of issuing funds: non-cash and cash. The first is much wider, since in addition to money, it also issues means of payment. In addition, commercial banks also have the right to issue non-cash issues, which fundamentally distinguishes it from the monetary form.
The issue of money in Russia meets a number of principles:
- Monopoly, that is, only the central bank of the Russian Federation is vested with the right to issue banknotes, and only it decides when and in what quantity to withdraw or issue them.
- May be carried out without collateral. The issue of banknotes does not have actual provision with gold or other precious metals, and the cost of making a bill is much less than their face value. In addition, there is no officially established ratio between the national currency and gold.
- It acts as an official means of payment, confirmed by the current Russian legislation, and the only free tool that can be used in cash with counterparties.
- The Russian ruble can be exchanged for each entity that has presented an identity document, and in any amount. There are no specific restrictions.
- The government should not indicate to the national bank the terms and amounts of the issue of money, especially in an ultimatum form.
The increase in cash money supply is carried out using a special unit called the cash settlement center. It, in turn, includes a revolving cash desk and a reserve fund. The first is responsible for issuing funds to commercial banks and accepting cash in case of surplus formation. A reserve fund performs the function of storing funds. Moreover, while banknotes are in this fund, they cannot be called money, since they do not perform the basic functions, but are only banknotes.
Settlement and cash center is located in the department of the national bank of the country, which has the issue right. Accordingly, it is he who makes the decision to transfer funds from the reserve fund to the working capital. This is carried out at a time when the inflow of funds does not increase according to planned standards, and the need for additional cash increases for several commercial banks.
Non-cash money issue arises in the process of development and expansion of the lending sphere, therefore, it can be made by other credit institutions. It involves an increase in money in accounts due to the conclusion of a transaction in a bank. It is believed that this form of issue is primary, that is, at first there is an increase in bank accounts, and then there is a need to increase the money supply.
It is worth noting that the cashless and cash form is in constant interaction and periodically takes one form or another. For example, when paying for a loan or depositing, an increase in non-cash funds is carried out. And at the time of withdrawing money from bank accounts , the amount of cash increases. But the concept of "money issue" implies not just a transition from one form to another, and not just the release of money into circulation, but a real increase in the money supply.