The essence of securities.
Economic activity is an important component of our modern life, without which many processes would not be able to. For example, the economic activity of individuals and legal entities is impossible without the transfer of money from one entity to another. You can transfer money in two ways: by lending and issuing / circulating securities (CB).
In order to reveal the essence of securities, we consider four distinguishing features of a security:
1. A security is a monetary document that can express two types of law: in the form of the title of the owner and as the ratio of the loan of the person who owns the document to the person who issued it. In the first case, we are talking about stocks, in the second - about bonds.
2. A security is documentary evidence of an investment. Thanks to securities, monetary savings become tangible objects.
3. Securities reflect requirements for real assets.
4. These papers generate income.
Naturally, paper is valuable not because someone called it valuable, but because it certifies the holder’s right to something valuable. If you do not turn to terminology, then the owner of the security has the following rights: the right to certify (obtain an extract from the registry), the right to exercise (i.e. the right to return the face value or participate in management) or the right to assign (give, sell, transfer, to lay) the Central Bank to another person.
Functions of securities .
The functions of the securities are as follows: - redistributive (the Central Bank plays an important role in the flow of capital between different sectors of the economy, segments of the population, industries and the state; - the realization of the owner’s right to a part of the income that he receives from investing or to return capital; - providing additional rights (priority of repayment of the debt, the right to participate in management, etc.).
Do not confuse the functions of securities and the functions of the securities market. The securities market has much more features. We simply give their classification, without a detailed explanation, so that it is clear what we are talking about. Like all markets, the Central Bank market performs general market and specific functions.
The general market functions include the following: commercial, pricing, informational, regulatory. Specific functions: redistribution of capital, redistribution of market risks or hedging, change of ownership. As you can see, the functions of securities and the functions of the securities market are significantly different.
Properties of securities.
The Central Bank has a lot of distinctive qualities, we list the main ones:
- market nature;
- seriality;
-reversibility;
- profitability;
- liquidity;
- standard;
- risk;
- participation in civil turnover.
Speaking about securities, their essence and properties, it is impossible not to say about the types of securities. It is customary to distinguish two large groups of securities: the main and derivatives. The main ones, in turn, are divided into primary (bonds, stocks, mortgages, bills) and secondary (warrants for securities, depositary receipts, subscription rights, strips, etc.). Derivatives of the Central Bank: futures contracts, negotiable options, etc.
There are other classifications of securities, for example, by the nature of the rights certified by them, they are divided into: real-estate documents and legal obligations. Many authors offer their classifications.
Central banks have a huge number of types, there are special articles in the legislation that list them in full, we list some of them: government bonds, bills of lading, certificate of deposit, stock, savings certificate, bank bearer passbook, warehouse certificate, double warehouse certificate, simple warehouse certificate, bond, bill of exchange, etc.