Starting from 600-300 BC e. Commodity money is being replaced by full-fledged money.
Full-value money is a type of money that represents banknotes whose purchasing power is directly or indirectly based on the value of a precious metal, such as gold or silver.
Banknotes, the purchasing power of which is directly based on the value of the precious metal, are 1 full-fledged money in strict accordance with the meaning of this term. Banknotes, the purchasing power of which is indirectly based on the value of the precious metal, are representatives of full-fledged money or exchange money.
For full-fledged money, the denomination indicated on the front side must coincide with its market commodity value. Representatives of full-fledged money have a denomination significantly higher than their commodity value, but they provide for mandatory exchange at a fixed rate for full-fledged money.
The main forms of full-fledged money are: (1) bullion; (2) coins; (3) banknotes. In Fig. 2.3 presents the classification of full-fledged money.
Rice. 2.3. Classification of full-fledged money
More on topic 2.3. Full-fledged money and its forms:
- Marxist interpretation of the amount of full-fledged money required for circulation.
- TOPICS OF CONTROL WORKS in the discipline "MONEY, CREDIT, BANKING" for part-time students of the direction "Economics" and the specialty "World Economy"
Starting from 600-300 BC. Commodity money is being replaced by full-fledged money.
Full money is a type of money that is a form of currency whose purchasing power is directly or indirectly based on the value of a precious metal, such as gold or silver.
Banknotes whose purchasing power is directly based on the value of the precious metal are full-fledged money in strict accordance with the meaning of this term. Banknotes whose purchasing power is indirectly based on the value of the precious metal are representatives of full-fledged money or change money.
For full-value money, the denomination indicated on the front side must coincide with its commodity value. Representatives of full-fledged money have a denomination significantly higher than their commodity value, but they provide for mandatory exchange at a fixed rate for full-fledged money.
The main forms of full-fledged money are:
(1) ingots;
(2) coins (full-value, change);
(3) banknotes.
In Fig. 3.2 presents the classification of full-fledged money.
Rice. 3.2. Classification of full-fledged money
Ingots. The first full-fledged money was issued in the form of bars. To certify the purity of the metal and its weight, the supreme rulers branded the ingots, trying to overcome the inconvenience of determining the quantity and quality of the metal contained in the ingot. Various sources on the history of money contain information that the first metal ingots, confirmed by a certain mark, were widely used in Ancient Babylon and Egypt. The disadvantages of metallic full-fledged money in bullions were their weak divisibility and limited transportability.
Coins. Unlike commodity money and unmarked metal bars, coins were the first fairly universal means of payment. Because their quality and weight were verified by testing. They were recognizable, durable, divisible and transportable.
It is believed that the first coins were put into circulation in the Lydian kingdom in 640-630. BC. They were minted from a natural alloy of gold and silver. And they were square. In 550 BC. In the Lydian kingdom, full-fledged gold and silver coins began to be produced. Around the same time, the first coins were minted in Ancient Greece. Later, in 600-300. BC, the first round-shaped coins were issued in China. And in 275-269. BC. silver coins came into use in the Roman Empire and then spread throughout its colonies.
Starting from 800-900. AD in most European countries, including Rus', their own coinage appears, and coins actively begin to circulate throughout Europe.
Since the weight content of the first coins coincided with the denomination minted on them, the name of the weight unit was often repeated in the monetary unit, for example, hryvnia, pound, etc.
In addition to full-fledged coins, small change coins were in circulation. They were fractional parts of full-fledged coins. Typically, small change coins were minted behind closed doors from state-owned metal at the state mint.
When full-value coins wore out during use, or when coins were damaged by private or state issuers, their weight content decreased. At the same time, the coins continued to circulate at the same denomination. This quickly led to the idea of the possibility of counterfeiting coins, i.e. purposeful minting of inferior money. Defective coins have a face value higher than their marketable (intrinsic) value. However, unlike full-value money, defective coins did not provide for any exchange for Full-value money.
Coin income. The minting of inferior coins brought in coin income. Coin income is the difference between the face value of a coin and the market value of the metal that was spent on its production. As nation states formed, coinage became the exclusive privilege of governments and was called coin regalia. Coin regalia is the state's monopoly right to mint inferior coins. This prerogative of the government was never subsequently ceded, arguing that it was necessary for the common good. The profit from the monopoly issue of money is called share premium or seigniorage.
Banknotes. The expansion of commodity production volumes entailed an increase in exchange transactions. Full-fledged money was not able to meet the growing needs of the economy for means of circulation, so there was a need to introduce a new form of money - banknotes, which were representatives of full-fledged money.
From the history of money it is known that the first European banknotes were issued by the Bank of Sweden in 1661. Banknotes, the issue of which was regulated by the state, appeared in England in 1694.
The first Russian banknotes appeared in circulation under Catherine II in 1769 and, by analogy with the French ones, were called banknotes.
Banknotes served as a means of payment in the sphere of wholesale trade; retail trade was serviced by coin money.
Banknotes were representatives of full-fledged money. They did not have a forced exchange rate, but were necessarily exchanged for coins at the market rate. Thus, the banknote was a receipt containing a requirement for the issuing bank to issue to its bearer the number of coins indicated on it.
In 1844, in England, according to the R. Peel Act, the institution of emission law appeared. The right of emission is the right of a central (state) bank to issue banknotes without monetary backing and without special permission from legislative bodies. Its scale was measured as a percentage of the volume of issue of coated banknotes. In France, the institution of emission law was introduced in 1848, in Russia - in 1897, in the USA - in 1916. Thus, the government monopoly on the issue of money, initially extending only to coins (since this was the only form of money used) , began to spread to banknotes.
Since banknotes were representatives of full-fledged money, they provided for a certain procedure for ensuring their issue, which could be direct or indirect. Direct security includes the provision of coins minted from precious metals or bills of exchange. Indirect security includes the provision of banknotes by the state’s obligation to accept them in payment of taxes and other payments. Depending on the security, three types of banknotes were distinguished: with full covering, with partial covering and without covering.
Full Cover Banknotes had full direct coverage, were exchanged for gold in unlimited quantities (the exchange rate was market), issued by private and state banks in unlimited quantities; the built-in limit on such emission was the official gold reserve.
Partially coated banknotes had direct collateral, which consisted of precious metals and bills, were exchanged for gold in unlimited quantities (the exchange rate was below par), and were issued by a state bank, whose activities were limited by the institution of emission law.
Uncoated banknotes did not have direct security, they were not exchanged for coins, they were recognized as a state debt; the right to issue additional banknotes was retained by the state bank and was periodically revised upward.
Over time, banknotes evolved from the first form to the third. Their gradual change was a consequence of continuous emission, which, given the limited official gold reserves, led to the impossibility of exchanging all issued banknotes for gold. In 1976, the demonetization of gold was secured by international agreements. Banknotes were finally transformed into irredeemable paper money.
Lecture 2.Types of money.
1. The concept of barter. 2. The concept of the type and form of money. 3. Commodity money and its forms. 4. Full-fledged money and its forms. 5. Fiat money and its forms. 6. Money surrogates and their role in the Russian economy.
The evolution of commodity relations, due to the continuous movement of socio-economic formations, leads to the development of new forms of exchange.
The first step towards the emergence of a monetary form of exchange was the barter form.
Barter is a direct exchange of a good or service for another good or service.
A system of exchange in which an individual who has a need for goods or services must find another individual willing to provide his goods and services in exchange for the goods and services of the first is called a system private barter.
The inconveniences of the private barter system forced people to look for other methods of exchange. One of them is the organization of special trading places where goods and services are presented.
A system of exchange in which individuals regularly exchange goods and services directly for other goods and services is called a system trade barter. The establishment of specialized trading platforms allowed potential buyers to know in advance where to find sellers of specific goods. Although this method of exchange reduces the severity of the problem of double coincidence of needs, it does not eliminate it completely, just as it does not eliminate the costs associated with it. A specific individual knows what exactly he will find at a certain exchange office, but he does not always know. What product (service) does the seller want to receive in exchange?
A pure barter system is characterized by three main disadvantages:
There is no way to preserve overall purchasing power. Barter allows you to save only a specific purchasing power of a product, which may fall as a result of physical changes in the product, modifications in consumer tastes, or the situation on the product market;
There is no single measure of value. In a barter economy, an individual must express the price of any good or service in terms of the quantities of all other goods or services;
The price scale has not been formed, i.e. there is no specific unit of payment to use, for example, in futures contracts. By the time the payment is executed, the market price of the agreed goods or services may change.
The concept of the type and form of money.
When analyzing the types and forms of money, the finished results of their evolution and differentiation of the content of public works performed by function are considered. In other words, the identification of different types of money is based on differences in the set of functions performed and dominant.
Type of money- This is the division of money according to natural and functional characteristics. It is customary to distinguish three main types of money: commodity money, full-fledged money, fiat money.
Within the type of money, monetary forms are distinguished.
The form of money is the external expression (embodiment) of a certain type of money. For example, modern credit money has several forms of implementation: paper money, deposit money, electronic money.
Commodity money and its forms.
Most types of money used in the early stages of the development of society were real banknotes, or commodity money.
Commodity money- this is a type of money that represents real goods, acting as a regional equivalent, the purchasing power of which is based on their commodity value.
There are three main subtypes of commodity money.
1) Animalistic. They include animals and products made from them. This subspecies included livestock, furs, shells, corals, etc.
2) Hyloistic. They include minerals and metals, as well as their tools. This subtype of commodity money included stones, metals, salt, amber, etc.
3) Vegetabilistic. These are plants and their fruits. The third subspecies included grain, tree fruits, tobacco, etc.
The formation of real money led to the fact that monetary goods acquired additional specific consumer value. The economic agent who accepted real money did not intend to consume it. Therefore, it became possible to replace full-fledged banknotes with inferior ones.
However, not every product is capable of playing the role of a universal equivalent. In the process of development of exchange, we determined properties, which real banknotes must have in order to be money. These included the following: divisibility, strength, wear resistance, recognition, ability for long-term storage, high cost, rarity. The combination of these properties creates money from goods that have them.
Defective money is money whose nominal value exceeds its real (commodity) value.
Full-fledged money and its forms.
Starting from 600 - 300 BC. Commodity money is being replaced by full-fledged money.
Full money is a type of money that represents banknotes whose purchasing power is directly or indirectly based on the value of a precious metal, such as gold or silver.
Banknotes, the purchasing power of which is directly based on the value of the precious metal, are full-fledged money, in strict accordance with the meaning of this term. Banknotes, the purchasing power of which is indirectly based on the value of the precious metal, are representatives of full-fledged money or exchange money.
For full-fledged money, the denomination indicated on the front side must coincide with its market commodity value. Representatives of full-fledged money have a denomination significantly higher than their commodity value, but they provide for mandatory exchange at a fixed rate for full-fledged money.
The main forms of full-fledged money are bars, coins, banknotes.
Ingots. The first full-fledged money was issued in the form of bars. In order to overcome the inconvenience associated with determining the quantity and quality of the metal contained in the ingot, the supreme rulers began to brand the ingots, certifying the purity of the metal and its weight. In various sources of literature one can find information that the first metal ingots, confirmed by a certain mark, were widely used in Ancient Babylon and Egypt. The disadvantages of metallic full-fledged money in bullions were weak divisibility and limited transportability.
Coins. Unlike commodity money and unmarked metal bars, coins were the first fairly universal means of payment. Since their quality and weight were certified by puncture, they were recognizable, durable, divisible and transportable.
The history of coins consider for yourself.
Why were the coins called, for example, hryvnia or pound? The weight content of the first coins coincided with the denomination minted on them.
In addition to full-fledged coins, small change coins were in circulation. They were fractional parts of full-fledged coins.
When full-value coins wore out during use, or when coins were damaged by private or state issuers, their weight content decreased. At the same time, the coins continued to circulate at the same denomination. This quickly led to the idea of the possibility of counterfeiting coins, i.e. purposeful minting of inferior money. Defective coins have a face value higher than their marketable (intrinsic) value. However, unlike full-fledged money, inferior coins did not provide for any exchange for full-fledged money.
Coin Income. The minting of inferior money brought in coin income.
Coin income is the difference between the face value of a coin and the market value of the metal that was spent on its production. In feudal Europe in the Middle Ages, any sovereign feudal lord had the right to mint coins. Often the income from minting inferior coins was his main source of income. As a result, for example, in Northern Italy, various princes competed with each other in defacement of coins, and Italy at that time gained a reputation as a country with the best authors writing about money, and with the worst money.
As coinage spread, governments soon discovered that the exclusive right to coinage was not only a tempting source of income, but also an important instrument of power. It is not without reason that even under the Roman emperors the prerogative of the ruler to mint coins was firmly established.
The coins were like a flag. They served as symbols of power. The coins not only conveyed the face of the patrons to the most remote parts of the state, but also spread them beyond its borders. The first sovereign to depict his profile on a coin was Alexander the Great.
When in the XYI century. The French political thinker Jean Bodin developed the concept of sovereignty; he considered the right to mint coins as one of its most important elements. Regalia (from Latin - royal, royal, state) - this was the name in Latin for the royal prerogative for minting coins, mining ores and collecting customs duties, which were considered its most important components. As nation states formed, coinage became the exclusive privilege of governments and was called coin regalia.
Coin regalia- This is the monopoly right of the state to mint inferior coins.
The profit from the monopoly issue of money is called share premium or seigniorage.
Banknotes. The expansion of commodity production volumes entailed an increase in exchange transactions. Full-fledged money was not able to meet the growing needs of the economy for means of circulation, so there was a need to introduce a new form of money - banknotes, which were representatives of full-fledged money.
Previously, banknotes served as a means of payment in the sphere of wholesale trade, while retail trade was serviced by coin money.
When banks issued banknotes with which they discounted trade bills, they simply changed the form of lending. Further, banknotes issued for short-term loans only became part of circulation for a while. This circumstance led to emphasizing the important difference between banknotes, which automatically disappeared from circulation, and “irredeemable paper money,” which did not serve as short-term loans, but was a permanent means of payment for goods and services. It would probably be impossible to make pieces of paper, which in themselves had no significant market value, become accepted money unless they represented a receipt for some valuable commodity. To be accepted as money, it had to first derive its value from some other source, such as another form of money. Banknotes were representatives of full-fledged money. They did not have a forced exchange rate, but were necessarily exchanged for coins at the market rate.
Thus, the banknote was a receipt containing a requirement for the issuing bank to issue its bearer the number of coins indicated on it.
The history of England can serve as a classic example of the evolution of banknotes. At the beginning of 1787 - 1817 banknotes were issued by commercial banks. Then their emission activities were limited to certain sizes. In 1833, Bank of England notes were declared legal tender, but the issue of private banknotes was retained. By 1844, the issue of banknotes was concentrated in the hands of the state.
In 1844, in England, according to the R. Peel Act, the institution of emission law appeared.
Emission rights- this is the right of the central (state) bank to issue banknotes without monetary backing and without special permission from the legislative bodies.
Its scale was measured as a percentage of the volume of issue of coated banknotes. In France, the institution of emission law was introduced in 1848, in Russia - in 1897, in the USA - in 1916. Thus, the government monopoly on the issue of money, which initially applied only to coins, began to extend to banknotes.
It should be noted that in most countries the introduction of banknotes into circulation was associated with great difficulties. Therefore, governments resorted to the most brutal measures. So in the 13th century. Chinese law made it punishable by death for refusing to accept imperial paper money. In France, twenty years of hard labor were provided, and in some cases the death penalty. In England, regulations prescribed that refusal to accept government money should be considered treason.
Since banknotes were representatives of full-fledged money, they provided for a certain procedure for ensuring their issue, which could be direct or indirect.
Direct provision- provision of coins minted from precious metals or bills of exchange.
Indirect collateral– providing banknotes with the obligation of the state to accept them in payment of taxes and other payments. Depending on the security, three types of banknotes were distinguished:
A) banknotes with full coverage - had full direct coverage, were exchanged for gold in unlimited quantities (the exchange rate was market), issued by private and state banks in unlimited quantities; the limit on such an issue was the official gold reserve.
B) banknotes with partial coverage - had direct collateral, which consisted of precious metals and bills, were exchanged for gold in unlimited quantities (the exchange rate was below par), and were issued by a state bank, whose activities were limited by the institution of emission law.
C) uncoated banknotes - did not have direct security, they were not exchanged for coins, they were recognized as public debt, the right to issue additional banknotes was retained by the state bank and was periodically revised upward.
Over time, banknotes evolved from the first form to the third. Their gradual change was a consequence of continuous emission, which, given the limited official gold reserves, led to the impossibility of exchanging all issued banknotes for gold. In 1976, the demonetization of gold was secured by international agreements. Banknotes were finally transformed into irredeemable paper money.
Fiat money and its forms.
Fiat money is banknotes that replace full-fledged money in circulation and act as signs of credit.
There are three main forms of fiat money: paper money– issued by the government; deposit money– issued by depository institutions, and electronic money– issued by specialized financial institutions. The differences between them are of a targeted nature. Cash and electronic money are issued for consumer needs. Deposit money is given temporarily for production needs.
All forms of fiat money provide for legal liability for failure to fulfill the assumed monetary circumstances.
Bills of exchange occupy a special place in fiat money systems.
Bill of exchange- This is an unconditional written obligation of the debtor to pay the amount indicated on it within the specified period.
The first mentions of bills date back to 1160–1200. AD At that time, wooden tablets began to be used in England as a means of lending. In the XI – XII centuries. bills of exchange were actively used in Italy during trade fairs. In the Russian Empire, the legislative design of bill circulation is associated with the introduction of the Bill of Exchange Charter in 1729. Currently, the form of the bill, the procedure for its issuance, payment, circulation, rights and obligations of the parties are regulated by the norms of national bill legislation, which is based on the Unified Bill of Exchange Law (UZL) ), adopted by the Geneva Bill of Exchange Convention in 1930.
A bill of exchange as a type of debt obligation has specific features: a) abstractness (the bill of exchange does not indicate the specific type of transaction, and with it the source of the debt); b) indisputability (unconditional payment of the debt, including coercive measures after the notary draws up an act of protest); c) negotiability (used instead of cash as a means of payment when transferring a bill of exchange to other persons with a transfer note on its back) This creates the possibility of mutual offset of bill circumstances.
Types of bills– consider for yourself.
Paper money.
Modern paper money is characterized by three features: irredeemability, the presence of a forced exchange rate and interest-free. Currently, a significant part of fiat money in developed countries is issued in the form of cash. About 95-97% of the total is paper money issued by governments or central banks. The remainder is issued in the form of small change coins, usually on behalf of the Treasury.
Since the issue of cash is monopolized by the state, cash can potentially be issued in any quantity. For example, the American currency is currently backed by gold and foreign exchange reserves by only 4-5%. The total gold and foreign exchange and commodity backing of the American currency is no more than 20-25%. Meanwhile, this situation does not pose a real threat to US monetary circulation. The fact is that the overwhelming majority of the dollar supply (about 60%) is in the hands of non-US residents and is evenly distributed throughout the world. Most of the holders do not have speculative motives.
During the second half of the twentieth century. The importance of paper money as a means of payment in developed countries has steadily declined. This was done with the widespread replacement of cash in payment circulation with deposit money.
Deposit money. The emergence of deposit money is historically associated with the development of the banking system and the implementation of banking operations for discounting bills. They represent numerical records of a certain amount of money in customers' bank accounts. Initially, deposit money appeared when the owners of the bill presented it to the bank for accounting, as a result of which the bank, instead of paying the amount of the debt in banknotes, opened an account for the owner of the bill. The amount of money due was recorded in such an account, and payments were made from this account by debiting them. Nowadays, deposit money is most often obtained by depositing cash into the bank's cash desk and opening checking bank accounts.
Today, a number of financial institutions have the right to issue fiat money in the form of opening transaction (current, check, card) accounts, which are called deposit money.
Plastic cards. With the development in the second half of the twentieth century. payment systems that allow retail payments to be made electronically, a new payment instrument appears - a plastic card. A plastic card is a personal monetary document issued by a bank or other specialized organization, certifying the existence of an account with the corresponding institution of the owner of the plastic card and giving the right to purchase goods and services by bank transfer.
There are three main functions of a plastic card: a) it is a tool for non-cash payments, significantly reducing the amount of cash in circulation; b) acts as a means of payment when purchasing goods and repaying debts in mutual settlements between legal entities and individuals; c) serves as a tool for receiving money from a payslip at almost any time.
Electronic wholesale payment systems. These systems are used to conduct transactions for large amounts. Electronic wholesale payment systems are payment systems that allow high-value payment transactions to be carried out electronically between banks, commercial companies and government agencies.
Electronic wholesale payment systems emerged in the late 1960s. and became widespread in 1970-0980. Their main elements are:
1) clearing settlement systems that make mutual settlements on the accounts of their clients (netting) at a certain point in time, usually at the end of the working day. Such systems can be unilateral or multilateral. The main disadvantages of such systems are the lack of efficiency in making payments, as well as the presence of liquidity risk;
2) real-time gross settlement systems. Currently, these systems have already replaced netting in many countries. With their advent, liquidity risk and systemic risk of the banking sector decreased significantly.
There are three main advantages of electronic wholesale payment systems: increasing the speed of mutual settlements; reducing the cost of payment transactions; simplification of processing of bank correspondence.
Online payment systems. Currently, due to the active development of the electronic economy, online payment systems (online banking systems) are becoming increasingly widespread. Online payment systems are new electronic payment systems that allow direct, real-time payments to be made from the payer's account and funds to be credited to the recipient's account.
Electronic money. The last years of the twentieth century. marked a new stage in the development of commodity-money relations: the emergence of a new form of credit money - electronic money. The main reasons for their creation include the desire to reduce transaction costs of money circulation both within the framework of traditional and electronic economies and electronic seigniorage.
Exchange costs. Since the purchase of any goods or services is associated with expenses, the main reason for changing one type of money to another is to minimize such expenses. Expenses associated with the acquisition of goods or services are expressed both in the expenditure of time waiting for the very opportunity to make an exchange, and in the expenditure of funds associated with the implementation of the exchange itself. The costs that the buyer bears while waiting for the opportunity to make an exchange for the product (service) he needs are called waiting costs. Costs over and above the price that a buyer will bear when purchasing a product or service are called transaction costs.
In addition to waiting costs and transaction costs, circulation costs, as a rule, include the costs of storage, transportation, recalculation, and ensuring the safety of money.
Money surrogates and their role in the Russian economy.
One of the criteria for the degree of development of a country’s monetary circulation is the presence or absence of money substitutes, money surrogates, in circulation. Money surrogates- these are substitutes for official forms of money, introduced into circulation by business entities arbitrarily for the purpose of making payments. What is common to money surrogates is that they perform the function of a means of payment, but do not serve as a store of value and do not determine the proportion of exchange of goods (i.e., they do not perform the function of a unit of account). Money surrogates, in contrast, do not have absolute liquidity, since they have limited circulation.
Many economists believe that the main reason for the appearance of monetary surrogates in circulation is the shortage of official banknotes, leading to a payment crisis. However, the existence of monetary surrogates may also be associated with other reasons, for example, with the emergence of new, not yet legally recognized forms of money, such as banknotes in the mid-19th century. and electronic money at the end of the twentieth century. Such banknotes will be monetary surrogates in the legal interpretation, but they will perform basic monetary functions in economic circulation and will actually be “new” money.
Depending on the specifics of the organization of monetary relations and the nature of their participants, money surrogates can be divided into: government (treasury obligations, tax benefits, regional money, etc.); commercial (financial bills, receipts, etc.) and others (subway tokens, coupons, sales documents, etc.).
As a result of the widespread use of money surrogates, the purchasing power of various funds circulating in Russia, and, accordingly, prices for the same products, expressed in the same rubles, differed by 1.5 - 2 times.
Consequences of using money surrogates in Russia:
A) widespread replacement of money as a means of payment;
B) hidden losses of enterprises both in terms of the time of receipt of funds and in actual amounts received;
C) tax evasion, which led to a decrease in the flow of funds into the budget and an increase in its deficit;
D) stimulation of inflated selling prices compared to market prices and, as a result, provoking inflation;
D) deformation of the trade bill as a commercial lending instrument in Russia.
Transaction- 1) a banking operation consisting of transferring funds from one account to another; 2) a deal, an agreement accompanied by mutual concessions.
As a result of the development of commodity relations, a universal equivalent—money—is separated from the commodity world. The functions of money were originally performed by noble metals - gold and silver. In Ancient Rus', silver bars served as money. In the 11th century coins practically went out of circulation in the 12th century. silver payment bars appeared - hryvnia. The development of monetary circulation was greatly influenced by the East, since feudally fragmented Rus' was at that time under the yoke of the Golden Horde. Initially, the ruble was synonymous with the hryvnia, later the name of the monetary unit was assigned to the ruble, and the weight unit - to the hryvnia. It is officially believed that the ruble originated from the hryvnia weighing 200 g of silver, i.e. The first rubles were in bullion. Payment bars in the form of hryvnia were irredeemable, served exclusively large wholesale transactions and were used mainly for paying tribute. Therefore, an objective necessity was the appearance of coins used to service retail turnover.
Coin circulation in Rus' began in the 14th century; coins began to be minted in strictly defined quantities at the mints of Moscow, Nizhny Novgorod and Ryazan. The ruble turned from an ingot into a countable ruble. We should not forget that the reform of Elena Glinskaya in 1535-1538 played an important role in the formation of monetary circulation, which provided for the withdrawal of inferior money from monetary circulation, the streamlining of the weight content of the ruble and the introduction of a decimal system of monetary accounts. As a result, the ruble became equal to 10 hryvnia, 1 hryvnia to 10 kopecks.
Money(denga) - Russian silver coin of the XIV-XVII centuries. Minted since the end of the 14th century. in Moscow, from the beginning of the 15th century. - in almost all other Russian principalities, as well as in Novgorod (from 1420) and Pskov (from 1425) Images on coins of the 15th century. were distinguished by their exceptional diversity, and in Moscow the most popular was the image of a horseman with a falcon or with a spear, which later became the coat of arms of the city. Initially, 200 coins were minted from silver hryvnia (48 spools), which made up the Moscow ruble.
It is worth noting that the remaining principalities gradually, as a centralized state was formed, were deprived of the right to mint their own coins. As a result of the reform of Elena Glinskaya, 300 coins with the image of a horseman with a spear, weighing 0.68 g each, or 600 coins with the image of a horseman with a sword, weighing 0.34 g, began to be minted from a silver hryvnia. The latter became known as “Moscow money”; later they began to be called Novgorodkas or kopeks.
In ϲᴏᴏᴛʙᴇᴛϲᴛʙii, with the reform of Peter I, the silver kopeck was replaced by a copper one, the silver ruble was introduced - a coin similar to the European thaler, the counting hryvnia became a silver coin of 10 kopecks, gold chervonets began to be regularly minted, and from 1755 - imperials and semi-imperials ials. From 1700 to 1816, copper money was regularly issued under different names (1/2 kopeck, money)
The assignment of gold to the function of a universal equivalent was facilitated by its basic properties: qualitative homogeneity, quantitative divisibility, portability (a small amount of metal embodies a large amount of labor), and preservation of the precious metal. Gold is one of the most labor-intensive metals to mine. This is a fairly rare metal, and its industrial development is carried out even when the rock contains very little of it (usually at least 6 g per 1 ton of rock). All the gold mined in the world from ancient times to the beginning of the 80s of the XX century. was estimated by experts at 100 thousand tons. Put together, it would have been a cube, the edge of which would have been only 17 m. It is worth saying that to extract this amount of gold, it would be necessary to process such an amount of rock that could be depicted in the form of a cone with a diameter 9 km and 2.5 km high. Money as a medium of exchange takes the form of a coin. The origin of the word “coin” is associated with the name of the temple of Juno-Moneta, on whose territory in the 4th century. BC e. The minting of banknotes of Ancient Rome began. The form of a coin demonstrates the local and political nature, limiting the circulation of money to the territories of individual states and internal commodity circulation. The coins speak a variety of languages and “wear” different national clothes.
It is important to note that one of the most important results of the evolution of metallic money was the appearance of denominations - concepts that personified a certain weight standard of the monetary metal and were assigned to money as their names. The new qualities of money, which bullion did not have, made it possible to limit calculations to simple recalculation and, over time, to abandon weighing. Signs of these qualities were inscriptions and signs on both sides of the coins. The emergence of coins was due to the development of commodity-money relations. This realized one of the most important qualities of metal—cost.
Gold money acquires its value created in the process of gold mining. It is their own internal value that gives them absolute stability independent of the commodity market. When the internal value obtained in the sphere of gold production coincides with the exchange value of gold in the sphere of circulation, the stability of the circulation of gold coins is achieved.
Until the beginning of the 19th century. The monetary systems of most countries were dominated by the parallel circulation of gold and silver coins, which had the same status. Under this rule, the price relationship between gold and silver was not officially established, but was determined by market mechanisms. In some countries, the circulation of full-fledged coins made of silver and gold was carried out at a price ratio between gold and silver established by the state.
Gold is a soft metal, and coins gradually wear out in circulation. Scientists have calculated that on average a gold coin loses 0.07% of its own weight each year. This means that over 2600 years of circulation of gold coins, the total loss exceeded 2 thousand tons of gold. Worn-out coins cease to be a valid equivalent of goods being sold. The functional existence of gold displaces its real existence. The contradiction between gold as a coin and gold as a universal equivalent leads to the need to replace gold with signs of value - paper money. Along with this, money, in its function as a medium of circulation, acts as a fleeting intermediary in the exchange of goods. In connection with this, the idea of reducing the cost of monetary material appeared and began to make its way.
In conditions of metal circulation, simple reproduction required an annual influx of gold, as the natural wear and tear of coins occurred. In this case, the state makes huge expenditures of social capital necessary for the development of the gold mining industry. In the absence of its own production, it is forced to import precious metals in exchange for exporting goods. Let us note that the growth rate of metal receipts, taking into account the speed of circulation of money, is closely related to the production or purchase of gold and silver. There will be difficulties due to insufficient supply of precious metals. Due to the fact that gold and silver are not capable of generating interest due to their own volume, full-fledged money has become of little use in servicing financial transactions associated with the circulation of loan capital. The circulation of coins became a brake on the development of individual capital, since it reduced the speed of their turnover. The bulky money supply led to a slowdown in the circulation of the commodity mass and thereby to a fall in the annual rate of surplus value. It is important to note that at the same time, the costs of sending gold across the regions increased, and the costs of gold mining increased. The limited natural reserves and the inability of existing production volumes to keep up with the demands of social production have led to a deadlock.
Over time, the names of monetary units are separated from their real content for the following reasons:
- the introduction of foreign money among less developed peoples (in Ancient Rome, the basis of the monetary system was the copper asset; gold and silver were initially circulated as foreign goods);
- displacement of less noble metals by more noble ones as labor productivity increases: copper was replaced by silver, silver by gold, the cost relationship between gold and silver in the Ancient East of the 15th-16th centuries. BC e. was 1:6, in the market economy of the 19th century. – 1:15, currently – 1:50;
- State counterfeiting of money.
It is worth saying that full-fledged money was issued in the form of bars, coins, and banknotes with full gold plating. The first full-fledged money arose in the form of bullion. It is worth saying to overcome the inconvenience associated with determining the quantity! and the quality of the metal contained in the ingot, the state began to brand the ingots, indicating the purity and weight of the metal. The first money in the form of metal ingots, confirmed by a certain mark, was in circulation in Ancient Babylon and Egypt. The disadvantages of full-fledged metal money in the form of ingots were poor divisibility and transportability. The most convenient form of full-fledged money was coins. The first coins began to be minted by priests in the state of Lydia in western Asia Minor in the 7th century. BC e. In Rus', its own coinage arose in the 9th-10th centuries. In the Middle Ages, in conditions of feudal fragmentation, coinage was carried out not only by kings, but also by numerous feudal lords, as well as cities. With the formation of national states, coinage became the privilege of the central government. In this case, as K. Marx noted, “as a coin, money loses its universal character and acquires a national, local character.”
The round, disk shape of the coin, as the most convenient for circulation, replaced other forms used in antiquity (rectangular, oval). Each coin has a specific image and inscription - a legend containing the name of the city, state, year of minting, and the name of the coin. The coin has a different front side (obverse), back side (reverse) and edge (edge). A coin with the same name as a monetary unit is called the main one, and one that combines several coin units is called a coinage (for example, in pre-revolutionary Russia, gold coins in denominations of 10 and 5 rubles. ) A coin that forms part of a monetary unit is called fractional (for example, a 10-kopeck coin in pre-revolutionary Russia)
To give the coin strength, it was minted from precious metal with the addition of a certain amount of ligature. A coin whose face value represents the value of the metal it contains and the cost of minting is called full-fledged; for a defective coin it exceeds this value.
The quantitative content of precious metal in the alloy from which the coin is minted is called fineness. In countries with a metric system for marking hallmarks, the coin alloy used for minting gold and silver high-grade, i.e. A full-fledged coin consisted of 900 parts by weight of currency metal and 100 parts of a ligature. In Great Britain, the fineness of the coin alloy was assumed according to the karat system: a gold coin had 22 carats, or 916 parts of the currency metal according to the metric system, a silver coin had 12 carats, or 500 parts according to the metric system.
In pre-revolutionary Russia, where a spool-type system of marking was used, the hallmark of gold and silver coins was expressed by the weight amount of gold and silver in 96 units of the alloy. Thus, the Russian gold coin had a fineness of 84.4, which was the 900th fineness in the metric system. The state allowed a limit for the deviation of the weight and fineness of the coin from the established sample - remedium. If the remedium was violated (the coin was damaged), the coin was withdrawn from circulation. The rules that determine the order of minting coins in the country are combined in the coin regulations, which change in accordance with changes in monetary systems.
Many centuries ago, to obtain the necessary goods and sell those that were in abundance, people used the simplest method - barter, or the elementary exchange of goods. With the development of crafts, the improvement of agricultural and livestock processes, as well as the expansion of areas of movement, this method of payment became increasingly inconvenient.
It was then that the first money appeared. They took root quite quickly, and soon the whole world was using another system of mutual exchange of goods: selling and buying. Time passed, countries and currencies changed, full-fledged and incomplete money, electronic payments and wallets evolved and appeared.
Definition of the concept
There are banknotes that directly depend on the material from which they are made. Most often it is gold, silver, copper. For such banknotes, the information indicated on the front side necessarily coincides with the commodity market value.
For example, a coin that weighs one gram of gold has a face value equal to the price of the same weight of this precious metal on the market. Otherwise, these means of payment cannot be considered as full-fledged money. Circulation and issue has a number of its own characteristics, advantages and disadvantages, discussed below.
Character traits
As already indicated above, a prerequisite for such banknotes is full correspondence of the nominal value to the real one. For example, a silver coin weighing one gram can buy exactly as many goods as the weight of this metal costs. In addition, full-fledged money is an ingot of precious material that can be used not for payments, but for other purposes. For example, for melting down and further manufacturing of jewelry, household items or art, weapons, etc. History knows many cases of melting down money for various needs, both individually and en masse.
Special nature
Essentially, full-fledged money is a commodity that can be bought, sold or exchanged. But the peculiarity of this property of these calculation tools is that they only accompany circulation, but are not intended for direct consumption.
Of course, the precious metal itself can be used for other purposes, but then it is no longer considered as full-fledged money. This phenomenon determines a special commodity form that is not inherent in any other payment instruments.
Everything can depreciate
By its definition, this payment instrument has a value that is sufficiently resistant to external factors. Despite the fact that it continues day after day for many centuries in a row, this metal not only does not become cheaper, but, on the contrary, its price is constantly growing all over the world. Silver, unfortunately, has lost its former value, but still remains among the precious metals. With the development of industry, copper has become completely cheap. In history, there have also been cases of depreciation of full-fledged money.
One example was back in the 16th century, after the discovery of America. Ships loaded with gold and silver, taken by force from the local population, headed to Europe. Precious metals began to fall sharply and greatly in price, and coins, accordingly, began to lose their value. But this process did not last long: the market rate was determined and the situation stabilized. Money made from silver or copper has also lost significant value several times in its history.
Important Features
Full-fledged money is not only a payment instrument, but also the most important lever of government administration and regulation. With their appearance, a new function of the state arises - not only the introduction of certain coins or bars into circulation, but also the adoption of the necessary regulations to regulate the activities of all people who use such means of payment.
Thus, full-fledged money exhibits legal and informational features or, as they say, has a “fiat nature” (from the word “decree”, “decree” - fiat). Thanks to this phenomenon, the principles of monetary policy emerge, as well as the development of law and legislative activity of the state.
Appearance and forms
The forms of full-fledged money are not particularly diverse. Initially, gold and silver bars appeared in circulation. To indicate their weight and fineness of metal, the issuer minted this information on them. With such inscriptions, the ingot did not need to be reweighed, which significantly facilitated and accelerated the trading process. But the ingots had a significant drawback - they were bulky and inconvenient to use, had a high cost and made it impossible to pay for a small product or an insignificant service. Only selected members of society could possess such money, while the rest continued to conduct their usual barter.
These problems were resolved with the advent of coins, which, according to scientists, were first minted in a state called Lydia in Asia. A small piece of precious metal, minted in the form of a coin, served as a unit of measurement for the value of everyday products, services and works. Coins began to appear not only among the nobility, but also among the common people (peasants, artisans, ordinary military personnel, etc.).
Over the next centuries, these types of full-fledged money began to appear in all corners of the world. They were minted in the shape of a circle, square, with embossed and smooth edges. In some Asian countries, for example, holes were made in them so that they could be strung on a rope and not get lost along the way. As a rule, the face value and the name of the currency or the place where it was minted were applied to the front side. But the variety of images on the reverse side is simply enormous: mythical deities and subjects, portraits of prominent figures in politics and art, representatives of flora and fauna, weapons, buildings, cities and much more.
However, this trend has continued today. Moreover, both states and individual cities, regions, kings and feudal lords could issue such banknotes. It was quite easy to pay anywhere in the world - gold is valued everywhere! And today, most people definitely have a couple of coins in their wallet. True, they will be made of steel, brass, nickel and various inexpensive alloys.
Another interesting form is the classic banknotes redeemable for gold. That is, these are paper bills that have the properties of full-fledged money, and the value of which is expressed in the equivalent of a precious metal. Such money was used at the beginning of the last century. Although they looked like simple papers, in fact their nominal value was confirmed by the country’s gold reserves.
Of course, the entry into circulation of a new type of gold products - banknotes in the form of bars and coins - led to the emergence of a mass of people wishing to illegally enrich themselves from this phenomenon. The scammers simply sawed off the coins, and made new ones from the gold obtained in this way. Accordingly, the mass decreased and was no longer equal to the nominal value. The common people could not distinguish a fake in any way, and weighing coins every time during calculations was completely inconvenient.
To solve this problem, they came up with ribbed edges. The sawn-off coin now stood out significantly and immediately aroused suspicion, and it was not so easy to repeat the carving in artisanal conditions. Later, technologies appeared that made it possible to apply a variety of designs and inscriptions, which further protected against counterfeiting. Today the value of coins is low, and there are not so many people who want to counterfeit them, but the tradition of carving has been preserved.
Main advantage
Full-fledged money had a very important property, from the point of view of its owners: if there was an excess in circulation, it could simply be set aside as a reserve of precious metal (treasure). And then, if necessary, bars or coins could be removed by the owner and put back into circulation without losing their value (of course, except in cases where they depreciated due to unforeseen circumstances or events). This eliminated the need for complex regulation of savings funds and those needed for current needs.
Flaws
Along with all the advantages that made it possible to perform its main functions for a long period of time, full-fledged (real) money also has a number of negative aspects:
- Making coins from precious metals (gold, silver) requires a fairly large amount of expensive material, the extraction of which in itself is a labor-intensive and expensive process. In addition, not all states have reserves of these metals in their depths and are forced to purchase them from other countries.
- As a result of use, full-fledged money wears out, wears out, loses its original weight, and therefore its nominal value.
- The need for money can change over time depending on many factors. Sometimes there is a sharp increase, and then the lack of money in circulation can be acutely felt. The reason for this is that the production of precious metals simply cannot keep up with market needs.
Prerequisites for the transition
The functions of full-fledged money made it possible to ensure convenient trade turnover throughout the world for quite a long time, but with the development of banking, credit relations and related processes, the entire payment system required changes.
Scientific and technological progress and population growth have caused a significant increase in the range of goods and services, as well as the need for them. Silver and gold were no longer enough to provide the market with the necessary amount of means of payment, and real money was replaced by inferior money. Another prerequisite was that banknotes ceased to be a value in themselves, but were necessary only as “intermediaries” in purchase and sale transactions and did not stay long with one owner, exchanging for various available benefits.
Bad money
At the beginning of the last century, real banknotes began to be replaced by banknotes that are made of paper, have virtually no nominal value, confirmed by a “gold” equivalent, are subject to severe depreciation and cannot be used as a commodity. Such money is called inferior. At the same time, they also have a number of advantages: ease of emission, not limited by anything in the physical sense, as well as ease of handling. Such means of payment were able to solve the problem of shortage of money in the market, but also caused a number of other problems and consequences. Such as, for example, the need for exchange rate determination of the value of currencies of different countries based on many variable factors.
Just pieces of paper?
In the last century, the concept of “paper money” appeared. Full-fledged money has a secured nominal value, inferior money does not, and paper money is issued by the state to cover the budget deficit or for other similar needs. That is, these means of payment are not only not backed up by anything, but are also not coordinated with the needs of the market.
At the time of their issue, they perform the functions assigned to them, and then depreciate, along with other money of the same currency on the market. Thus, the fiat property of money is distorted and leads to negative consequences. It was thanks to this phenomenon that the definition of “paper” appeared, that is, meaningless, and not at all because they were made of such material.
Modern technologies
Progress has stepped far forward, and today both full-fledged and inferior money are becoming less and less popular. They were replaced by electronic currencies. Making purchases with a bank card or making payments without getting up from your chair is much more convenient and practical. Electronic money, of course, has its drawbacks, but the information and digital age makes its own adjustments and requires changes in the good old system of payments using coins and banknotes. True, even today many people prefer to keep their savings in the form of bank accounts in order to protect them from depreciation, believing that the precious metal is still the most reliable means of payments and savings.
