Centralized finance - this is the relationship that arises from the state in the process of formation, distribution and use of targeted cash funds. This type of finance (if we consider it as a combination of funds), as a rule, is first accumulated on the state accounts of the central bank of the country, and then distributed to the budget and extra-budgetary funds.
They contribute to the implementation of the main goal that the state seeks to achieve, financing the main socio-economic programs, ensuring the state administration apparatus and the country's military stock. The financial system of any country includes a centralized and decentralized sector. The latter assumes the existence of financial relations that take shape in the process of interaction between various business entities.
As noted above, centralized finances form a set of relations regarding the accumulation and disposal of funds in the municipal and public sectors. The basis of such relationships is cash flow - a single process that combines cashless and cash flow of cash, ensuring the satisfaction of the requirements and obligations of counterparties. In other words: thanks to them, an expanded reproduction process is carried out. Centralized finance is closely related to decentralized. Thus, the state of the budget and the amount of funds received in the treasury largely depend on the activities of individual enterprises and the development of individual sectors of the economy.
Centralized and decentralized finance perform the same functions.
Planning for fundamental goals of paramount importance for the country's economy. The establishment of the main guidelines is of great importance for the future activities of both individual enterprises and government bodies. If we talk about a centralized sphere, the implementation of this function is manifested in the approval of annual budgets and planned balances.
Organizational function requires a clear structure, each element of which is endowed with special powers and responsibilities. And to facilitate and streamline the activities of each structural element, that is, a body authorized by the state, a clear classification of budgets has been developed, which significantly speeds up the process of distribution of finances.
Centralized finance has a stimulating function. It manifests itself in the redistribution of funds to more needy enterprises and organizations in order to maintain a strategically important economic sector for the economy.
In addition, state bodies exercise control over the activities of all elements of the economic system and determine the degree of their compliance with established criteria, norms and standards. The supervisory function determines the development and approval of a whole set of legislative acts and administrative legal norms. The dominant position is control over the targeted use of funds received from the budget. Thus, centralized finance is subject to tight supervision.
