The monetary system is a historically established form of money circulation in the state. Such a structure exists in every country. The concept of the monetary system is enshrined in law. Like any other, this structure consists of certain components.
The monetary system, including the subsystem of cash and cashless transfers, contains, first of all, the principles in accordance with which it is organized. They are the rules for the formation of the structure, which are established by the state. These rules, and other elements of the monetary system are closely related. Moreover, the former have a direct effect on all other components.
For developed countries, the main elements of the monetary system can be distinguished.
The monetary unit is a sign established by the legislative procedure. It is used in measuring and expressing the value of all goods. As a rule, this component is formed historically. However, in some cases, a new name of the mark may be established.
The price scale is considered as a choice of a state monetary unit and as a method of expressing commodity value by means of the weight content of a monetary metal in a given selected unit. The latter concept, however, has lost its economic significance. This is due to the fact that credit money is not endowed with its own value and cannot express the value of other goods.
Types of money are legal tender. As a rule, these elements of the monetary system are treasury and bank tickets, change coins. As a rule, in states industrialized, treasury bills are not issued. At the same time, paper money is very common in a number of developing countries.
The provision of money in one form or another is established by the state. So, precious metals, insurance policies, inventory items, government and bank guarantees, gold, freely convertible currency, etc. can be used. Violation of established rules or the use of other types of collateral should not be allowed.
The emission system is the procedure for the circulation and issue of money established by law. Relevant operations (for withdrawal and issue) are carried out by the Central Bank and the Treasury. The Central Bank enjoys a monopoly on the issue of banknotes, which make up a significant part of cash circulation. The Treasury, as the executive body, issues treasury coins and tickets. These elements of the monetary system are made from cheap sorts of metal. They in developed countries account for about ten percent of cash output.
The Central Bank carries out issuing operations in three areas: providing credit institutions with a credit in the form of re-counting existing commercial bills, lending to the treasury against securities, and issuing banknotes by exchanging them for foreign currency.
In an effort to reduce the likely fluctuations in economic processes, the state takes various measures to regulate the production process. In this case, two systems are used - monetary and credit. It should be noted that these structures are interconnected with each other, especially in connection with the dominance of borrowed funds.
Under the influence of increased inflation and crisis phenomena in many countries with developed industry in the mid-seventies of the 20th century, "targeting" was widespread. Thus, targets were set for regulating the increase in the circulation of money supply and loans.
