The essence and function of money in the modern world
Nothing in the world causes such fiercedisputes between people, as the value of money in the world. Some argue that this is the most important thing in the world, because only money gives us a pass to the world of great opportunities and realization of the most cherished desires. Others, on the contrary, blame money for all the failures and claim that they are the greatest evil on earth. What is the essence and function of money in fact? Today we will try to move away from the superficial and emotional views on this issue and disassemble it from an unbiased point of view.
Money is the most important financialan instrument through which all economic activities in the world are carried out, beginning with the usual trade between people, and ending with the conclusion of state contracts between countries. It is important to realize that money is a certain measure of the value of certain goods and services, as a result of which we have the opportunity to actually assess the significance of certain things in the world. Despite the fact that in the 70s of the 20th century the peg of the US dollar to gold (gold and currency parity) was abolished, today, in fact, gold plays a significant role in the stability of the world financial system. As a result, the essence and functions of money play a decisive role in the system of state economic development.
The main body that exercises control over thethe number of banknotes in the country is the Central Bank, which, if necessary, can withdraw part of the money from circulation, and also issue additional money notes. In general, the Central Bank is engaged in regulating money circulation in accordance with the specific needs of the economy at a particular time.
The essence of money and their functions determine the following tasks:
- Provide an opportunity to implement a large selection of goods and services for various transactions
- They are a means of circulation, as a result of which it is possible to evaluate not only the purchasing power, but also the comparison of goods among themselves
- Eliminates the shortcomings of barter exchange of goods, which greatly facilitates the purchase of those goods that are needed.
It is noteworthy that the essence and function of moneycan not always be compared directly with monetary notes that are familiar to each of us. In some emergency situations, as well as in martial law, the function of money can be performed by coupons, which the state issues for essential goods (water, sugar, bread, matches, salt, etc.). Thus, we see that the function of money can perform, in general, any things, if they are given a certain measure of value. With the help of coupons, the state can reduce the risk of speculative operations and reduce the segment of the shadow economy in the conditions of the country's unstable economic situation.
It is important to remember that the money itself isvery little, because only a measure fills their significance with respect to other currencies. In addition, the entire credit and financial system of the world is tightly linked, as a result of which the essence and functions of money can be carried out and securities. Possessing a certain importance, securities can act as a financial instrument in the performance of large trade transactions or the merger of several companies. Shares and bonds of companies are the benchmark of its capital, according to which the company is valued in the market, and as pricing takes place constantly, the value of shares can either grow or fall.
In conclusion, it should be noted that the essence,functions and types of money are so vast a sphere of economic doctrine that it is simply impossible to fully describe all its elements within the framework of the article. Here we talked about the fundamentals of the monetary system, knowing that everyone can already better navigate the complex flow of economic information.