Lecture №11 Theme: the Financial system. Monetary circulation and banks.

THE PLAN: 1. Essence and functions of the finance. System of the finance. 2. Public finances. Taxes and their functions. The state budget. 3. The monetary circulation law. Factors influencing quantity of money. 4. Inflation and its reasons, kinds. 5. Concept of the credit, credit function. 6. Bank system and its role.

Credit – financial relations are the relations connected with money resources (market economy bases make commodity – monetary relations).

Society finance is an education system and uses of funds of the monetary resources necessary for maintenance of reproduction.

Financial relations is a set of the economic relations arising between the states and the enterprises, the organisations, branches, regions and separate citizens in connection with movements of funds.

Subjects of financial relations Relations between the state and the enterprise; The relation between the enterprises and banks; Relations between the enterprises; Relations between manufacture and consumption spheres; Relations between the state and the population;

Functions of the finance is its display, concrete visibilities, essence of the finance in economic activities.

Functions of the finance: 1) Distributive: A.Pervichnaja – distribution which occurs in manufacture and is connected with distribution of GNP and НД among economic subjects and transformation into monetary forms B.Pereraspredelenie through the state budget

2) Stimulating is that that financial assets makes active economic activities of economic subjects (taxes, grants, duties) 3) Social protection is a financial maintenance of the minimum living wage to certain layers, members of a society, i.e. a financial guarantee

4) the Economic information – data and messages on financial results of activity of economic subjects and society economic activities that is necessary in management of economy

The auditor service – carries out the analysis of financial and economic activity, makes examination of reports and prepares the information, does conclusions about a financial position of the enterprises, firms, the companies.

The financial mechanism is a set of forms and methods of the practical organisation of financial relations. Set of financial relations in a society is called as system of the finance.

Into a financial system enter also creation of various funds: Special funds (fund of rescue of Arala, fund "Умид"); Fund for charity; Religious funds (fund Vakf); Insurance fund;

Public finances are a relation concerning transformation of part НД and НБ in monetary funds of the state organisations, the enterprises and maintenance and their economic growth, satisfaction of cumulative requirements of members of a society, distribution of use for country management.

The state budget – the basic financial plan of the state, the main link of a financial system. Its main appointment by means of financial assets and mechanisms to create conditions for stable development of economy and the decision of the state social problems.

Types of tax: The general; The individual; The profit tax; Payments on insurance; Indirect (customs and пошлинные);

State budget expenses: Expenses for manufacture development, i.e. investments; Charges of social sphere; Charges of machinery of state; Expenses for defence and military expenses; Stocks for unforeseen economic circumstances (earthquake, accidents);

The reference of money – constant movement of money in economic circulation and uninterrupted performance of the functions. The monetary circulation law says: the quantity of money necessary for the reference during the certain period changes in direct ratio speeds of a turn of money.

The monetary circulation formula: TO = СЦТ / СДО СЦТ = the sum of the prices of the goods СДО = speed of a turn of money

Factors influencing quantity of money (on Keynes) Necessity of money for payments. Time (just in case) accumulation of money and the necessary time, release their reference. Accumulation of riches in the form of monetary denominations.

Inflation – the depreciation of paper money accompanied by a rise in prices for the goods and services.

The reasons of inflation of money The factors of inflation connected with the offer of money: Internal factors: 1. A budgeted deficit 2. A currency issue – has grown on the market new monetary банкнотов issue increase 3. Кредиторная эспансия banks – when banks reduce loan percent

External factors: The state is increased by an external debt, the more an external debt, the more inflation. Конвертанция on hard currency.

2) the Factors of inflation connected with demand of money: The internal: 1. The monopolies giving a great bulk of the goods dictate the price in the market. 2. Military expenses. 3. Increase in long-term capital investments. 4. A rise in prices for the goods and services.

The external: 1. The international factor 2. A rise in prices for means of production in the world market 3. The structural crises of world economy connected with reduction of natural resources conducts to rise in price of factors of manufacture in all countries (manufacture reduction) 4. Wars between the states are accompanied by huge requirement for money

The credit is a relation between a society, labour collective and the workers, developing at formation, use and transfers of means to time using on the terms of promptness, reflexivities of payment of percent.

Credit functions: Release of the instruments of payment, equal to money (the bill, the check, the certificate) Transformation of free money resources into the functioning capital By delivery of money resources in the loan will provide movement of funds in manufacture among various branches Stimulation of economic growth through means of claiming from the loan and loan deliveries

Categories of credit: The short-term credit (till 1 year); The intermediate term credit (from 3 till 5 years); The long-term credit (over 5 years); The private credit (gives out on individual conditions);

The formula of level of percent УП = ПС / КС *100 УП - percent level ПС – percent on the loan КС – quantity of the loan

The factors operating on level of percent: 1. Supply and demand relations in the market of money 2. Potrebitelnaja cost of money 3. Conditions and terms of payment (return) of the loan 4. What money the loan stands out 5. A rate of inflation 6. Use of money in other forms of the capital than to give out it in the loan 7. Degree of risk of delivery of money in the loan

Bank – the financial structure which collects, stores, accumulates money resources, supervises monetary references, making взаиморасчёты with clients, giving credits, letting out securities and money.