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The development of forms of money influenced the change in the mechanism for determining the carriers of monetary functions and the role of the state in this mechanism. Initially, the market itself showed a need for money, put forward certain requirements for a monetary product, and itself spontaneously put forward one of the most popular and capable goods for this role. External impact on this process was minimal. Nevertheless, the evolutionary concept of the origin of money by no means removes the question of the role of the rational factor in the creation of money, primarily the state.

With the consolidation of the role of money for gold, the influence of the state on this process increased noticeably; money (combating coin counterfeiting), etc.

With the transition from full-fledged to inferior money, the role of the state has increased significantly. It began to determine not only the form of money (the type and form of banknotes), but also their value, regulating the mass of money in circulation. Thanks to the efforts of the state in the person of its central bank, ordinary scraps of paper or simple entries in the books of banks acquired the ability to fulfill the functions and role of money. The state, first of all, provides paper money with the force of legal tender and accepts such money in payments for all its claims. In addition, it implements a whole system of measures to maintain the mass of money at the level of circulation needs, provided that prices remain constant.

However, it should be noted that the role of the state in money creation is corrective, not determinative.

First, the market itself creates an objective need for money, which the state must reckon with.

Secondly, the market imposes strict requirements on the bearer of monetary functions, and the state must choose the bearer that is able to most fully satisfy its requirements.

Thirdly, the amount of money in circulation is determined by certain objective laws that must be taken into account by the state in regulatory actions.

Note that only when all three circumstances are taken into account, banknotes issued (created) by the state will be recognized by the market and will be able to perform the functions of money. Otherwise, they will depreciate, and the rate of inflation will grow in the country.

Post Author: Rachel Reinbauer

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