Money // Economy


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Greetings, comrades back with more content in the world of Economics, but from a monetary point of view since the history of humanity, Economics has been applied in all cultures and their societies in the market, exchange, barter, production, innovation, route of commerce, but each culture in its historical moment used a means of payment or exchanges, which this brilliant instrument a representative nominal value for commercial use or means of payment over time adopted the figure of what we know today as money.


From the use of money, many cultures grew as a society and power over time, principles were born and with them laws that were applied as policies to regulate things, in the case of money, monetary policy is applied to regulate money, Since the monetary base (BM), dear reader, is represented by the sum of the legal money in the hands of the public, to be clear that part corresponds to the bills and coins, we also cannot forget the bank reserves, it is the entire sum of the money legally in the hands of the banks and their deposits in the issuing central bank, who elaborates it according to the demand of the nation with its monetary unit placed in circulation in the hands of the public and in an economy.


Because monetary policies are applied to regulate the circulation of money, because this affects the monetary base and the money supply, creating monetary liquidity, since everything lies in the following, monetary base = cash in the hands of the public + bank reserves, where, dear reader, it is clear to us that the Central Bank determines the monetary base and from there the financial intermediaries generate bank money, but there are also economic phenomena that affect an economy its circulation of money, because if there is evidence of a decrease the Bank's assets Central without reducing non-monetary liabilities, will lead to a decrease in the monetary base, creates the so-called monetary liquidity.


It does not matter which is the currency or currency in circulation in an economy, but only the amount of money that an economy has available depends on the issuance of the central bank, it usually happens that more money is created put into circulation the issuing bank, the greater the money supply, the economy has more money. It is necessary to consider how it affects the bank deposits made by the public, the ineffective payments, the cash advances either by banks or ATMs, this affects the monetary base and the money supply.


Finally we have to analyze that money is very influential as a currency and a means of payment, since the demand for money represents a negative relationship with the interest rate, where we can find the opportunity to have liquid money and not having it deposited in a bank where it produces interest, where the equilibrium returns the supply and the monetary demand is reached when this is in the short term depending on the interest rate.


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