Ministry Of Education and Science of the Republic Of Kazakhstan
Ryskulov’s Kazakh Economic University
Faculty of “International Educational Programs”

Course Work on finance discipline Monetary system of the Republic of Kazakhstan

Prepared by:
Sayakova Aierke group 242
Scientific advisor:
MBA, Ph.D. Candidate
Bazarbekova Alma Damerovna

Almaty 2011
Content

1. Introduction

2. Theories of money

3. Evolution of money

3.1. Kinds of modern money

3.2 Analysis of structure of monetary weight of Republic Kazakhstan on 2010.

3.3. Money in the world countries

4. Conclusion
1. Introduction
Money is the major attribute of market economy. The monetary system functions, stability of economic development of the country in many respects depends. Studying of the nature and the basic functions of money, process of evolution of monetary systems, the organisations and developments of monetary circulation, the reasons, consequences and methods of struggle against inflation is necessary for the subsequent analysis of features of functioning of all financial system.
Businessmen in the economic activities constantly deal with monetary units of the country and the foreign states. Money - the historical category inherent in commodity manufacture. Before occurrence of money barter took place.
The goods which were used daily concern the most ancient kinds of money, and at an exchange served as a universal equivalent: food (cattle, salt, tea, grain, rice, etc.), fur (skins of fur animals), an instrument of labour (mattocks, axes, knifes, shovels), ornaments (rings, bracelets, chains). Gradually the role of money has passed to metals, at first in the form of ingots of the different form, and since VII century BC - in the form of stamping coins. Before capitalism the role of money was carried out by copper, bronze, silver, and in some countries (in Assyria and Egypt) still in the ancient time (for two millenia BC) - gold. With development of commodity manufacture gold and silver became the monetary goods.
To us paper money is more habitual. For the first time they have appeared in China in 812 the earliest in the world releases of banknotes have been carried out in Stockholm in 1661 Onere De Balzac asserted that “money is the sixth sense allowing us to enjoy by five others”. More strictly and chilly their economists define. A.Smith named money “a reference wheel”, K.Marx - "universal equivalent".

2. Theories of money.
Communication of money with manufacture is noticed for a long time. Money is the important element of any economic system, promoting economy functioning. In dependence first of all from an estimation of a role of money and monetary system in economy development there are various theories of money. These theories arise, receive acknowledgement and any time dominate. However some of them, on the contrary, do not receive distribution as practice does not confirm, and even simply denies them.
Distinguish three basic theories of money - metal, nominal’s and quantitative.
The metal theory of money. The given theory has arisen in England in initial accumulation of the capital in XVI - U.Stafford (1554 1612) was XVII centuries one of founders of the metal theory. For the metal theory of money it was characteristic equating riches of a society with precious metals by which exclusive performance of all functions of money was attributed. Supporters of this theory did not see necessity and law of replacement of high-grade money paper, therefore later they opposed paper money, not change on metal.

The inconsistency of this theory consisted in the following:
1) At the analysis of functions of money early Machinists did not provide necessity and expediency of replacement of high-grade money cost signs. They have not understood the nature of paper money, that replacement of high-grade money with cost signs is natural. Paper money was widely applied at that time only in China about what early Machinists in Europe could and not know.
2) Early Machinists did not understand that money - a historical category that they has arisen from the commodity reference at a certain stage of development of a human society.
3) Their representations about riches of a society as about accumulation of precious metals was limited and from here their sight is erroneous that the riches source lies in trade. They have not understood that the riches of a society consist not in gold, and in aggregate the material and spiritual blessings created by work. Early metallise reflected interests, first of all trading bourgeoisie.

The Nominalistichesky theory of money. Englishmen of J were the first representatives of this theory. Berkeley (1685 - 1753) and J. The steward (1712 - 1780). At the heart of their theory two following positions lay. First, money is created by the state, and, secondly, cost of money is defined by their face value. The basic error of representatives of nominalism is position that cost of money is defined by the state. Thereby they deny the labour theory of cost and the commodity nature of money.
The further development of this theory is necessary on the end XIX - the German economist G.Knapp (1842 - 1926) was XX centuries the Most known representative of nominalism. In its opinion, money has purchasing capacity which gives them the state. G.Knapp based the theory not on high-grade coins, and on paper money. At the analysis of monetary weight it considered only state treasury notes (paper money) and change, excluding from it credit money (bills, banknotes, checks).
The main error of nominalists consisted that, having torn off paper money from gold and from goods cost, they allocated with their "cost", "purchase power" by the certificate of the state legislation. Positions nominalistic theories have been applied in economic policy of Germany which widely used a currency issue in days of the First World War. The hyperinflation period in Germany in the twenties has definitively denied the nominalism concept in the theory of money.
The quantitative theory of money. The French economist Z.Boden (1530 - 1596) was the founder of the quantitative theory of money. This theory has received the further development in works of Englishmen of D.Juma (1711 - 1776) and J. Mill (1773 - 1836), and also Frenchm S.Monteske (1689 - 1755). D.Jum, trying to establish causal and proportional connection between inflow of precious metals from America and a rise in prices in XVI - XVII centuries, has put forward the thesis: «Cost of money is defined by their quantity». Supporters of this theory saw in money only a currency. They wrongly asserted that in the course of the reference as a result of collision of monetary and commodity weights the prices are ostensibly established, and cost of money is defined.

Bases of the modern quantitative theory of money have been put by the American economist and mathematician Irving Fisher (1867 - 1947). I.Fisher denied labour cost and started with «a purchase power of money». It allocated six factors on which this depends «a purchase power of money»: 1) quantity of cash in circulation; 2) speed of the reference of money; 3) the average price level; 4) quantity of the goods; 5) the sum of bank deposits; 6) speed of the depozitno-check reference.
The modern quantitative theory of money, studying macroeconomic models and the general parities between weight of the goods and a price level, asserts that at the heart of price level change dynamics of nominal monetary weight lies mainly. It puts forward corresponding practical recommendations about stabilisation of economy by means of the control over monetary weight.

Version of the quantitative theory of money is the monetarism.
Monetarism - the economic theory according to which the monetary weight which is in circulation, plays a defining role in stabilisation and market economy development. The founder of monetarism is the founder of the Chicago school, the Nobel prize winner of 1976 M.Fridmen. The monetarism has arisen in 50 - е years. The Monetarism approach to management of economy was widely used in the USA, Great Britain, Germany and other countries in overcoming 70 - the beginnings 80 years, and also in the beginning 90 years at transition to market economy in Russia.
Top of theoretical workings out of monetarism of a steel of the concept of stabilisation of the American economy and known « reygonomic » which realisation has helped the USA to weaken inflation and to strengthen dollar. After Keynesianism concepts of the Chicago school became the second example of an effective utilisation of the economic theory in economic practice of the USA.

Keynesianism - the macroeconomic theory recognising both proving necessity and the importance of state regulation of market economy. It is named by name of J. M.Keynes (Great Britain). Occurrence of the given theory concerns the period of Great depression 1929 - 1933 this largest crisis of world capitalist system has found out inability of purely market scientific direction to answer a question on its reasons and ways of stabilisation of economic development. A basis of theoretical positions of Keynes the idea about state intervention in development of capitalist economy for the purpose of elimination of the crisis phenomena makes, achievements of the maximum employment, increase of rates of increase of a social production. Keynes considered that practical realisation of this idea can be reached by means of application of the macroeconomic methods assuming the analysis of interdependence of such modular (cumulative) sizes, as national the income, the cumulative offer, cumulative demand, employment, savings, investments. A major factor influencing economic growth and capable to provide an exit of economy from depression, Keynes considered the cumulative demand defined by three components: population consumption, investments of the enterprises and the State expenditure.
According to monetarist the concept modern market relations represent the steady, self-adjustable system providing economic efficiency. It is important also that state intervention in economy development is desirable and is inevitable, but not for the purpose of updating of market mechanisms keynesian methods of regulation of cumulative demand, and for creation of conditions of activization of competitive forces of the market by means of the rational monetary policy. Depending on reaction of the market to a manipulation in monetary weight of Fridmen and its followers consider two models - short-term and long-term.

In a short-range plan the increase in monetary weight conducts to fall of interest rates and demand expansion, unemployment reduction. However if the increase in the offer of money repeats repeatedly for a long time there is an intensification of investment process. It stimulates growth of volumes of output, sales, incomes and demand for money that raises the percent rate. Long-term effect of such policy - communication rupture between movement of norm of percent, change of demand for money and their offer.

The monetarism considers as a condition of long-term balance of the monetary market observance of the basic monetary law establishing connection between long-term rate of increase of the offer of money and long-term rate of increase of a real product: m = y + i;
Where m - long-term rate of increase of the offer of money; y - long-term rate of increase of a real product; i - rate of expected inflation (rate of increase of the prices supervised by the state).
The purpose of a long-term monetary policy - stabilisation of inflation and its transformation in completely predicted. From monetarism positions such economic policy which is guided not on short-term changes of an economic conjuncture, and on long-term tendencies, in the best way promotes maintenance of optimum rates of economic growth.
Now the monetarism any more is not a full antipode keynesian concepts of development of economy. Today exists certain keynesianism - neoclassical synthesis - the independent theoretical model accumulating elements of both economic theories.

3. Evolution of money
3.1. Kinds of modern money
The modern period, first of all, is characterised by development of credit-paper money and replacement of metal coins by them. For correct perception stated below a material it is necessary to give definitions and explanations to some economic terms and concepts, such as "paper money" and "credit money".
Paper bank notes happen two kinds: state (treasury notes) let out by exchequer and banks (bank notes or banknotes - bank notes). It is accepted to name Treasury notes simply paper money unlike banknotes which by the nature are credit money. Historically paper money has arisen before the credit. Banknotes appear with development of credit relations.
Paper money is signs on high-grade money. Money as currencies carries out a fleeting role at an exchange of the goods. Therefore gold functions here only as seeming gold and as money is not a general embodiment of riches for the seller has no value, whether money in that cost which on them is written possess. To it it is important, that this money used social recognition. [The economic theory / Under. V.I.Vidjapina, A.I.Dobrynin etc. - М: ИНФРА, 2000 with. 56]
It and that paper money is more convenient in circulation, the fact of transition from a metallic currency to the paper speaks. Possibility of such transition is put as money as currencies. Use of this possibility for practical realisation of release of paper money in the reference assumes presence of two conditions: concerning the developed commodity-money relations and trust presence to paper money. During pre-capitalistic times paper money existed only until there was their free exchange for the high-grade. With occurrence of capitalism in the name of the bourgeois government, at last, there was the one to whom people could trust.
Thus, paper money is unchangeable bank notes on the high-grade money which is let out for a covering of deficiency of the state budget. Release of paper money should be limited by quantity of the high-grade money necessary for the reference during the given period, in other words, by quantity of gold money with which they replace in circulation.
But how many paper money would be not not let out by the state, they will represent only that quantity of high-grade money with which they replace in circulation. The essence of inflation, that is reduction of purchasing capacity of paper money consists in it. But depreciation of money can occur and for other reasons: trust decline to the government, passive balance of the balance of payments. Non-cash money appears in circulation in process of depozitno-loan issue of commercial banks which can be regulated by the central bank only indirectly.
Credit money arises from function of money as the instruments of payment which development occurs on the basis of the capitalist credit. There are three kinds of credit tools of the reference: the bill, a banknote and the check. And the oldest is the bill - it has appeared in XII century as means of calculations between merchants, and two last have been created by banks as credit tools.

The bill is a written abstract and indisputable obligation of the borrower about payment of the certain sum to the creditor [The Economic theory / Under the editorship., prof. I.P.Nikolaevoj. - М: the Prospectus, 1998 with. 71.] I Will explain some words from definition. Abstraction - in the bill do not specify the reason of occurrence of a debt. The indisputability - the person who has given out the bill, has no right to refuse payment. Bills happen simple and translation. The promissory note - the written obligation which has been given out by the debtor to the creditor about payment after term. The translation bill - the written obligation which has been given out by the debtor to the creditor about payment after term to the creditor or the one to whom he will tell. The creditor can use the bill as follows:
1. To receive money after payment term;
2. To consider the bill in bank, having received thus its sum minus a discount rate;
3. To use as an instrument of payment at purchase of the goods (if the supplier agrees to accept the bill as payment.
So, thanks to the abstraction and indisputability, the bill gets the third property - обращаемость. The bill - the short-term obligation, usually within 3 months. Replacement of a metallic currency in circulation bills occurs two ways: before bill maturity can address as payment and purchasing means; the part of bills is mutually repaid, excluding, thus, necessity for money.
The banknote is a bill of bank of issue. The banknote differs from the bill as are not issued only for any concrete transaction. Unlike the bill, the banknote is the bank sight liability, subject earlier to an exchange for gold on a presentation. At the account of bills the bank released the banknotes, one kind of credit money was replaced with another. The central bank is closely connected with the government which uses its credits under the short-term obligations. As unproductive character such loan will cause superfluous issue has government expenses. To prevent it, free exchange of banknotes on gold then the quantity of banknotes will be defined by requirements of the commodity reference is necessary. With the termination of exchange of banknotes on gold the mechanism of bank issue undergoes considerable changes, together with it the nature of banknotes varies also. Along with commercial bills as lawful maintenance of banknotes bonds of state loans and exchequer bills are used. Real bill maintenance has given way to the fictitious. Unchangeable banknotes on gold completely submit to the law of the reference of paper money, and for them inflationary depreciation is characteristic.
The check is the written order of the owner of the current bank account on payment of the specified sum to the certain person or to whom the person will order, or to the bearer of the check. It is used both on internal, and on a foreign market. Unlike the bill, it is the sight liability. That the check was valid the lawful promissory note, it should have:
1. Instructions on the one who has the right to receive this money;
2. The sum of payment in figures and in words;
3. The name and a bank site;
4. The signature drawer.
Checks are subdivided on nominal, with the right of transfer to the third party (order), without the right of transfer to the third party, demand. The companion of paper money is inflation. It arises because of impossibility of the spontaneous adaptation of paper money to requirements of goods turnover and use by the governments of issue for a covering of deficiency of the state budget.

3.2 Analysis of structure of monetary weight of Republic Kazakhstan on 2010.

The monetary system of Republic Kazakhstan functions according to the Republic Kazakhstan Law. Official monetary unit (currency) is Kazakhstan the tenge. The parity between tenge and gold the Law is not established. The tenge official rate to foreign monetary units is defined by NB РК and published in the press. The kinds of money having lawful payment force, banknotes and metal coins which are provided with all actives of National Bank of Republic Kazakhstan are. Except cash non-cash money (in the form of means for accounts in credit institutions) functions also.
The exclusive right of issue of cash, the organisations and their references and withdrawal NB РК possesses. Following duties are assigned To National Bank of Republic Kazakhstan: transportation and storage of banknotes and coins, and also creation of their reserve funds; an establishment of rules of storage, transportation and collection of cash for the credit organisations; definition of signs of solvency of bank notes and a replacement procedure and destruction of the damaged; working out of an order of conducting cash operations for the credit organisations; definition of rules, forms, terms and standards of realisation of clearing settlements; licensing of settlement systems of credit institutions.
For the purpose of regulation of economy of NB РК involves following tools: discount rate rates; norms of obligatory reserves of credit institutions; operations in the open market; carries out a regulation of economic specifications for credit institutions.
Reserve funds represent stocks of not released banknotes and coins in storehouses NB RK and have great value for the organisation and the centralised regulation of cash resources.
Let's consider on an example structure of monetary weight of Republic Kazakhstan for 2010.
The monetary weight is a set cash and non-cash purchasing and the means of payment providing the reference of the goods and services in a national economy which private persons, institutional proprietors and the state have.
In structure of monetary weight allocate such cumulative components, or as them still name, monetary units as М1, М2, М3, L, grouping various payment and settlement means on degrees of their liquidity, and their each subsequent unit are included by the previous.
М1 Are money in the narrow sense of the word, which else name «money for transactions», and they include cash (paper money and coins), addressing out of banks, and also money for current accounts (accounts "poste restante") in banks. It is necessary to notice that deposits on current accounts carry out all functions of money and can be easy transformed into cash.
М2 Are money in a more comprehensive sense words which include all components М1 + money for urgent and savings accounts of commercial banks, deposits from specialised financial institutions. Owners of fixed deposits receive higher percent in comparison with owners of current contributions, but they cannot withdraw these contributions before the contribution of term defined by a condition. Therefore money resources on urgent and savings accounts cannot be used directly as purchasing and means of payment though potentially they can be used for calculations.
The following unit M3 includes М2 + large fixed deposits and the sums of contracts on resale of securities.
Unit L consists from М3 and commercial papers with certain kinds of short-term securities.
It is necessary to notice that in our country until recently monetary units did not pay off and were not used. Theoretically it was proved by postulates of a Marxist economic science according to which it is considered inadmissible association of quasi-money and cash for absolutely different categories - money mix up, securities, the credit.
However it is clear that between the monetary market (movement of short-term loans), the market of investments (the reference of the intermediate term and long-term loan capital) and a securities market there is a close interrelation. Potentially the rests on urgent accounts and securities can be used for calculations. Besides, owners of urgent accounts have possibility to renew them in accounts poste restante. Incomes of securities can be stored on current accounts, the same as the money resources obtained from their sale. [10, p. 358]
Certainly, monetary units play a positive role practice as reference points of a monetary policy of the state. Taking into account deleting of sides between a cash and non-cash turn in our country followed pass to their active use.
Now in Republic Kazakhstan monetary unit M2 pays off as the sum of following indicators:
М2 = weight of an active money + the sum of deposits.
In turn, the sum of deposits is equal to means for accounts of the enterprises and to contributions of the population in commercial banks plus population contributions to the Savings Banks (urgent and poste restante).
From table 1 it is visible that the monetary weight in circulation (monetary unit M2) for January, 1st, 2011 has made 236,4 bln. tenge and in comparison with January, 1st, 2010 has increased almost in 1,5 times.
Credits of bank system to economy and the Government were defining factors of growth of monetary weight in 2010 still.
Participation of National Bank of Republic Kazakhstan in formation of monetary weight is characterised by volume and dynamics of monetary base and sources of its formation.

The monetary base in the wide definition, including cash in circulation and in cash desks of commercial banks, means in fund of obligatory reserves and on correspondent accounts of commercial banks in National Bank of Republic Kazakhstan, has increased in 2,6 times in 2010 against 5,2 times in 2009. (Table 2).
The greatest relative density in structure of monetary base is made by cash in circulation taking into account cash desks of commercial banks. Their share by the end of 2010 has made 59,2 % against 63,6 % by the end 2009г.
The share of the rests on correspondent accounts of banks in monetary base was reduced from 23,4 % in the beginning of year to 22,7 % in the end.
Cumulative reserves of commercial banks for January, 1st, 2011 have made 40,5 bln. tenge, having increased from the beginning of year in 2,5 times. The obligatory reserves of banks deposited in National Bank of Republic Kazakhstan, have increased for a year in 3,6 times and have made on the end of the year of 32,3 bln. tenge.
In 2010 for more effective influence on rates of increase of monetary weight the National Bank of Republic Kazakhstan carried out the control over dynamics of monetary base in the narrow definition, including cash in circulation and in cash desks of commercial banks, and also means in fund of obligatory reserves. Quarterly limits of a gain of pure internal actives of bodies of monetary and credit regulation have been with that end in view established.

Table 1 Monetary weight in 2010-2011 (bln. tenge)
|Indicator |01.01.10 |01.04.10 |01.07.10 |01.10.10 |01.01.11 |
|Monetary weight (М2) - all |155,8 |164,0 |183,4 |200,7 |236,4 |
|including: | | | | | |
|Cash in treatment |75,7 |79,2 |85,6 |90,0 |112,8 |
|Non-cash means cash in circulation |80,1 |84,8 |97,8 |110,7 |123,6 |
|out of bank system | | | | | |

The appendix 2
Table 2 Monetary base and its structure (bln. tenge)
|Indicators |01.01.10 |01.01.11 |Index Growth in |The sum relative density in a|
| | | |2010 |total sum, % |
|Monetary base - all including: |68,9 |100,0 |178,6 |100,0 |
|Cash in circulation taking into account the rests of |43,8 |63,6 |105,8 |59,2 |
|cash desks of commercial banks | | | | |
|Corresponding accounts of commercial banks |16,1 |23,4 |40,5 |22,7 |
|Obligatory reserves |9,0 |13,0 |32,5 |18,1 |

Business cycle
Over the last 10 years Kazakhstan has involved considerable volume of the domestic and foreign capital. In a combination to the weighed policy this factor has provided last five years steadily high annual rates of a gain of gross national product per capita, on the average exceeding 10 % a year. Under forecasts, in 2010 and 2011 gross national product growth will remain at level of 8,8 and 7,0 % in a year accordingly. Moreover, at the further increase in possibilities for investments, manufacture and export to oil and gas branch Kazakhstan can provide prompt rates of increase and low level of budgetary deficiency even in the conditions of reduction of prices on oil.

Despite the reached successes, the contribution not raw branches in maintenance of economic growth remains insignificant that underlines necessity of carrying out of re-structuring and (or) liquidations. Thanks to a small population and considerable inflow of direct foreign investments in due course it will be possible to overcome economy some of structural lacks. The further liberalisation of a political life, perfection of conditions of economic activities and acceleration of rates of structural reforms, including development not raw branches and privatisation of the large companies are necessary.

3.3. Money in the world countries
The United States of America - difference of this country from all others consists that here practically there was no feudalism period. In a XVIII-th century monetary circulation on the American continent was served mainly by foreign money - English pounds sterling and the Spanish silver dollars. In 1785 the congress declared national unit dollar, and in 1792 the system is entered bimetallistic - the dollar was minted from gold and from silver by the Finance. [The credit: the Textbook / under the editorship of L.A.Drobozinoj. - М, 1997 with. 234.] However in second half XVIII in cash payments were carried out basically by gold and a change. Release of banknotes was made is decentralised by private banks. The government undertook attempts of centralisation of monetary issue. First two attempts have terminated in failure - in 1791 and 1816 Only in 1863 have been created national banks, and private issue is imposed 10 % by the tax and has gradually disappeared. In 1873 the silver free coinage has been cancelled, in 23 years the gold standard, but also before exchange of banknotes have been entered into the USA carried out basically on gold. The gold maintenance of dollar is established at level 1,50463г. The basic lack developed in the USA to the beginning of the XX-th century of monetary system was it rigidities , and during the periods of crises in circulation there were monetary substitutes (up to marks). Therefore in 1913 Federal Reserve Banks (Federal Reserve Banks) in 12 reserve districts have been founded. In days of the First World War of the USA unlike other countries, did not cancel exchange of banknotes on gold, but the quantity of gold was in circulation reduced. A world economic crisis 1929-1933. Has led to cancellation of the gold standard in 1933, and in the beginning next year has led to dollar devaluation on 40 %. And to the organisations it was forbidden to citizens to own gold in the monetary form, exchange on gold was cancelled. At the expense of gold reserves increase the currency stabilisation fund in the size 2billion has been created. Dollars for course regulation.

During the Second World War the monetary and credit system of the USA was widely used for financing of military expenses. The strengthened issue has led to inflation in post-war years. With cancellation of the control over the prices (was during war and till 1948) retail prices have jumped up on 33,7 %. War in Vietnam and militarization have worsened dollar positions. The government is compelled in 1971 and in 1973y to go on devaluation of dollar and to rise in prices for gold. The active anti-inflationary policy spent by Federal Reserve System, has strengthened a dollar exchange rate has reduced inflation to a minimum.

Money in Japan. The bank of Japan founded in 1882, has received in 1889 right of emission, and in 8 years in the rising sun country the gold standard has been entered. During the period and after the First World War monetary weight in circulation in Japan has considerably increased (during 1914-1920 - in 3 times), inflation has made 64 %. The world economic crisis was reflected and in Japan, having increased monetary weight in 1.6 times. From the beginning of war with China in 1937 empire position has even more worsened, and the second world has struck definitive blow to economy and monetary system of Japan. The prices in 1945-1951 have grown in 343 times. Purchasing capacity of yen was reduced to 99 %. Ability and desire to work for the Japanese people have made unknown, having transformed for 3 decades the medieval semifeudal country into the scientific giant who has overtaken on technologies many most developed countries the Course of economy / Under the editorship of prof. B.Arayzberga. - М: ИНФРА, 1999 with. 67. . End of restoration of economy was necessary for 1952, inflation has decreased to 65 % a year, but in 60-70х years there was some increase in inflation to 210 % a year. And to the beginning 80 position managed to be stabilised - in 1981 gain of the prices has made 0,2 %. Yen position more and more becomes stronger.
Money in Great Britain. England before others has passed to gold monometallism - actually in the end of a XVIII-th century. Except for 14 million the pounds sterling, all paper money 100 to %-s' was provided with gold. Monetary circulation was regulated by Robert Pilja's certificate since 1844. The First World War has caused frustration of monetary circulation of the country. Inflation for 7 military and post-war years have grown on 300 %. Since 1920 the government pursues a policy of a deflation - rises in price of money. In 1925 the currency reform which has returned exchange of pounds sterling on ingots (for the sums from above 260 000ф.с is spent.) the World economic crisis 1929-1933 has weakened a national economy. The zolotoslitkovyj standard is cancelled and devaluation is spent. The Second World War has rendered дезорганизущее influence on economy of Great Britain. But inflation in England was small (but more, than in the USA). Have affected high relative density of taxes in financing of military expenses (more than 40 %), an essential role of external sources of financing, the state control over the prices. Inflation has an effect till now. With 1950 for 1986 the volume of cash has increased in 10 times.
Money in France. In XIX in France existed bimetallism (1803-1873гг). After transition to gold monometallism (1876-1878) Silver continued to play a role of lawful means of payment. In the beginning of the First World War the gold standard have cancelled. The victory of France in this war cost to it very expensively and in the economic plan. It longer period of the inflation proceeding till 1926 speaks. In the conditions of relative stabilisation in 1928 reform and the government have been spent has passed to the deflationary policy. The minimum sum for an exchange for gold made 215 thousand francs. The issue system of France of 30th years has been based on an incomplete covering by gold of banknotes (35 %). France longer other countries has kept the gold standard.

This results from the fact that the world economic crisis has captured it later. The gold reserves have increased to 83 billion francs. But in 1932 gold has begun to flow abroad, in the country there has come an economic crisis. In 1936 the government has spent 25 %-s' devaluation and has stopped franc exchange on gold. During the Second World War France has undergone to occupation, than its extreme expenses are caused. After war the monetary weight quickly grew, often there were devaluations. The government has passed to a policy of "controllable inflation". But till now inflation in France remains at appreciable level.
Money to Germany (Germany) during the period to. XVII - to. The XX-th centuries. Till 70th years of a XIX-th century Germany had no uniform monetary system as in its territory settled down more than 30 states and princedoms which used 7 various monetary systems, 6 from them (except for Bremen, based on a gold thaler) were silver. Gold coins - friedrichs, louis, pistoles and ducats - addressed with a variable course in relation to silver. Paper money 21 German states and banknotes of 33 banks of issue also was in use.
After association of Germany by O.Bismarkom in the seventies a XIX-th century, the country passes to gold monometallism. The gold maintenance of mark is established at level 0.358423г. In the beginning of the First World War exchange of banknotes on gold has been stopped. As a result of inflation in military and post-war years money has depreciated in 1 600 000 000 000 times (1.6 billion times!) . Currency reform of 1924 provided devaluation in introduction in the reference of a new banknote - reichsmark at the rate of 1 reichsmark =1 000 000 000 000 marks. Huge military expenses in a world economic crisis, the Second World War, its loss, defeat, tactics of "the dead earth", practised by Russian armies in territory of Germany, have not left a stone on a stone from economy and the finance. In the country the chaos reigned, in the market there was only a barter. In 1948 separate currency reform on which each inhabitant could exchange 60 marks face value, the others - 1:10 has been spent, half of all contributions has been blocked, then 70 % of the blocked accounts have been cancelled. The economic revival of Germany spent by the West in territory of Germany, the USSR - in territory of GDR has from this point on begun. To what each party in the transformations has come, very well it was visible after association of Germany when the economy of the former GDR was scattered as a house of cards. Positions of Germany in the international currency market are strong enough, the cumulative active payment balance during 1950-1987 has made 320 billion marks, and gold reserves - 120,2 billion marks. The gold maintenance of mark was up to standard 0.2-0.3г. The policy of revaluations (in relation to other currencies) has allowed to strengthen course increases even more strongly a position of Germany in the international market.
Euro. In Europe attempts to raise level of stability of the rate of exchange time and again were undertaken. The European system included an establishment of a range of the rate of exchange - the top and bottom limits in which limits the rate of exchange could fluctuate. Throughput criteria for participation in «the EURO zone» by its countries (the Appendix 1) have been established. This system of EU was called as the mechanism of the control of exchange rate of the European economic community (МККВ). МККВ has appeared in March, 1979, it included the majority of the countries of EUROPEAN ECONOMIC COMMUNITY. However Great Britain has decided not to join. In 1984 the European Union was entered by Greece. In 1989 in МККВ Spain, in 1990 - Great Britain, and in April, 1997 - Portugal enters. In September, 1992 Great Britain and Italy have suspended the stay in structure MKKV for uncertain time, but in November, 1996 Italy has entered again it that was a part of its attempts to pass to uniform European currency.

Austria enters 1995, Finland - in 1996 And Greece - in 1998 By then as МККВ has been superseded by system of uniform European currency in 1999, outside of МККВ there was only Sweden and Great Britain. Greece and Denmark, without having accepted in the reference uniform currency, there were two members МККВ with a mark II in January, 1999 Their rates of exchange have been fixed in relation to euro. In the Maastricht agreement the scheme of creation EBS which will reach the apogee with creation of the currency union has been offered. At this stage the uniform European currency along with the general monetary policy spent by independent European central bank has been entered. On January, 1st, 2002 EURO it was entered into some stages (the Appendix 2). The European Central Bank has entered into the reference of a banknote and an euro coin, within 6 months they still co-existed along with old currency. On July, 1st, 2002 national banknotes and coins have lost the status of lawful means of payment and have been withdrawn from circulation.

Сonclusion
So, in detail having investigated various functions and evolution of money, we can draw corresponding conclusions. Economic value of money is difficult for overestimating. Without understanding of essence of money and their functions the understanding of action of mechanisms of market economy, and the main thing - influence on them is impossible. If you wish to understand that there is "economy" and as the processes proceeding in it, influence a life of our society, be engaged in studying of money, their essence and functions. The knowledge of this question allows to look in a new fashion at many economic problems which our society faces and gives chance to try to change something to the best, using the individual approach and the experience stored by scientists.
Money - one of the greatest our inventions - makes the most fascinating aspect of an economic science. «Money charming people. Because of them they suffer, for them they work. They think out the most skilful ways to receive their and most skilful ways to spend them. Money - is unique the goods, which cannot be used differently, except how to be released from them. They will not feed you, will not dress, will not give a shelter and will not entertain until you not and spend or do not invest them. People almost will make all for money, and money almost will make all for people. Money is captivating, repeating, changing masks a riddle» [Makkonel K.R., Brju S.L.Economics.] Money can be defined as means of expression of cost of the goods, a measure of value, a universal equivalent of set of costs of the goods. Money happens 3 kinds: natural, paper and non-cash.

Money carries out 4 basic functions: a measure of value; a currency; accumulation means; an instrument of payment.
Estimating value of money in a society life, it is necessary to notice, first of all that they, first, essentially facilitate exchange process. Secondly, their use provides considerable economy of the public riches, which society would be compelled to spend within the limits of barter.
Therefore it is possible to tell that money creates riches of the nation. And the more absolutely the monetary system, the goes escalating of public riches faster.
In many advanced countries bank notes live the last years. If in the country the bank system is well developed, the government enjoys confidence at the population, there is no necessity to carry with itself a heap of paper money and coins. It is possible to pass to the clearing settlement. It many times more conveniently also is more practical. People can come to shop with a plastic plate in a pocket, and buy some goods if the account certainly allows, can call and order the goods by phone or through Internet. Almost all large transactions are spent under the clearing settlement.
But such kind of calculation can be perspective only at the stable economy developed to bank system and absolute trust of the population to the state. If though one of these components is not carried out, full transition to non-cash system is simply impossible. Unfortunately, in our country any condition is not satisfied. Hence, yet there will be no trust to the government, the bank system will not be developed, and the economy this kind of calculation extremely is not stabilised is not perspective.

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