Credit money, their history and types

Money is an integral part of the functioning of any society. The origin of this term is quite interesting. Coining of coins of Ancient Rome was made in a specially designated place for this purpose - the temple of the goddess Juno Moneta, on behalf of which the English word "money" (money) occurs. The development of human civilization entails the development of all spheres of its life, including financial. Ancient equivalent of money can be considered furs and skins of animals, then silver and gold (metal money) entered the turnover, and, finally, paper money. A special type of modern money is credit money, the emergence of which is associated with the rapid development of the banking industry. This money does not have its own value as such and exists only in the form of digital signs certified in one way or another. In other words, it can be said that loan money is a kind of debt obligation, paper value signs that arose on the basis of a loan in return for gold.

During the lifetime of the entire banking system, credit money has evolved from bills to credit cards and electronic money.

The first type of this type of cash in Russia was a bill, which is an ordinary written obligation of the debtor to its creditor. Bank bills are issued, as a rule, only if there is a certain amount of money on the borrower's current account. Treasury bills are special promissory notes not before the bank, but already before the state and refer to securities issued for a period of 3 months to a year. You can buy treasury bills on the current securities market. Their repayment is carried out by the central banks of the country on behalf of the Ministry of Finance.

At the end of the 17th century, a new kind of credit money appeared in Russia - banknotes, the right to issue only the central bank. The rich gold reserve of the country excluded the possibility of depreciation of this type of cash. Banknotes at any time could be exchanged for gold. The main distinguishing feature of a banknote from a bill is its perpetual existence.

The process of creating commercial banks required the appearance of a new type of cash, they became checks, representing a special type of a bill, a written order from the owner of a certain account to pay the holder of the amount indicated in it. A check can be issued to both a commercial bank and a central bank in the country. Automation of banks and cash transactions preceded the appearance of the credit cards that came to replace the checks, issued by banks in the form of a plastic card with a chip on it based on the customer's account.

Credit money and their types were part of the emergence and development of a system of capitalism, one of the main features of which was the circulation of funds, which caused a number of economically important consequences for the country. The capital cycle ensures a constant flow of money, which is most often done through lending. The main form of movement of banknotes in this case is credit, the main form of payments is credit money.

Summarizing, it can be said that loan funds are inextricably linked to such a phenomenon in the economic life of the country, like capitalism, and have become most widespread with the development of commodity-money relations. Their main distinguishing feature from paper money lies in the origin. Paper money can be issued only by the Treasury, credit same - commercial and central banks in the form of checks, bills, credit cards, banknotes and electronic money.