In modern economic science, the monetary aggregate is considered as the amount of money, as well as other financial resources that are identical to the money supply. It is generally accepted that monetary aggregates have liquidity close to one.
For almost the entire time that this economic category has been used, it was assumed that the main monetary aggregates act as the main objects of credit policy.
In economic science, such aggregates of money supply are considered as:
- cash (M0);
- financial assets: cash , credit and demand deposits (M1);
- aggregates of the form M2 - are formed by adding M and various types of term deposits;
- aggregates of the type M3 - are formed by the addition of M and a number of large term deposits (certificates of deposit);
- aggregates of the type L — the widest of aggregates, including a summary of all financial assets, without exception.
In the modern economy, credit funds are becoming increasingly important in the structure of monetary aggregates. And this is directly determined by the need to expand the functions of the loan.
In matters of the list of loan functions and their characteristics, economists have not come to a common opinion. Often the same characteristics of a function refer to different names of functions, or, conversely, different functions are identified.
For example, the function of replacing with money signs and the credit function of circulation are identified, since it is argued that in both cases credit acts as a category of exchange. Nevertheless, these functions should be separated, since it is obvious that the issue of credit money (the fact of replacing money with signs) and the circulation of credit money are far from identical and affect monetary aggregates and their types in terms of their composition and structure.
When characterizing the distribution function, the literature emphasizes the productive nature of the redistribution of credit resources. However, the functioning of credit resources is not always productive in nature, that is, the returned, but not increased credit value, which cannot be included in monetary aggregates, is redistributed. In this regard, in addition to the steam distribution function, one should offer a function of stimulating resource saving, which is responsible for the productive nature of the movement of credit value, and the function of creating a new credit value as self-increasing.
In the economic literature there are three main functions of credit - distribution, control and substitution, as well as a number of other functions that determine the active role of credit, as part of the money included in monetary aggregates. That is why, on the basis of well-known functions, a classification of functions is formed that has retained its relevance with the addition of a new loan function: the transformation of inactive capital into functioning capital.
It provides:
- connection of credit with the economy as a whole:
- creation of new credit value as self-increasing value;
- creation of credit means of circulation (credit and non-credit money);
- loan servicing of cash turnover (real and modern, so-called credit money);
- substitution of cash turnover (credit cash and credit non-cash money).
The role of the loan as a result of the implementation of its functions will ensure the acceleration of the circulation of monetary funds, which, in turn, will favorably affect monetary aggregates.
The principle of constructing such a model lies in a hierarchy determined by the purpose, direction, and details of functions. The classification of functions is based on the creation of a new credit value as self-growing, and the final result involves the transformation of inactive capital into functioning capital.