Many shortcomings in the monetary sphere can be eliminated by such measures as: devaluation, money exchange, denomination. However, all these measures do not cause long-term improvement, do not eliminate the causes that caused these or other shortcomings.
The radical elimination of negative phenomena is monetary reform. This is a process involving the transition to the use of a stable, stable monetary unit, which contributes to the development of economic relations in a market economy. Along with this, the importance of finance is increasing in the organization of the national economy.
Monetary reform is carried out in accordance with applicable laws. They are aimed at strengthening the state financial system. In the course of the transformations, impaired banknotes are withdrawn, and new banknotes are issued in return. The monetary unit (or gold content) also changes, and a transition is made from one financial system to another. At the same time, the transformations are carried out both in cash turnover and in cashless payments.
It should be noted that monetary reform does not guarantee the subsequent maintenance of financial unit stability. After the implementation of the reforms, it is necessary to regularly carry out activities to strengthen the new system. Of no less importance is the financial and credit policy. Its use allows the necessary regulation of the financial industry.
According to the historical experience of the reforms and taking into account the content of the changes themselves, there are three main prerequisites for the successful implementation of monetary reforms.
- To maintain a financial unit, production growth is paramount. It helps to increase the volume of offers and limits the likelihood of price increases.
- The absence of a deficit in the budget allows dispensing with money issue and loans to pay expenses. Due to this, solvent demand is limited and the probability of its impact on price increases.
- If there are sufficient foreign exchange reserves , the stability of the national money rate is maintained. If necessary, these reserves can be used to import goods and increase their supply on the market.
Of course, all of these factors have different meanings during various financial transformations.
For example, the first monetary reform in Russia in 1895-97 was carried out against the background of an increase in production and an almost deficit-free budget. But, due to the fact that the transformations in that period involved the free exchange of banknotes for gold, the accumulation of gold reserves acquired special significance.
In 1922-24, a new monetary reform was carried out in the country. Transformations were supposed to eliminate the negative consequences that developed in the financial system after the First World War and the Civil War. However, there were no prerequisites for the successful implementation of the changes. However, certain conditions were formed that required immediate reforms. These conditions consisted in increasing the functioning of foreign currency in circulation. Gradually, she began to supplant the depreciating national banknotes. In this regard, the transformation was begun by the end of the 22nd year with the release of the chervonets. This monetary reform (due to the absence of certain conditions) was completed not immediately, but only by the beginning of the 24th year.
The following transformations in the financial system in the state were carried out in 1947. It should be noted that initially the changes were supposed to begin in 1946. But in connection with the lean year, the monetary reform was moved to the next year, which became fruitful and contributed to its successful implementation.
The need for the following transformations arose in the Russian Federation at the end of the 20th century. At that time, the value of money in the life of the population and the activities of enterprises was quite low. As a result, in 1998 the exchange rate of the state currency was changed and a denomination was made.