LEGAL REGULATION OF MONEY CIRCULATION Money circulation - the movement of money in the domestic...
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Transcript of LEGAL REGULATION OF MONEY CIRCULATION Money circulation - the movement of money in the domestic...
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LEGAL REGULATION OF MONEY CIRCULATION
Money circulation - the movement of money in the domestic turnover of cash and non-cash forms, serving circuit products , non-commodity payments and settlements .
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Forms of currency:
• circulation of cash, i.e. currency (notes and coins) ;
• non-cash currency is to write off a sum of money from the account of one entity and its admission to the account of another entity with the bank.
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Regulation of currency is expressed in monetary policy that provides NBT, and consists of a change in the money supply to reduce inflation and stimulate economic growth.
Optimally organized monetary system facilitates effective Circular Flow , well served by the development of all spheres of economic activity , the movement of the economy as a whole.
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The policy of " tight money " is carried out in order to curb inflation. The reduction in the money supply causes a rise in the interest rate for the loan. This can lead to a decrease in the rate of inflation , but at the same time reduce investment and exacerbate the problem of unemployment .
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The policy of "cheap money " is aimed at stimulating economic growth. For this increases the money supply, reduced interest rate for a loan, it becomes more affordable credit, increasing investment and employment. However, this policy is fraught with increasing inflation.
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• interest rates on the Bank of Tajikistan;• mandatory reserve deposits with the Bank
of Tajikistan (reserve requirements);• open market operations;• refinancing of credit institutions;• foreign exchange intervention;• setting targets for monetary growth;• direct quantitative restrictions;• issuance of bonds on its behalf.