Money, money circulation and credit - стр. 20

The government keeps control of the circulation emission of currency. If the money issue was unlimited or could be done by everyone thus the prices would grow sharply, money would devaluate and wouldn’t be used. The society would return to an exchange in kind.

Paper money is unstable in itself, i.e. as a rule it devaluates because it is issued for the budget deficit coverage. It is not exchanged on gold and does not have its own inmost value thus the mechanism of spare money withdrawal from circulation the «mechanism of trea- sure» does not work here. Consequently paper money issued above the norm is stuck in the channels of circulation and devaluates. The depreciation of money is an exchange of one paper monetary unit purchasing power (but not all the paper monetary stock).

There are two forms of the monetary depreciation:

Internal is a depreciation in respect to the goods on domestic market, i.e. the increase of prices;

External is a depreciation of money in respect to the foreign currency, i.e. an exchange fall (drop) of the national currency.

Credit money is a collective term appeared on the basis of the private individuals’ or government’s real obligations substitution. It occurred due to the money function as a mean of payment where money acts as an obligation which should be redeemed by a real money according to a due date. Credit money includes bills, banknotes, cheque, electronic money.

Banknote is a perpetual debenture guaranteed by the Central Bank of the State. Initially the banknotes had a gold guarantee of exchange onto the gold. They are issued with a strictly defined denomination and in principle are concerned as a national money on all the State territory.

Till 1990 in the Soviet Union circulated as the treasury notes so the USSR banknotes. The first included the monetary units with small denominations of 1, 3 and 5 rubles issued by the Treasury and marked as the «treasury notes». The notes with nominations more than 10 rubles were issued by the USSR State Bank, i.e. were the banknotes.

Nowadays the monetary units in Kazakhstan are issued only by the National Bank of the Republic of Kazakhstan (under the RK law dated from March 30, 1995 № 2155 «About the National Bank of the Republic of Kazakhstan»).

According to this law the banknotes and coins issue, their circulation organization and withdrawal from the circulation on the territory of Kazakhstan are performed only by the National Bank of RK exceptionally. The banknotes and coins emission to the circulation is performed by the National Bank by means of their sale to private and legal individuals.