{"id":1073,"date":"2022-04-12T16:15:46","date_gmt":"2022-04-12T13:15:46","guid":{"rendered":"https:\/\/fiacoglobal.com.tr\/?p=1073"},"modified":"2022-04-12T19:14:04","modified_gmt":"2022-04-12T16:14:04","slug":"para","status":"publish","type":"post","link":"https:\/\/fiacoglobal.com.tr\/en\/2022\/04\/12\/para\/","title":{"rendered":"MONEY"},"content":{"rendered":"
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What is Money? What are its Functions?<\/strong><\/h3>

\u00a0<\/p>

Money is a medium of exchange with three functions. Its first function is as a means of payment. If it does not have the characteristics of a means of payment accepted by everyone, that medium of exchange is not considered money. Its second function is as a unit of measurement. If it does not show the value of a product, the medium of exchange is not considered money. Money is the concept of a measure of value. Finally, its third function is that it is a means of accumulation (savings). Unspent idle income can be saved for future use. This situation reveals the saving function of money.<\/p>

Money is a concept that has undergone many changes from thousands of years ago to the present day. The last stage in this journey that started thousands of years ago is today. Today, money is used in the form of paper money.<\/p>

With the development of technology in recent years, paper money is gradually turning into electronic money. Because money users can act in accordance with the three functions of money without paper money. Functions such as savings in banks, card payments, etc. can now be done electronically.<\/p>

Is There a Value for Money?<\/strong><\/h3>

\u00a0<\/p>

Money is generally printed by the central banks of the respective country. But is the money printed worth anything?<\/p>

Today, paper money has no equivalent. The money printed until the First World War had a gold equivalent. These gold coins were kept in central bank vaults. However, the severe economic consequences of the war made it difficult for many countries to print money against gold and made them abandon this practice. Finally, the United States, which was the only country to print gold coins until 1972, abandoned this practice due to the heavy burdens of the Vietnam War. Today, the value of money that does not have any equivalent is equal to the reputation and value of that country.<\/p>

What is Reserve Money?<\/strong><\/h3>

\u00a0<\/p>

The currencies that countries accept in international trade, other than their own money, are called reserve currencies. The most appropriate examples for this definition are the Dollar and the Euro. Although not as much as these two currencies; Sterling, Yen, and Swiss Franc can also be considered as reserve currencies.<\/p>

Reserve money, especially in developing countries, should be kept as reserves in the central banks since they will use it in international transactions. In Turkey, such reserves are held at the central bank as foreign exchange reserves.<\/p>

What is Liquidity?<\/strong><\/h3>

\u00a0<\/p>

Liquidity refers to the speed with which a financial product can be converted into cash. The faster a product can be converted into cash and the less it depreciates, the more liquid it is considered to be.<\/p>

What is Emission?<\/strong><\/h3>

\u00a0<\/p>

The release of products such as money, bonds, etc. to the market is called emission. In terms of our country, the central bank and the mint printing money and putting it on the market is emission. Another example of emission is the issuance of bonds by the state.<\/p>

What is Seigniorage?<\/strong><\/h3>

\u00a0<\/p>

It is the income obtained by the institution that holds the authority to print money in return for the money it prints. In our country, the Central Bank has this income. For example, if it is assumed that the cost of printing 100 TL banknotes is 2 TL, the Central Bank earns 98 TL seigniorage income.<\/p>

What is Dematerialized Money or Central Bank Money?<\/strong><\/h3>

\u00a0<\/p>

Paper money is physically created by the central bank and metal money by the mint. Apart from these, financial institutions also have the power to create money. This type of money, called dematerialized money, is created when banks extend loans.<\/p>

For example; Let a person deposit 1000 TL in a bank. The bank deposits 100 TL of 1,000 TL to the central bank as reserve requirement. Assume that it gives the remaining 900 TL as a loan. Let's assume that the borrower deposits this money in the bank again. The bank deposits 90 TL again to the central bank as reserve requirement. 810 TL can be lent again. This process can go on and on like this.<\/p>

As indicated in the example, this fictitious money created by banks is called dematerialized money. According to the example, dematerialized money can be increased by 1\/10. In this case, the first deposit of 1.000 TL can become 10.000 TL when continued until the last transaction.<\/p>

What is a Liquidity Trap?<\/strong><\/h3>

\u00a0<\/p>

It refers to a stage where increases in the money supply cannot lower interest rates any further. When money becomes abundant, excess money is used as idle savings. It has no effect on stimulating the economy. This is called a liquidity trap.<\/p>

What is the velocity of money circulation?<\/strong><\/h3>

\u00a0<\/p>

It is a term used to describe the number of times money changes hands in the economy and the number of times it is involved in economic transactions. The velocity of money circulation is affected by individuals' incomes and interest rate changes. As income increases, people spend and the circulation of money accelerates.<\/p>

Why Do People Hide Money?<\/strong><\/h3>

\u00a0<\/p>

According to Keynes, people hold money with transaction motive, precautionary motive and speculation (investment) motive. In holding money with a transaction motive, people want to meet their daily needs. People who hold money with a precautionary motive want to be prepared for extraordinary events. In holding money with a speculation motive, people want to save money and invest it in the future.<\/p>

Transactional and precautionary money holding is a function of income, while speculative money holding is a function of interest.<\/p>

Why Does a Country's Currency Depreciate Against Foreign Currencies?<\/strong><\/h3>

\u00a0<\/p>

Economist Dr. Mahfi E\u011filmez has summarized this issue in 10 points;<\/strong><\/p>

  1. Deterioration in the country's economic situation,<\/li>
  2. Increasing foreign debt,<\/li>
  3. The political troubles the country is going through,<\/li>
  4. Geopolitical challenges,<\/li>
  5. Foreign policy issues,<\/li>
  6. Increased risk due to uncertainties such as elections,<\/li>
  7. Increased risk of war or terrorism,<\/li>
  8. Some problems experienced in the outside world affecting the country (decrease in revenues such as tourism, exports, etc.),<\/li>
  9. Higher prices of oil, natural gas, etc. that the country has to import,<\/li>
  10. When a country faces natural disasters and loses its productive power.<\/li><\/ol>

    \u00a0<\/p>

    Amounts of Money in the World<\/strong><\/h3>

    \u00a0<\/p>

    According to the US Treasury Department, there is 650 billion dollars of cash on the market. Of this, $10 billion is in Turkey.<\/p>

    In Euros, there are 169.2 billion Euros in cash in the world.<\/p>

    In TL terms, the amount of cash banknotes and coins in circulation as of the end of 2018 was 137 billion liras. Of this, 14 billion liras are in bank vaults and the remaining 123 billion liras are in circulation.<\/p>

    If money is seen only in its classical definition as a physical element consisting of banknotes, coins and bank deposits, the figure is $90.4 trillion.<\/p>

    Taking into account the amount of money held in the form of mutual funds, the amount of money in circulation worldwide is $544 trillion. The upper limit in this classification is 1.2 quadrillion dollars.<\/p>\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t<\/div>","protected":false},"excerpt":{"rendered":"

    Para Nedir? Fonksiyonlar\u0131 Nelerdir? \u00a0 Para \u00fc\u00e7 fonksiyonu bulunan bir de\u011fi\u015fim (m\u00fcbadele) arac\u0131d\u0131r. \u0130lk fonksiyonu \u00f6deme arac\u0131 olmas\u0131d\u0131r. Herkes taraf\u0131ndan kabul edilen bir \u00f6deme arac\u0131 niteli\u011fi bulunmad\u0131\u011f\u0131 takdirde o de\u011fi\u015fim arac\u0131 para say\u0131lmamaktad\u0131r. \u0130kinci fonksiyonu ise \u00f6l\u00e7\u00fc birimi olmas\u0131d\u0131r. Bir \u00fcr\u00fcn\u00fcn de\u011ferini g\u00f6stermedi\u011fi takdirde de\u011fi\u015fim…<\/p>","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1073","post","type-post","status-publish","format-standard","hentry","category-fiaco-global"],"yoast_head":"\nPARA | Fiaco Global<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/fiacoglobal.com.tr\/en\/2022\/04\/12\/para\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"PARA | Fiaco Global\" \/>\n<meta property=\"og:description\" content=\"Para Nedir? 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