Finance Part 1 Financial Category
Preface
Finance, financing, is the redistribution of resources. The core is currency, and the relationship between borrowing and lending is established by credit, a subject that focuses on saving and borrowing money.
Notes on Finance (Lesson 1) . I originally planned to write notes according to the class, but the teacher lectures are mostly casual, sometimes speaking less, sometimes in advance, which is not conducive to systematically writing notes. So first write notes in accordance with the book in advance.
"Finance" Introduction to the definition, function, structure and learning methods of finance
Reference Course: "Finance" by Cao Longqi (Fifth Edition)
The content is summarized according to the knowledge structure, with occasional supplementary understanding.
Originally planned to be written one by one. But this content is too fragmented. Therefore, the content of finance is divided into four parts. Introduction, Part I, Part II, Part II.
My intention in studying finance is to understand the routines of financial institutions and to understand how to save and borrow money.
I don't want to dig into the horns and bite the bullet. Skip the unintelligible parts and focus on the key points.
Article Directory
Financial category
The essential element of money-finance
What is currency
Currency is an inevitable product of the development of a commodity economy and a general equivalent.
The two basic characteristics of currency as a general equivalent: currency is a tool that expresses the value of all commodities; currency has the ability to directly exchange with all commodities.
Currency reflects the production relations of a specific social form.
The function of currency is a concrete manifestation of the nature of currency. Marx's monetary theory system believes that in the process of exchange and development of commodities, money has gradually formed five intelligences: value scale, circulation means, storage means, payment means and world currency, among which value scale and circulation means are the most basic functions of money.
Currency form: physical currency (gold and silver), substitute currency (paper currency), credit currency (electronic currency)
It's uncomfortable to watch, this part is dry and I don't want to take notes. The notes I want to take are what I don’t understand, not what I understand. Such as foreign exchange and exchange rates, financial markets, financial institutions, commercial banks, and central banks.
Therefore, I chose to take notes in this first article. If there are deficiencies, wait until the end of the period to add.
What currency
Divide currencies according to the amount of money.
Define currencies hierarchically.
- Cash (ie currency, currency in circulation)
- Demand deposit
- Time deposit
- All deposits
Currency system
Elements of the monetary system
Currency metal: the basis of the entire currency system, determining different metals as currency materials constitutes different currency standards. Such as silver standard, gold standard, gold and silver duplicate standard;
Currency unit: specify the name of the currency unit and the weight of the currency metal contained in it.
Minting, issuance and circulation procedures of various currencies: standard currency, token currency
Preparation system: reserves
The evolution of the monetary system
Since its inception, the currency system has experienced four major types: silver standard system, gold-silver standard system, gold standard system, and non-convertible credit currency system.
Silver standard system: The silver standard system prevailed from the 16th century to the 19th century; the silver production increased sharply in the middle and late 19th century, the market price of silver fluctuated and continued to fall, and many countries abandoned the silver standard system;
The gold and silver standard system: Before the first half of the 16th century, the world's gold and silver production was not high, but with the progress of the maritime age, navigators discovered a large amount of gold and silver in the Americas.
Gold standard system: gold coin standard system, gold bullion standard system, gold exchange standard system
Non-convertible credit currency system: A currency system in which paper currency is the standard currency and the paper currency cannot be exchanged for gold. A currency system commonly practiced by countries in the world today
Premonition that electronic money will be the fifth currency system.
China's currency system
New China's currency system
Hong Kong's currency system
Macau's currency system
Taiwan's currency system
International Monetary System
International gold coin standard: the outbreak of World War I from the end of 1880 to 1914.
Gold exchange standard system: 1914-1929
Dollar Standard: Ended in March 1973
Managed floating exchange rate system: so far
The monetary system feels like setting a standard.
Credit, interest and interest rates
Credit meaning
Credit refers to economic behavior characterized by borrowing and lending. It is conditional on the repayment of principal and interest, and is the unilateral transfer or transfer of value that does not change in ownership.
Wen crepe. Credit means doing what it says. Repay debts.
In the process of borrowing and lending, one of the parties is the creditor, who lends goods or currency, which is called credit; the other is the debtor, and he accepts the creditor's commodities or currency, which is called credit. The debtor pays back the money, which is called trustworthiness.
The essence of credit is the temporary transfer of property use rights. This transfer is not gratuitous, but is conditional on repayment of principal and interest.
Characteristics of credit
Based on mutual trust, with debt repayment as the condition, with the goal of maximizing income
Credit system
Commercial credit, bank credit, national credit, consumer credit, international credit.
Every unit wants to collect interest, but does not want to take risks, then find a trustworthy unit to save money.
The financial industry is like a peddler in economic activities. Like a funding platform. It used to be more and more popular because of poor information. With the transparency of information, it is the manufacturing industry that makes money.
The industries that earn poor information will only shrink with the development of the times. Only by creating value can we gain value.
credit risk
Credit risk refers to the possibility that the trustee cannot repay the principal and interest and the expected return of the credit grantor will deviate from the actual return. It is the main type of financial risk and a concentrated expression of economic risk.
All it turns out is that you can't expect debt repayment. The investor's money has been lost and I don't know when it will be recovered.
Credit tool
Credit activities use credit instruments as the carrier. The credit instrument is the legal proof of the credit contract relationship. Also known as financing instrument
Such as IOU, contract
In economics, the total wealth of any economic unit becomes an asset. Generally, physical assets with a useful life of more than one year become real assets; assets in the form of credit instruments, such as currencies, certificates of deposit, bonds, and stocks, become financial assets.
Credit instruments include: commercial papers, stocks, bonds, mortgage contracts, loan contracts and other forms of borrowing; bank drafts, bank drafts, passbooks, negotiable certificates of deposit, life reimbursement forms, etc.;
Bills: money orders, promissory notes, checks
letter of credit
credit card
Stock: A share certificate issued to investors by a joint-stock company to raise funds.
Bond: A marketable security in which the debtor promises to the creditor to repay the principal and pay interest on a specified date.
Interest and interest rates
Interest is the remuneration paid by the debtor to the creditor;
Interest rate determination theory: the savings and investment theory of the classical school, the liquidity preference theory of Keynes, and the loanable funds theory of the neoclassical school;
The economic leverage function of interest rate: macro adjustment function, micro adjustment function (incentive, restraint)
Foreign exchange and exchange rate
The dynamic meaning of foreign exchange is international exchange, that is, the currency of one country is converted into the currency of another country to pay international claims.
The static meaning of foreign exchange is external payment, that is, an international payment method or payment instrument expressed in foreign currency for external settlement.
The exchange rate is the ratio between the two currencies.
Foreign exchange risk
The typical representative is the dollar standard system that ended in 1973. The exchange rate of a country is unstable.
The cheaper the RMB, the better for exports. This is the main theme after joining wto in 2002. Because the same RMB items exported abroad are cheaper to exchange for U.S. dollars. The lower the price, the higher the sales. This is the simplest principle of microeconomics. Export is one of the troikas that drive the economy (the other two are investment and consumption). Therefore, in order to promote exports, it is impossible for the country to increase the value of the renminbi. Any country is. Japan’s Plaza Accord that year was oppressed by the United States and greatly appreciated the yen at one time, and its economy suffered heavy losses. This is an example.
However, in addition to exports, the renminbi also has a separate role. In the rise of great powers, the issue of currency free convertibility. You have been depreciating, or the currency value is extremely unstable, you can not play this role. Whether it is to become a global transaction currency or an important part of a basket of assets of central banks, it is necessary for the RMB to have a relatively stable value like the US dollar.
end
The content of the next issue starts with the middle part of finance-financial markets and financial institutions.
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