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THE CONCEPT OF PRIVATE MONEY AND ITS USE IN THE MODERN WORLD
Chudinova E.V.
Financial university under the Government of the Russian Federation E-mail: chudinovaekaterina@icloud.com Scientific advisor Moiseeva T.V., senior teacher Financial university under the Government of the Russian Federation E-mail: moiseewa.tv@yandex.ru
Abstract. The development of the modern world economy, which is undoubtedly connected with the development of information technologies, lays the foundation not only for the modification of traditional functions of money, but also for the development of new ones. The reason for the introduction of these new functions is due to the ever-increasing need to accelerate calculations and expand the space of economic relations. The emergence of private money and its ubiquity can be considered a natural and reasonable stage of economic development under the influence of information technology. This topic is undoubtedly relevant today and is interesting for being studied. This article is aimed at a deeper study of private money considering its importance and role, as well as specific examples of private money and its use in the modern world.
Keywords: private money, cryptocurrency, bitcoin, money system
ПОНЯТИЕ ЧАСТНЫХ ДЕНЕГ И ИХ ИСПОЛЬЗОВАНИЕ В
СОВРЕМЕНОМ МИРЕ
Чудинова Е.В.
Финансовый университет при Правительстве Российской Федерации Е-mail: chudinovaekaterina@icloud.com Научный руководитель: Моисеева Т. В., старший преподаватель
Финансовый университет при Правительстве Российской Федерации Е-mail: moiseewa.tv@yandex.ru
Аннотация. Развитие современной мировой экономики, которое несомненно связано с развитием информационных технологий, закладывает фундамент не только для модификации традиционных функций денег, но и для выработки новых. Причина внедрения этих новых функций объясняется непрерывно возрастающими потребностями в ускорении расчетов и расширении пространства экономических отношений. Возникновение частных денег и их повсеместное распространение можно считать закономерным и обоснованным этапом развития экономики под влиянием информационных технологий. Данная тема, несомненно, актуальна на сегодняшний день и представляет интерес, поэтому она была выбрана мной для изучения. В данной работе с целью более глубокого изучения проблемы частных денег рассматривается их значение и роль, а также приводятся конкретные примеры частных денег в современном мире и их использование.
Ключевые слова: частные деньги, негосударственные деньги, криптовалюта, биткоин, денежная система
In today's environment, ensuring economic stability is one of the most important activities of the governments of various countries. The most important element is monetary policy implemented by the central bank. In turn, one of the most important functions of the Central Bank is the issue of money, which is its monopolistic right.
However, in the face of global financial turbulence, new and innovative solutions are needed, perhaps inconsistent with the existing economic
concept. One is the denationalization of monetary emissions.
Private money is non-state fiduciary money issued by private organizations. In essence, private money is the private obligation of the issuer to accept as a means of payment, to transfer on national monetary basket its new instruments nominated in the national or an international currency or its own monetary unit or unit of accounting goods. Thus, private money can be seen as the antithesis of public money [3].
The Austrian economist Friedrich fon Haisk in his work "Private Money" in 1976 proposed to denationalize money, as the state monopoly is harmful to the economy, a system based on competition of parallel private currencies is effective to achieve monetary stability. The monetary policy of central banks in the 20th century was a source of constant economic misinformation, discoordination of the economy, manifested in artificial fluctuations of business activity, as well as stimulation of inflation, for which there are no necessary institutional structures for regulation. The concept of a market mechanism allows self-regulation and imposes certain requirements on the monetary system. The basis of the idea is that money is considered as an ordinary commercial commodity and is produced in a market way. In other words, the competition in the goods market helps improve consumer properties and remove products of poor quality. In the currency market there will be a similar process: competition between private money will serve as a criterion for selecting those currencies that will perform the functions of money in the most effective way and as a means of payment to preserve their value in time [5].
In support of this, it is possible to consider the behavior of private issuers banks which, by regulating the amount of monetary value they issue, make considerable efforts to maintain their liquidity, risking their creditworthiness, and do so not worse than a central bank which risks nothing. Therefore, the question of the possibility of circulation of private currencies is rather a question of the possibility of ensuring high liquidity of private money arising from private issues.
Another representative of the Austrian school Muray Rothbard approved the concept of private money. The possibility of dishonest private minting of money, in when the value of coins is deliberately reduced. He compares with the state forced reduction of the value of money. However, if we follow the logic of this argument, private enterprises may also be impure in the field of the machine industry and electronics, but no one has an incentive to nationalize them.
Thus, when money is denationalized, the risks of all financial institutions become private; because the
risks are subject to the mechanism of the market selection, eliminating the main factors of instability of the monetary system.
But it is also worth noting the obvious shortcomings of the concept of private money:
• money may be issued without any reinforcements (gold, Central Bank assets, etc.);
• under this concept, the errosy of the tax base of states is quite natural;
• possibility of using private money shadow economy;
• monopolization of emissions at the expense of structures close to the state is possible;
• the lack of readiness of the world monetary system for cross-border movement of private money is a prerequisite for another financial crisis;
• inability to control money turnover, money supply, inflation, etc.;
• lack of infrastructure is a major technical challenge [2].
The need to address this issue is linked to the fact that in today's world, with a lack of cash liquidity, local, regional currencies are increasingly emerging, which strengthens and stimulates the regional economic community and allows small businesses to compete on an equal basis with large ones to smooth out the negative effects of financial crises. This is possible by the fact that the private issuer performs an important function that of maintaining the constant purchasing power of its own currency defined within a certain commodity equivalent ("commodity standard"), the composition of which may vary depending on changes in market conditions. It is better to evaluate the phenomenon of private money from a practical point of view; it will reflect the objective possibilities of applying this in modern realities.
First, it is necessary to consider the regulatory and legal field of this issue in the Russian realities. According to the article 75 of the Constitution of the Russian Federation, the Bank of Russia has the exclusive right to issue cash, it means that the introduction into circulation and issue of other money, including money surrogates, is prohibited. Thus, the Central Bank of Russia is a monopoly of
the monetary issue, there is only one currency that of a ruble. However, the private component exists, and commercial banks may have cashless funds. This phenomenon is possible through regulation at the expense of a bank multiplier, which allows to monitore the cash turnover.
However, the logical development of forms of money has led to them in the electronic forms, expressed in the form of a file or set of electronic information. This phenomenon itself means the issue of private money, because real money turns into obligations of the issuer (electronic money system) to transform the same purchasing power into a virtual form at the moment of credit of money to a virtual account - an electronic wallet. This practice is carried out within the framework of the legislation (Federal Law "On the National Payment System). Examples of successful credit institutions - issuers of private money are Yandex. Money, WebMoney and Raypal. Thus, it can be said that the presence of private electronic money in the monetary system of the state is a natural process of development [7].
The Russian practice has other indirect examples of private money. First, it is worth remembering the period of the USSR, when the cash deficit led the population to switch to another way of legal payments - commodity stamps. Most of the population could purchase goods necessary to meet the needs arising not only from the form indicated on the ticket, but from any of them, through their exchange or payment. This kind of "quasideneg" can be indirectly called private, but this was a strong prerequisite for their further use in a private status. This is confirmed by the so-called modern fuel cards, in 2011 the volume of fuel trade accounted for 4.5 trillion rubles and about 40% were carried out through fuel cards. This suggests that they can be considered as means of payment. There are quite a lot of such payment means expressed in the issuer 's obligations within the amount expressed in the currency used - various loyalty programs, Aviamili, bonuses «Thank you» from Sberbank. All of them are accepted for calculation in a certain range of companies, being a semblance of private money.
In the world practice, one of the first examples of private money can be considered a promissory note,
which in the 16th century was widely used in various countries. From this fact, it can be concluded that private money is securities that have a wide range of distribution and are recognized by the society as a means of payment. Perhaps in the future (given the current rate of development of the stock market) securities of various companies will be used as a calculation tool in the stores [5].
Of course, there are also more realistic examples of the use of private money use that officially exist. Above all, a prerequisite for such application is that the crisis combined with the high transaction costs of delivering a national currency unit to a certain territory and supported by the centralization of finance in public centres, forces some local communities to use their private money to carry out daily activities. Also, the private local money serves as a strong catalyst for business development in the region. Such official funds issued by private companies are officially established by the State legislation in various developed countries, such as Germany, England, etc. In the United States, there are time dollars used as a means of payment - for example, they are used as fees for public works for which everyday goods can be purchased. Another interesting example of private money used in the United States is Berkakia, a local currency in South Berkshire. Its essence is also reduced to a more efficient use of funds and the acceleration of business development, but for participants of this system there is a bonus - at the cost of $95 per 100 purchases, the participant of the system receives the cost in calculations equivalent to dollar 1 to 1, which expresses an increase in purchasing power due to discount in calculations. These private moneys have successfully existed since 2006. This is how the liberal attitude of the authorities towards the monetary system helps overcome structural territorial problems. It should be noted that the example with berkacks is very promising in the Russian realities -various associations of companies are already being created, providing discounts to consumers by reducing transaction costs.
The above facts indicate that the use of private money reduces the impact of various negative processes on the economy. However, it is worth
considering another aspect of the use of private money that of additional tax revenues and investment
[7].
It is a crypto currency, a digital (virtual) currency, protected from forgery, because it is encrypted information through cryptography. Crypto is a digital asset whose issue is decentralized. Emerging in 2008, Bitcoin challenged most national monetary systems, being absolutely decentralized private money. For 2017, there is no final legislative regulation in any country, but there are already different views on the phenomenon. The USA, Finland, Norway - recognize them as various types of assets - financial or property, that are accordingly taxed. In Singapore, only transactions are taxed, while investments in production are freely taxed. China has imposed a clear ban on its use or issuance, although Chinese investors are most interested in crypto currencies. Russia has no consensus on this issue as early as 2014, a sharp ban was planned, but at the end of 2016, the State Duma held a meeting with specialists, at which possible legalization and taxation are already announced as a commodity. There is no point in strangling prohibitions if it does not arouse any interest, taking into account the prospects for profit -increasing the tax base and attracting foreign investments for the development of the production of crypto. In order to assess possible prospects it is worth pointing out that Bitcoin from 10 dollars in 2008 increased to 1000 dollars in 2017, investors from Silicon Valley invest 5 million dollars each in crypto-currency projects, and daily turnover of exchanges of crypto amounts to more than 110 million dollars [1]
Analyzing all the above, it can be concluded that private money is not an unrealistic idea, but a promising step in the development of forms and circulation of money. The Russian government needs to develop legislative measures to ensure the possibility of issuing private money, as well as the framework regulation. These measures will give a strong step towards liberalization and development of the market form of the national economy, also, it may create a "cushion" in case of financial shocks. This will give a qualitative boost in the right direction, because not all banks will agree to shoulder the heavy financial burden of ensuring constant control over the value of their own currency, many of them will prefer a cheaper way to operate the most liquid of the available private currencies.
References
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8. Прокопенко З.В. Экономическая феноменология: Миф о денационализации // Terra есопот^/ — Ростов-на-Дону: Южный фед. ун-т. 2008, №3-3 — С.25-2
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