The main functions commercial banks

We have to consider the major functions and operations of commercial banks.

The most valid from both an economic and from a legal point of view of the definition given in the Bank of the RF Law “On Banks and Banking Activity”. The law defines a commercial bank as a credit institution, which has the exclusive right to exercise together in order to profit the following banking operations: to attract monetary funds of natural persons and legal entities, to place these funds on its behalf and at his own expense on condition of repayment, maturity, interest payment; open and maintain bank accounts of individuals and entities. Perform banking transactions can only be a legal person having a license (permission) of the Central Bank of Russia. The banks are forbidden to engage in production, trade and insurance.


This definition allows you to emphasize the basic principles of commercial banks:

• work within the formed Bank of the resource base, which is based on borrowed money from clients;
• full economic independence and responsibility (including property) or for the results of its activities;
• relationships with clients on a contractual, market-based;
• regulation of banking activities should be mainly indirect (economic) means.

The main purpose of the bank as a commercial enterprise is profit. The main feature of the bank as a place of business is that for profit bank invests in profitable but risky operations funds from clients, which he must return them. In other words, it buys on the market cash customers on terms of repayment, maturity, and for a fee (in the form of interest) and sells them on the market on his own behalf at a higher price. At the same location (for sale) credit bank must be on the same principles of repayment, maturity, payment, and that involvement, whether in which financial and nonfinancial assets, he puts them. Therefore, it must place funds in loans, deposits, securities, precious metals or property, ensuring repayment of these funds. The consequence is a relatively high liquidity of bank aktivov1 compared to other commercial enterprises.

The main function of commercial banks is a function of financial intermediation, which consists in the accumulation of temporary free funds of some economic agents (people, companies, etc.) and redistribute them to other economic agents in need of additional funding. As a financial intermediary, the bank provides savings and savings play in loans and investments, as well as inter-sectoral, interregional and cross-country capital flows, allowing them to better productivity and pro use. The most important aspect of the performance of functions of financial intermediation by banks is to mediate in the implementation of cashless payments and accounts of economic agents.

It is through the lending institutions – banks – credit functions are implemented as an abstract economic categories: redistribution, emission, regulating, control.

The most detailed presentation on the functions of banks in the modern market economy theory of financial intermediaries makes eration, widely spread in 70s of XX century. The main reason for the existence of financial intermediaries, this theory considers information asymmetries, and the banks called “information processors.” In the current boom conditions of the information is constantly increasing costs of finding, collecting and analyzing information, the risk that important investment decisions made based on insufficient, outdated or distorted information. In the context of financial globalization and the massive flow of information appropriate to transfer the functions of collecting, processing and analysis of data banks. As financial intermediaries, banks are rewarded for making qualified investment decisions, risks associated with them, as well as information provision business.

The concept of “financial intermediary” – broader than the term “bank”, because there are different types of financial intermediaries. By way of formation of the resource base of financial intermediaries are divided into non-deposit institutions and deposit. Banks are a group of depository institutions, which is characterized by a double exchange of debt. Banks are attracted resources in exchange for their own debt obligations, such as promissory notes and the proceeds invested in its own name in bonds of other economic agents, such as bonds of Gazprom.
Banks – the only financial intermediaries, which not only guarantee a full refund of the debt to clients – individuals and legal entities, but also a fixed rate of return in the form of contractual interest on deposits (credits). In this case all the risks of investing money for clients and the associated loss the bank takes over, dividing among its shareholders.

The implementation of the basic economic function – the function of financial intermediation – is carried out taking into account that the bank at the same time is a commercial venture, the main purpose of which is profit. In this incarnation of his bank acts as a seller of financial products and services, competing with other credit institutions operating in financial markets.
The interests of the bank’s business may be in conflict with its macro-economic functions, such as house payments, resulting in the need for constant supervision of the bank’s management and its activities in the public interest. Control, supervision and regulation of commercial banks by the Bank of Russia, which imposes certain features of the functioning of the bank as a commercial enterprise.

Banks and other financial intermediaries operating in different financial markets and make the credit system of the country.
The credit system is a set of economic relations on the accumulation and redistribution of temporarily free money resources, forms, methods and instruments of credit, credit institutions and credit markets.

The core of the credit system of the Russian Federation is a two-tier banking system consisting of a central bank, credit bank and nonbank institutions such. In Russia there are three types of non-bank credit institutions, which can carry out certain banking operations, which establishes a valid combination of the Central Bank. This – the organization of collection, payment and deposit and loan zitno non-bank credit organizations (NGOs). At present, banks in Russia in 1189 (not including branches and subsidiaries) and 46 NGOs.
In addition to the organizations that form the banking system, there are structures that are the institutions of the credit system, but not in the bank. They’re called credit-specialized financial institutions (SKFI). These include investment companies and funds, pension funds, leasing and factoring companies and other commercial entities operating in the financial markets, but do not belong to a group of depository financial institutions.

Central Bank – is the issuing bank that performs specific functions in a market economy. Making a profit is not its purpose, that is, it’s not a commercial bank. The main objectives of this activity is to maintain stability of the exchange rate and purchasing power, strengthening the banking system, to ensure the smooth functioning of settlements and payments. CBR has the exclusive right to issue currency and regulate currency circulation, is the banking regulation and supervision of currency regulation and currency control, is involved in developing and implementing state monetary policy.

Regulation of commercial banks by the Bank of Russia are both direct administrative and indirect economic means. The former is the licensing of banking activities, establishing regulations governing the “limits and quotas, rules of conducting banking transactions, forms and deadlines for reporting. The latter include methods for regulating the supply and demand of funds in financial markets: the establishment of the official discount rate of Central Bank reserve requirement rules, the refinancing of commercial banks, the Bank of Russia on the open market.

The basic principle of improving the system of banking regulation and banking supervision is the introduction of internationally recognized norms of international experience and taking into account the characteristics of the organization and functioning of the Russian banking market.

Where is the best work

There are several types of people react differently to the proposal to go to work in a foreign company. The first type – people who have never worked in foreign companies and do not want to work for them. The most difficult are those who believe that working in the Western representation of it directly helps to “conquer” the homeland. Such people are found less and less, but occasionally you can run into quite a good specialist in his field, which potentially could be working in foreign company, but that’s patriotism is a serious internal barrier. Recruiters difficult to accept this position because at work and no bondage at any time to leave the place, to the same foreign company as a rule are the registered legal entities in Russia and pay all taxes in the national budget, and pay a fair unlike some Russian companies. They also raise the solvency of the population, paying salaries to its employees and generate demand for the various support materials if they use Russian suppliers.
But to convince these people are just friends, or in some way the circumstances. Sometimes lies behind this lack of confidence in their abilities, which can range from uncertainty in the possession of language to concerns about the difficulty of working in a multinational environment. These issues are candidates for recruiters or simply choose not to decide (as it is better not to show insecure candidate to the customer), or if, for example, after the language test person himself is convinced of their own ability, then in such cases, the problem solved itself . It is best for this work is the youth, especially those who could at one time to go abroad for training or even any lines.  more positive attitude among those who believe that working in foreign company is good, but can not be realized as the employee personality. For such people are also so-called “freelancers” and it is good people, only with a large creative component. They believe that foreign firms operate on the principle: “We have worked well in all countries and Russia will be no exception.” Often, experts are right, but if the customer rekuterskogo agency – a company oriented toward the realities of Russia, then in the process of recruiting enough to convince a person to go to work in a foreign company, you need only give the details to him the possibility of self-realization in the new location. These people are also those who view work not only as a means of livelihood, but as a matter of life and “put in the work of the soul.” Such people are hard to lure anywhere because they do not want to work for someone else, and this applies equally to domestic and foreign firms, but in the case of foreign here, again, mixed with patriotism.  For the second type are those who already worked in the foreign company and does not want to repeat this experiment. Here there are two categories: “graduates” of Asian and European firms. The first came across eastern mentality, and it seemed to them the mechanism of suppression of personality, turning into a cog working mechanism. Because in Japanese, Korean firms are valued observance of subordination, loyalty to the firm and the initiative is welcomed in a very manageable limits, it is not all it is viewed with enthusiasm. Although the work in these firms have certain advantages. Such “burnt” is sometimes possible to persuade to work in European companies, but the proposals they are already ultra-cautious. “Graduates” as European companies often complain about lack of career prospects, say senior positions are occupied by foreigners and a lifetime to sit in one spot they do not like. These people can go to a higher position in another foreign company, but they are easier to agree to occupy a similar place in the Russian company. Sometimes people knock a busy schedule and, interestingly, people do not always perceive the western style of management, believing that something funny and something unnecessary. separate systems are Indian companies who are not satisfied with their professional uncertainty and low wages. The easiest way to trigger the Russians against the Germans and Americans, their way of thinking, at least more predictable. To the emotional Italians and Spaniards must get used to. As for the proposals of domestic companies, then there is 99%, all determined by the specific operating conditions. In general, most do not like permanent domestic instability. While in this area there have been significant changes since sometimes the company name is enough to make sure of the seriousness of the work. Often people prefer to work out some time in a Western company to learn civilized business and then take a good position to achiever a Russian company. People are scared in the early stages to face the uncleanliness of the Russian business, because “in this vtyaneshsya, then do not otvyknesh.” In general it may be noted that smoothing occurs in the minds of job seekers difference between ours and not ours. On the one hand, people get used to, on the other hand many companies themselves contribute to this. The Russian approach to working standards and conditions to the west, and foreign, in turn, adapted to Russian realities. In the western state firms are increasingly composed of Russian and native are invited for temporary employment of foreign experts. Times have names like “Spetstyagmash” are gone, and now most pleased with hearing strange but beautiful names of Russian companies. And most likely, after some time candidates for a job are able to identify only firms belonging digging into the firm’s history or its instruments. Well, of course, recruiters can help them in this task.

The function of money as a measure of value

1.The magnitude of value of goods measured by equating them to a certain amount of money. Money serves as a universal symbol and a measure of commodity values. The basis for comparing products is a prisoner in goods abstract labor. A feature of this function is that it operates ideal money, that is mentally represented, and are not really in the hands of the commodity. Goods mentally equal to the money before the exchange.


However, the function measures the cost of carry is not some kind of symbols, and full-fledged money, that is, having self-worth. Measure the value of something so devoid of value as impossible as to measure the weight of something weightless. The cost of the goods, expressed in money, is price.

Under the gold standard, when applied only gold coins (before the First World War), the prices depend on the value of the goods as the price of gold as money is relatively constant. When paper money circulation commodity prices expressed in the signs of the cost of not having their own cost. But these people make money as a means of payment. The seller, getting them to the goods sold, convinced that he too will be able to buy them he needed goods. The state also pledged to accept paper money as payment of taxes and perform other debt obligations by citizens.

When metallic monetary circulation, and later there was a scale of prices, ie weight of the metal in the currency of the country. For example, the scale of the Soviet ruble price of the sample in 1961 was equal to 0.98741 grams of gold. Jamaican currency Conference (1976) abolished the official price of gold and the gold content of currencies of participating countries of the International Monetary Fund (IMF). In Russia, the official ratio of gold ruble and abolished in 1992. In modern conditions occurred demonetization of gold, it has lost the function of money. Gold replaced the inner and outer back of credit money.

The state determines the name of the currency denominations structure, procedure of issue of money, including coins, rules for handling cash and non-money exchange rate of the national currency to the foreign proceeding from demand. Modern money is not exchanged denominations of gold.

2. The function of money as a medium of exchange. In this function, the money should really be present. Commodity-money circulation includes purchase of goods (DT), ie transformation of money into commodity form of value, and sell (T-D), ie transformation of commodities into money. Money at the same time act as an intermediary in the exchange.

In a direct exchange of goods (T1-T2) buying and selling are the same across time and space. Commodity circulation with the use of money involves two distinct acts: sell the product and its sale. These acts are separated in time, and possibly in space. This creates the possibility of metabolic disorders. Features of the money this is the real function of the availability of money in circulation, as well as the transience of their participation in the exchange process. Therefore, this function can perform and ‘inferior’ money – paper and credit.

Some authors believe that the function of money as a medium of exchange and carry out non-cash money (when the calculations are carried out by the record sums on accounts opened in banks’ organizations). Foreign scientists usually combine the functions of money as a medium of exchange and means of payment. For Western economy is characterized byThat the majority of settlements and payments made by bank transfer. In our country the share of cash in the structure of money supply is quite high.

Businesses and organizations use the function of money as a medium of exchange in limited circumstances. They can pay cash to each other only within the state-established limit. Cash used mostly in the calculations of the population with companies and organizations and with each other when buying and selling goods in shops and markets, as well as payment of certain services.

3. Money as a means of payment. This function follows the function of money as a medium of exchange. For it is characteristic of the time lag between the movement of goods and movement of money. Goods are not always sold for cash for various reasons. Often you want the sale of goods by installments, ie, on credit. With this final act of sharing in the process of sale is paying off debt. The gap in time between the goods and money creates the danger of default of the debtor to the creditor. The problem of nonpayment has become particularly acute in. contemporary Russia. In order to expedite payments between companies using these types of credit money, such as electronic money and credit cards, bank bills. In this function can be used non-cash money (record from one account) when calculating business with each other, as well as the payment of taxes in the budget and extrabudgetary funds.

4. The function of money as a means of accumulation and savings. In this function, and money is used by enterprises and citizens. Businesses and organizations accumulate funds to finance capital construction and implementation of reconstruction and technical re-equipment, as well as for the payment of remuneration to employees on the basis of the enterprise for the year. Citizens also arises the desire for accumulation and preservation (for example, when buying apartments, villas, car, garage, etc.). However, the mere accumulation of money does not bring additional income to their owner.

In this function, the money must be real. When metallic monetary circulation extra money went into the treasure, and lack of money was replenished at the expense of treasure. In a developed market economy, the entrepreneur is unprofitable to keep their money. it to negotiate for a profit. At the same time, enterprises, organizations and the state create cash reserves to smooth out the imbalances. Gold continues to play a role as the embodiment of the treasures of the national wealth, accumulated in reserves of central banks and the treasury of the state. The value of gold reserves indicates the richness of the country and ensures the stability of the monetary unit. Individuals also accumulate in the form of gold jewelry, bullion, coins, buying it on the national currency. Companies are focusing short-term capital into banks, and long-term capital – in the form of securities to earn additional income.

5. The function of world money. Under the gold standard favored gold world money and currency of individual states, bargaining for gold (the U.S. dollar and British pound sterling). They played the role of public purchasing and tender in the world market, as well as the overall materialization of social wealth. Money is used as a global means of payment, if payments of a country exceeds receipts from other countries for the period. As the embodiment of social wealth in the world’s money is used for a loan of one country to another, with reparations the winning country defeated country (as in these cases there is a movement of the wealth of one state to another by means of money), as well as replenishing foreign reserves of the state.

General concepts of investment

Investment can be long-term and short-term. Long-term investment, it when you invest money, and the first profit start to receive only in 3-5 years. In short-term investments, this process borrows about one year. Also all investments can be divided on expensive and small - budgetary. To world measures, expensive investments begin with the sum over 100 000 dollars. In total that less than this sum, it is possible to divide on average and budgetary and small - the budgetary investments.

As to world economy, investment in it plays very large role. If to consider a case of any investment, it is possible to tell that it, almost same as the credit in bank. The main difference consists that at the credit, you stipulate beforehand the exact sum both exact terms, and the creditor, for 100 % is sure that will return the money, plus also percent. In investment all not so. The situation can develop in such a manner that you invest money in the project which in the future will simply burn through. In such cases, you not only don't get profit, but you also will lose an initial body of an investment. Therefore, investment, it much more risky business, rather than credit.

Distinctions in approaches

Investments or capital investments in the most general sense are understood as temporary refusal of the economic subject of consumption available for it at the disposal of resources (capital) and use of these resources for increase in the future of the welfare. The expenditure of money on acquisition of the property, being characterized essentially smaller liquidity – the equipment, real estate, financial or other non-turnaround assets appears the simplest example of investments.
It is accepted to distinguish two types of investments: real and financial (portfolio). It should be noted that in case of real investments use (operation) of the corresponding non-turnaround assets for production of some production and the subsequent its realization appears a condition of achievement of the planned purposes, as a rule. Here use of organizational and technical structures of again formed business for profit extraction, for example, belongs during authorized activity created with attraction of investments of the enterprise.
Within the centralized planned system the following standard concept was used: «Capital investments are the financial means spent for construction of new and reconstruction, expansion and modernization of the operating enterprises (production capital investments), on housing, municipal and cultural and community construction (non-productive capital investments)».

In our daily language the word "investment" not always has the same value what is given it in economic discussions where «pure investment», or formation of the capital, that represents a pure gain of the real capital of society (buildings, the equipment, material and production stocks etc.) is called. In an everyday life often speak about "investment" when buy a ground, in circulation securities or any other title of a property.
The given definitions show distinction in definition of essence of investments in planned and market systems. The definition given to capital investments (investments) in a planned economy, narrows area of investment and limits it to investments only in increase and improvement of fixed assets. In the conditions of a management system of distribution of resources the fact of existence of financial and other types of investments wasn't considered by a domestic economic science. Now both terms are applied. The term "capital investment" means that type of investments which goes, generally on reproduction of fixed assets.

In market economy on the essence of an investment combine two parties of investment activity: expenses of resources and results. Investments are carried out for the purpose of receiving result (the income or other result) and are useless if they don't bring such result.
Besides, it is possible to note still the following common, characteristic features of investments: they, as a rule, have long-term character (it belongs to real investments; short-term investments are carried out in the financial sphere with fast-liquid securities); investment activity and made investment decisions have complex impact on all parties of business activity and a social and economic situation in the region.
So, the variety of concepts of the term "investments" in modern domestic and foreign literature substantially is defined by width of the intrinsic parties of this difficult economic category. Therefore for specification of the content of this category it is necessary to consider the main characteristics forming its essence. In this regard it should be noted that investments is:

• object of economic management;
• the most active form of involvement of the saved-up capital in economic process;
• possibility of use of the saved-up capital in all its alternative forms;
• alternative possibility of capital investments in any objects of economic activity;
• source of generating of effect of business activity;
• object of the market relations;
• object of a property and order;
• object of temporary preference;
• risk factor carrier;
• carrier of a factor of liquidity.

Thus, investments of the enterprise represent capital investments in all its forms in various objects (instruments) of its economic activity for the purpose of receiving profit, and also achievement of other economic or external economic effect which implementation is based on market principles and is connected with factors of time, risk and liquidity.