Money is considered the main tool in the economic process, without which it is impossible to imagine how economic activity takes place. Contemporary economies are monetary economies in which individuals seek to obtain money as the most important form of wealth, while money is the focus of economic decisions, especially in the field of production, distribution, and macroeconomic management in general. Monetary policy is the first line of defense to prevent economic shocks, and the maker of initiatives that stimulate economic activity.
Money has an important role in achieving economic security, which is one of the most important aspects of national security, and money is a tool that can be developed. It started in metallic form, then developed into paper form, until it reached electronic cards, ending up with electronic money, and encrypted money, which is also called The terms (virtual currencies, or digital currencies), which are money that do not have a tangible physical substance and are based on characteristics that undermine all traditional monetary policy tools, which makes them represent a real threat to the national security of countries, which requires studying these currencies and determining alternatives for dealing with them in an accurate manner. Economic interest.
Money has a concept that is constantly evolving, and if it is important for individuals, its importance increases for countries as it is used to stimulate economic activity, and it is considered one of the most important tools for protecting economic security, which is one of the national axes. We will address this through two requirements, to present in the first requirement the concept of money and monetary policies. Then, in the second section, and its relationship to the development of money.
The role of the economic system in the concept of monetary policy
Monetary policy: It is a set of procedures undertaken by the central bank in the field of managing everything related to money, and regulating the general liquidity of the economy in order to achieve monetary stability and stimulate economic activities. Monetary policy is considered the fastest tool to stimulate the economy and prevent economic shocks by providing the necessary cash to finance the needs of various economic sectors and expand markets. It is also considered one of the basic conditions for effective economic development.
Monetary policy tools and how to achieve their objectives: There are many tools that can form the axes of monetary policy, and the use of one or more of its specific tools depends on the method adopted by monetary policy in achieving its objectives. It “mostly” works to achieve its goals according to two frameworks:
The first: policies for quantifying cash liquidity: through which the total volume of cash liquidity is determined through tools that affect the determination of the amount of money circulating in the market, as increasing the volume of liquidity stimulates the total demand of society, and reducing the volume of liquidity reduces the volume of total demand, and activity can be stimulated. The economic system must push towards increasing overall demand, taking into account that the volume of liquidity does not increase to the appropriate amount and does not shift demand to imported products in foreign currencies, thus increasing the demand for them, which raises their prices, ending up with more inflation and a reduction in the value of the national currency. Hence, these policies can influence the increase or decrease in the volume of money in the market depending on the nature of the diagnosis of the economic situation at each stage of development. The most important of these policies are.
The role of the economic system and policies for determining the quality of money:
In it, monetary policy aims to distribute the volume of banking resources between different uses, within the total volume of liquidity designated for economic activity, and here monetary policy uses its specific tools such as:
1- Setting credit ceilings that banks are obligated not to exceed for certain sectors, such as requiring that the percentage of consumer loans not exceed a certain limit.
2- Setting a minimum limit for financing certain sectors, such as requiring that financing small and medium enterprises not be less than a certain percentage of the size of the bank’s deposits.
3- Providing low-interest financing initiatives for some sectors or activities with an understanding between the Central Bank and commercial banks about sharing the difference between the official interest rate and the lower rate directed to those sectors.
The development of money and the monetary role of the state:
1- Self-satisfaction: Since the beginning of creation, man has resorted to satisfying his needs by himself, or by cooperating with his family or tribe to achieve self-sufficiency.
2- Barter: With the development of life and the diversification of human needs, barter appeared as a method of exchange, but with the diversification of products and the development of production forces, difficulties appeared for barter, the most important of which are the difficulty of achieving compatibility between the two parties, the difficulty of achieving exchange ratios between goods, and the indivisibility of some goods.
The economic system that preserves for citizens the real value of their savings and income, enabling them to satisfy their various requirements.
Credit money: which can be withdrawn by checks and credit cards. Issuances of electronic money cards based on real currency have varied through different credit cards (Visa cards). This money has remained based on real currency deposited in banks issuing credit cards and insured by insurance companies. The checks issued by merchants are based on their ability to pay, and their issuer is exposed to bankruptcy and imprisonment in the event of non-payment, which ensures that it does not expand in a way that changes the balance of markets, even though the technology of creating credit money was the main cause of the global mortgage crisis. For the year 2008.
The role of the economic system and cryptocurrencies:
C ryptoCurrecnies virtual currencies, or digital currencies are all terms for one concept that expresses the money that has recently appeared on the Internet, based on the imagination of programmers, to be acceptable in the field of commercial exchange via Internet stores in the first place. Cryptocurrencies are codes that express the balance of registered purchasing power. In an electronic record without having a tangible physical form of metal, paper, plastic, or anything else. It differs from regular money in that it is issued away from government regulation, as it is not issued by regular banks, is not based on real money, and does not have a tangible physical form, but rather are merely codes on the Internet.
Cryptocurrencies are the latest stage in the development of money, and many attempts to issue them began during the 1990s, until an anonymous computer programmer calling himself Satoshi Nakamoto invented the virtual currency Bitcoin, which departs from regulation and government supervision, making it the first cryptocurrency to attract attention.
Bitcoin is a virtual, encrypted currency that represents the beginning of a new phase in the development of money. They appeared to suit financial and commercial movement over the Internet, without having a physical presence yet. They are codes that represent a standard of value and an intermediary in dealing over the Internet through electronic banks. They are not the only digital currency, but rather the most famous among more than ten thousand digital currencies. It has spread widely, such as (Litecoin, Ethereum, Ripple, Novacoin, Nemocoin, Bitcoin, Dogecoin, KatiCoin, and others), and about 50 new digital currencies are issued daily, all of which are not issued by government bodies and are outside the control of central banks.
