About monetary liquidity

Greetings partner back with other content in the field of Economics, such as consumers, entrepreneurs, investors, such as ineffective money as a payment and investment instrument to acquire goods and services, assets, but the interesting thing is that ineffective money has its impact on an economy, as in the case of monetary liquidity, this liquidity refers to what the cash represents in the hands of the public, plus the bank deposits available for use by savings and checking accounts, apart we also have to know which is the monetary base is the sum of the monetary reserves plus the cash in the hands of the public. In other words, liquidity is also the way that cash circulates to be spent and produced, where its liquidity is the speed at which it is spent and loses its nominal value, since this occurs when there are high levels of inflation, achieving a direct loss of PIB.

An example for the case of the money supply, which is the opposite of monetary liquidity, when banks withdraw a certain amount of cash from circulation and banks also create money by accepting money and granting credits, that is why Bank reserves are part of the monetary base, but not of the money supply, thanks to this it allows us to observe the relevant economic variables, such as the purchasing power that the public carries out in the markets, with the effective demand that it has there. Second, with the level of consumption, apart from circulating money, it is all the money that circulates in a current way between people and companies, that is, they are active funds distributed throughout a nation, through large financial entities. They are responsible for transforming them into a material used to carry out economic activities, investment, reader friend there is to create awareness the value of our money is also the level of trust that we give like a cryptocurrency.

Already having clear as influential the cash in circulation in an economy, the printing and distribution of banknotes and coins, is designated particularly and especially to a Central Bank, one of the mechanisms to regulate the Economy are fiscal and monetary policy However, monetary policy is the discipline of economic policy that controls monetary factors to ensure price stability and economic growth and for the case where the economic model does not respond to the needs of society knowing the Scarcity Law. Money can also be used as a financial capital asset and which allows us to see how the asset turnover in a company is.