Economy monetization

National economy metric

The Economy monetization is a metric of the national economy, reflecting its saturation with liquid assets. The level of monetization is determined both by the development of the national financial system and by the whole economy. The monetization of economy also determines the freedom of capital movement. Long time ago scientists recognized the important role played by the money supply. Nevertheless, only approximately 50 years ago did Milton Friedman convincingly prove that change in the money quantity might have a very serious effect on the GDP. The monetization is especially important in low- to middle-income countries in which it is substantially correlated with the per-capita GDP and real interest rates. This fact suggests that supporting an upward monetization trend can be an important policy objective for governments.

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