Monetization

Under monetization is understood in the wider economy the process by which a thing, an activity or an event, a monetary value is attributed. Among other things, the following phenomena may refer to:

• The attempt to demand money for services that were formerly provided for nothing,
• The assignment of monetary values ​​( willingness to pay ) for non- material assets,
• The purchase or redemption of debt securities by the central bank of the state which has issued the debt securities.

In the history of money one uses the term when it comes to varying degrees for a long time use of money.

Word origin

The literal meaning of the noun monetization can be drawn in " cash nexus ," " conversion into money." It is from the verb monetize ( " convert into money ", " to make money " ) was formed and consists of the following parts:

• From the tribe monetar, from Latin monētārius ( "belonging to coin ", " coin " ) to Latin Moneta ( " warning voice ", " Warnerin " ), an epithet of the Roman goddess Juno State; in the sanctuary of admonishing patroness of Rome ( Templum Iunonis Monetae ) was a mint, which Moneta later synonym for " coin " or " mint " was.
• From the ending- ize on late Latin- izāre originally a Greek ending in meaning to make, convert to,

Assignment of monetary values

Goal of monetization of non- tangible assets is often to perform a cost-benefit analysis. The method is applied to the example of the assessment of environmental damage in the planning of infrastructure.

The monetization can be done

• By calculating the damage costs ( how strong economic damage caused by the destruction of biotopes, such as when tourism is disrupted or the land value in the area decreases)
• By determining the replacement or mitigation costs ( what it would theoretically cost to produce a qualitatively similar biotope),
• By assessing the potential price (which concerned would pay for a receipt of the goods ) or
• By calculating the compensatory price ( which price keep Affected appropriate to waive the Good).

However, replacement or avoidance costs can be included only under very restrictive conditions in a well -propelled economic cost- benefit analysis, because behind these costs are not necessarily actual social payment or compensation Willingness. Payment or compensation Willingness can also be determined for goods that do not have a market price and also not related to prevailing market goods in a close relationship. Here social science survey methods are used.

Monetization of government debt

Finally, speaking of monetization or monetization of government debt if this debt bought by the central banks, " be turned into money " So, what can be considered in certain situations as a palliation of the situation and is criticized in part violently. If monetization permanently, they can state the factual bankruptcy of the state concerned conceal ( disguised sovereign default ). This is the case when the state of its obligations nominally served, but this can actually achieve only with devalued money. With the permanent monetizing the central bank conducts an expansionary monetary policy by buying government bonds with simultaneous distribution of seigniorage to the state budget. This approach differs in extreme cases, it barely to cover the state budget directly through the issuance of money by the central bank ( " printing money "). In fact, the money supply is inflated compared to the existing quantity of goods, that is, the citizens' money is being devalued by inflation.

In extreme cases of monetization with hyperinflation and veiled Staatsbanktott follows a monetary reform. Since placed in motion inflationary spiral for many citizens and the economy is generally associated with extreme cost, the influence of governments monetizing was in many states severely restricted to the central bank or banned.