Importance In the modern theory of interest there is a serious disadvantage: the interest rate is identified with such an economic category, as creditor's reward, i.e. an expected benefit of the lender from debt operations compared with the storage of money itself. Objectives I could identify that shortcoming by observing that the rate of change of the nominal value of money can assume different values, not just zero, as it occurs in the modern economy. Methods As a result, I was able to obtain the full interest rate formula. Interest rate is a combination of creditor's remuneration, and also the point of reference of creditor's remuneration. In the modern theory of interest, the last parameter is completely omitted, but, by default, it is deemed as equal to zero. In my study, I also found that in all modern theories of interest only the creditor's remuneration is erroneously analyzed, i.e. all mentioned theories of interest are, in fact, only theories of expected creditor's remuneration. Results The importance of the study for economic theory is that on this basis, I was able to rethink considerably the theory of interest. Additionally, I identified the direction of further research - the search for the optimal rate of change of the nominal value of money, which will enable to achieve the appropriate level of interest rates. Provided that the level of interest is one of the key economic parameters, the specified direction of further research may become the priority in economic theory. Conclusions and Relevance I came to a conclusion that the main drawback is the lack of a key parameter, i.e., the rate of change of nominal value of money. The special significance of this parameter is that it can be set at any level, which, in its turn, will enable to change the level of interest rate in economy to any level. These are the key findings of the paper.
Keywords: interest rate, loan interest, theory of interest, creditor remuneration
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