The concept of monetary policy credit policy is a set of interrelated measures taken by the Central Bank for the purpose of regulation business activity through planned interaction on the status of the loan and money circulation. PrEP is the most important direction economic policy state and is part of national policy, which must be “fitted” into the overall development goal national economy and contribute to achieving macroeconomic equilibrium

PrEP goals Goal government regulation economy - achieving macroeconomic equilibrium with optimal types of economic growth for a given country. Also, the goal of government regulation is the simultaneous achievement of goals in the “magic quadrangle”

"Magic Quadrangle" Stable level prices Equilibrium of foreign trade exchange High level employment Economic growth INDICATORS SELECTED TASKS INDICATORS SELECTED TASKS Price index Unemployment rate Natural unemployment Unemployment rate Foreign trade balance Positive foreign trade balance Growth real GDP Optimal rates of economic growth

Money supply for various purposes of monetary policy 0% M MS 1 MS 3 MS 2 M is the amount of money in circulation MS 1 is the money supply with a monetary policy aimed at maintaining a constant mass of money in circulation MS 2 is the money supply with flexible monetary policy MS 3 is monetary supply when the supply of money and the interest rate change

Mechanism of change required reserves an increase in the required reserve ratio leads to a reduction in the excess reserves of commercial banks, which they can use for lending operations; when the required reserve ratio decreases, there is a multiplier expansion in the volume of money supply

Interest rate policy of the Central Bank Regulation of loans from commercial banks from the Central Bank direction of the interest rate policy of the Central Bank Discount rate policy Accounting policy is to regulate the interest rate at which commercial banks borrow cash at the Central Bank.

Operations on open market The Central Bank's open market operations have a direct impact on the volume of free resources of commercial banks, which stimulates a reduction or expansion of the volume of credit investments in the economy, while simultaneously affecting the liquidity of banks.

“Cheap money” policy With this policy, the Central Bank: Buys government securities, transferring money to pay for them to the accounts of the population and to bank reserves. This provides expanded lending opportunities for commercial banks and increases the money supply. Lowers the interest rate, which allows commercial banks to borrow and expand their lending and subsequently also increases the money supply. Reduces the mandatory rate bank reservation, which leads to an increase in the money multiplier and expansion of lending opportunities for the economy.

Policy " expensive money» sells government securities, which causes a reduction in bank reserves. This leads to a reduction in lending opportunities by commercial banks and reduces the money supply. increases the discount interest rate, which leads to a cessation of borrowing from the Central Bank and an increase in interest rates on loans from commercial banks. Increases the required bank reserve ratio, which reduces the money multiplier and limits growth money supply.

“Protecting and ensuring the stability of the ruble is the main function of the Bank of Russia in accordance with the Constitution of the Russian Federation” (Draft EDKP of the Central Bank of the Russian Federation dated, p. 3). Source: according to the Central Bank of the Russian Federation. 2 RUB/USD exchange rate index (to the previous day) M. Ershov. RSPP. October 22, 2015

“The stability of the ruble is ensured by maintaining price stability (emphasis added by us – M.E.), which is the main goal of monetary policy” (Draft EDKP of the Central Bank of the Russian Federation dated, p. 3). Let us recall that from November 2014 to January 2015 alone, inflation almost doubled (from 8 to 15%). This jump was caused by a sharp depreciation of the ruble from 45 to almost 70 rubles/dollar. Inflation exceeding the target level of 5% is approximately “two-thirds due to the weakening of the exchange rate” (E.S. Nabiullina, Speech in State Duma RF) Sources: Central Bank of the Russian Federation, Rosstat. 3 Inflation and exchange rate (rub/dollar) M. Ershov. RSPP. October 22, 2015

“A sharp, almost two-fold drop in oil prices below 50 US dollars per barrel, the need to repay significant volumes external debt under the conditions of financial sanctions, led to a weakening of the ruble, an increase in its volatility and an increase in inflation and devaluation expectations.” (Draft EDKP of the Central Bank of the Russian Federation dated, p. 3). 4 *data for Canada includes oil and gas exports Sources: Bloomberg, IMF, national statistics Share of oil exports in GDP and devaluation national currencies(%)* Extent of impairment Russian ruble was more significant than that of other oil-exporting countries (even those whose share of oil exports in GDP is higher than in Russia) M. Ershov. RSPP. October 22, 2015

1. Restricted the provision of ruble liquidity. However, this also limits the access of funds to the rest of the ruble economy. 2. Raised interest rates. This also inhibits growth. Regulator for stabilization foreign exchange market: 5M. Ershov. RSPP. October 22, 2015

Growth of the Russian economy and Bank of Russia rates. GDP Rates of the Central Bank of the Russian Federation * at the end of the year. Sources: Rosstat, Central Bank of the Russian Federation. * 6M. Ershov. RSPP. October 22, 2015

For Russia: “To fulfill established by the Bank Russia's 2015 inflation target... The Bank of Russia should be prepared to further increase interest rates over the next year” IMF. Russian Federation– 2014 Article IV Consultation C. 3. For the US: “Premature rate hikes could trigger tightening financial conditions or loosening financial stability, which will hinder economic growth" 2015 Article IV Consultation with the United States of America Concluding Statement of the IMF Mission Recommendations of the IMF mission: M. Ershov. RSPP. October 22, 2015

Growth rate of M2 (y/y, %) A high level of rates combined with a constant decrease in liquidity, which is declining and will be even less taking into account the volume of repayment of external debt, creates problems for economic growth Sources: Central Bank of the Russian Federation. Growth rate of the monetary base (y/y, %) 8M. Ershov. RSPP. October 22, 2015

On the draft monetary policy of the Bank of Russia for 2016 and the period 2017 and 2018 M. Ershov

Slide 2

Monetary policy is a set of government measures in the field of money circulation and credit, aimed at regulating economic growth, curbing inflation, and ensuring stability monetary unit Ukraine and employment, equalization of the balance of payments (Law of Ukraine “On the NBU”).

Slide 3

Final goals: 1) the economic growth;

2) price stabilization;

The main instruments of penny-credit regulation and monetary policy are: 1. Change in the norm of bank reserves. 2. Change in the interest rate or official interest rate. Central Bank(oblikova or discount policy). 3. Open market operations.

Slide 5

Required reserve is the portion of the amount of deposits that commercial banks must hold as non-interest bearing deposits with the Central Bank. The percentage set by the Central Bank for commercial banks is called the discount rate. Open market operations are a way to control the money supply (in countries with

developed economy

). The securities market is associated with the sale of securities and short-term government bonds.

Slide 6

In monetary policy, two opposing courses are distinguished: 1) the policy of cheap money - increasing the money supply in order to expand aggregate demand and exit the recession; 2) the policy of dear money - reducing the money supply in conditions of demand inflation in order to curb it. Slide 7 Money - view financial assets, which can be used for transactions, the most

characteristic

money – its high liquidity, i.e. their ability to quickly and at minimal cost be exchanged for any other type of asset. Slide 8 To measure the money supply, monetary aggregates are used: Mo - cash; M1 = Mo + population deposits in

commercial banks

(on demand), funds in bank accounts of enterprises and citizens; M2 = M1 + time deposits in savings banks; M3 = M2 + certificates of deposit, government bonds, other bank and government securities, term loans in Eurodollars, etc. Slide 9 Demand for money is desire economic entities have a certain amount at your disposal means of payment, which firms and the public intend to hold at the moment. They distinguish: Nominal demand for money - changes following an increase in prices (Md). Real demand for money - calculated taking into account purchasing power

money (cash) Md/ P, where P- average level) - prices Monetary policy monetary policy public policy

regulation of national monetary credit system. Along with fiscal policy (fiscal policy), it is one of the two components of macroeconomic policy. Justification for the need for PrEP in, the problem of increasing the efficiency and competitiveness of the national economy, the problem of asymmetric information, the problem of competition and monopoly.

Stimulating monetary policy (cont.) 1. The Central Bank buys government. securities, reduces the required reserve ratio, reduces the discount rate 2. the monetary base (H) expands 3. excess reserves of commercial banks increase 4. the money supply increases 5. interest rate decreases 6. investment costs increase 7. aggregate demand increases 8. GDP increases 9. unemployment decreases

Containing monetary policy 1. The Central Bank sells government. securities, reduces the required reserve ratio, reduces the discount rate 2. monetary base (H) decreases 3. excess reserves of commercial banks decrease 4. money supply decreases 5. interest rate rises 6. investment spending decreases 7. aggregate demand falls 8. growth rate GDP decreases 9. inflation decreases

Monetary mechanism (cont.) – The Central Bank increases (or decreases) the monetary base using monetary policy instruments. –Money supply increases (decreases). –The interest rate decreases (increases). –Investment and aggregate demand increase (decrease). –GDP, national income, employment are growing (decreasing).

The advantages of monetary policy are a less significant administrative lag compared to the BFP, a more subtle, complex but flexible implementation mechanism, less dependence on politics and pressure groups, a positive effect of net exports, more effective in terms of macroeconomic stabilization in a developed market economy.

3. Deregulation financial institutions removal of some legislative restrictions on the activities of commercial banks and other financial institutions in order to increase competition in the financial market and improving the efficiency of the monetary system.

National Bank RoK, based on the analysis of external and internal factors, and also, in accordance with the tasks assigned to it, performs the main functions: 1. carrying out the state monetary policy in the Republic of Kazakhstan 2. issuing banknotes and coins on the territory of the Republic of Kazakhstan 3. performing the functions of a bank of banks 4. implementing the functions of a bank, financial advisor, agent of the Government of the Republic of Kazakhstan 5. organization of the functioning of payment systems 4. implementation currency regulation And exchange control in the Republic of Kazakhstan 5. management of gold and foreign exchange assets National. Bank of Kazakhstan 6. control and supervision of financial activities. organizations.