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Money and credit - Ivanov V.M.

12.4. Monetary Policy Aspects

In modern conditions, the importance of the sphere of international monetary and financial relations in the world economy and politics is increasing, which is naturally associated with the growing internationalization of production and circulation. This, in turn, determines the strengthening of state and interstate interference in the sphere of international monetary and financial relations. In this regard, the concept of monetary policy arises, which is expressed in the implementation by state and interstate bodies of a certain set of measures in the field of international monetary relations, with the aim of implementing the political and economic program policies adopted by governments.

In monetary policy, there are two aspects. One of them is the daily, operational regulation of the current foreign exchange situation, the activity of the foreign exchange and gold markets. The current monetary policy at the national level is implemented by the Ministry of Finance, the central bank, and foreign exchange control authorities, and at the international level it is coordinated by specialized interstate monetary organizations. The main forms of monetary policy are as follows:

• a discount policy , that is, maneuvering by the discount rate of the central bank, which, along with other means, should regulate the money supply, the volume of aggregate demand, the price level in the country, as well as the inflow from abroad and the outflow of short-term capital;

• the motto policy , carried out mainly in the form of foreign exchange intervention, which is the purchase and sale of foreign currency by state bodies, which affects the rate of the national currency;

• the sale or purchase of gold in order to have the desired effect on the gold market;

• change in the currency convertibility regime;

• tightening or easing currency restrictions;

• diversification of foreign exchange reserves, which allows to reduce losses associated with the relative depreciation of certain currencies and to provide the most favorable structure of reserve assets;

• obtaining or providing loans and subsidies used to compensate for arising gaps in international payments.

Another aspect of monetary policy is the implementation of long-term structural changes in the international monetary mechanism, which is realized by the participation of countries in interstate treaties and agreements.

The development of the world monetary system reflects the main stages of the development of a market economy and is directly determined by the course of the reproduction process, therefore periodically the principles of the world monetary system do not correspond to the real state of the market economic mechanism. In this regard, there is an objective need for a periodic change in the monetary system, associated with the changing needs of reproduction and exchange.

The relationship of currency relations and market reproduction is complex and contradictory. The state of the economy of a country, the development of world economic relations are greatly influenced by the in-depth processes of reproduction. At the same time, currency factors are an active lever in the reproduction process. Measures taken by individual countries to overcome the currency crisis often result in limited economic growth and even reduced production and domestic consumption. The volatility of exchange rates and the activities of international monopolies, transferring huge capital from country to country, are turning the currency system into a carrier of the "inflationary infection" (from the USA to Western Europe), disorganizing their monetary mechanism.

However, the relationship of the process of market reproduction and the state of the monetary system is not straightforward.

The currency system affects the state of the national economy through channels of balance of payments, exchange rates and capital flows. The measures taken by individual countries to regulate prices, devaluations and revaluations ultimately affect the growth rate of production, investment, employment, consumption, etc. The massive movement of short-term capital from country to country in the face of currency volatility will disorganize money circulation aggravates inflationary processes, adversely affects the course of capitalist reproduction. The influence of currency relations on the economic situation of individual countries is different and at the same time it is always the stronger, the more the country's economy depends on foreign markets.