home Banking Books Money and credit - Ivanov V.М.

Money and credit - Ivanov V.М.

12.4. Aspects of monetary policy

In modern conditions, the importance of the sphere of international currency-financial relations in the world economy and politics is growing, which is naturally connected 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 of a certain set of measures in the sphere of international monetary relations by state and interstate bodies aimed at implementing the political and economic policies adopted by the governments.

There are two aspects to the currency policy. One of them is the day-to-day, operational regulation of the current currency situation, the activity of the currency and gold markets. The current currency policy at the national level is carried out by the Ministry of Finance, the central bank, currency control bodies, and at the international level is coordinated by specialized interstate monetary and credit organizations. The main forms of monetary policy are as follows:

• Discount policy , that is, maneuvering with the central bank's discount rate, which along with other means should regulate the size of the money supply, the volume of aggregate demand, the level of prices in the country, as well as inflows from abroad and outflows of short-term capitals;

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

• sale or purchase of gold in order to make the desired impact on the gold market conditions;

• changing the regime of convertibility of currencies;

• tightening or easing of currency restrictions;

• Diversification of foreign exchange reserves, allowing to reduce losses associated with the relative depreciation of certain currencies, and provide the most beneficial structure of reserve assets;

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

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

The development of the world monetary system reflects the main stages of the development of the market economy and is directly determined by the progress 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 interconnection of currency relations and market reproduction is complex and contradictory. On the state of the economy of a particular country, the development of world economic relations is greatly influenced by the deep processes of reproduction. At the same time, currency factors are an active lever of the process of reproduction. Measures taken by individual countries to overcome the currency crisis often cause a restriction of economic growth and even a reduction in production and domestic consumption. The volatility of exchange rates and the activity of international monopolies that transfer huge amounts of capital from country to country transform the monetary system into a carrier of "inflationary contagion" (from the USA to Western Europe), disrupting their monetary mechanism.

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

The monetary system affects the state of the national economy through the channels of balance of payments, exchange rates and capital flows. The activities carried out by individual countries to regulate prices, devaluation and revaluation ultimately impact on the growth rates of production, the amount of investment, the level of employment, consumption, etc. Mass transfer from a country to a country of short-term capital in the conditions of currency instability disrupts the circulation of money , Exacerbates inflationary processes, adversely affects the course of capitalist reproduction. The influence of currency relations on the economic situation of individual countries is different and in this case it is always stronger the more the economy of a country depends on foreign markets.