Legal Encyclopedia. The letter P

MONETARY POLICY.

Monetary Policy - a set of measures taken by the state to regulate the national currency.

PV is considered in four aspects: 1) the material support of positive and negative balance of payments through changes in reserves and financial liabilities to other countries. This funding is either temporary or permanent. Restore balance may temporary financing, but this requires accurate prediction of the future course of balance that is very difficult to do. Only in countries backup center (or key) currency, which is, for example, the United States, possibly permanent financing balance of payments deficits. These countries (Centers reserve currency) are in a better position, as other states prefer keeping part of their funds on deposit in the currency of these countries. If the national currency

is a key international currency transactions, the global economic growth will continue to be accompanied by an increase in demand for a given currency as a means of international payments. Thus, the huge demand for the US dollar as the key currency of the United States made it possible to have a stable exchange rate. The title of the world's key currency, in 1980-1990-ies., Claimed the German mark and the Japanese yen, however, attempts by governments of these countries have not been successful. But the situation may change radically with the introduction in the late twentieth century. the single currency of the European Union (EU) -Euro. The fact that the euro could become a serious competitor to the US dollar as the time and was one of the arguments for unity monetary systems of countries outside the EU, and considerably pushed European monetary integration;

2) foreign exchange controls introduced to ensure that a fixed exchange rate, is the second aspect of the PV Currency control is considered to be less acceptable from a social point of view, among the options that require more serious adaptation measures than the funding gap. But, despite this, he Naib Lee is often used in practice.

Faced with the constant violation of the balance of payments, many countries with the help of the developed system of state control, which limits the ability of residents to purchase foreign goods and services, travel abroad or to provide loans to non-residents, resorted to support fixed exchange rates. The trade policy of export quotas is an analogue of exchange control. Indeed, the consequences of the establishment of import quotas on the import of foreign debt - non-residents (loans abroad), tourist services, etc., as well as imports of goods similar to the simple consequences for the economy of exchange controls;

3) The third aspect of monetary policy in a nutshell floating exchange rate, which is freely determined without official interference. The exchange rate will increase, and the state will not interfere in this process on one condition, if the demand for the currency increases. Similarly, the state will allow to restore the complete equilibrium exchange rate to fall if demand for the currency falls;

4) The fourth main aspect of the currency

policies - permanently fixed rates. To the economy corresponded to the established exchange rate, the state makes changes to it. If a country is constantly a shortage of external payments, and foreign legal entities and individuals are not more willing to own the currency of the country, the government can reduce the offer of money by depleting foreign exchange reserves, to conduct a deflationary policy, which is accompanied by a decrease in prices and incomes. Monetary contraction and holding a deflationary policy proposals will continue as long as demand for foreign currency and its proposal is balanced at a predetermined fixed parity. This approach is considered a classic remedy for the unsettled balance of payments.

While driving to the new parity of the national currency may be devalued daily by regulatory authorities in the pre-planned and the declared value ( "crawling peg"), and if there is a need to lower the rate by a large amount with a pre-announced intervals ( "crawling peg") or

previously undeclared value - every day (a "dirty float"). In parallel with these actions the government is taking measures to adapt to the new situation of the economy.

While fixed exchange rates, many countries have, as their reduced international payments surplus without tight macroeconomic policies. The main country with a deficit of international payments is the United Kingdom.