Экономические науки/ 1.Банки и банковская система.

Romanyuk K. K.

Vlasova I. A.

Donetsk state university of economics and trade

after Michael Tugan-Baranovsky, Ukraine

Nbu’s money-and-credit mechanism of regulatory influence on the economic development dynamics

Under the conditions of developed market relations, monetary policy is one of the most significant levers of the state's influence upon economic processes for the purpose of ensuring financial stability and stimulating industrial growth. At the time when the administrative levers of economic regulation are reduced to minimum, precisely the money-and-credit regulatory mechanism becomes of crucial importance in providing an active state's influence on the development of all economic processes.

The effectiveness of money-and-credit regulation critically depends on the adequate selection of such a strategy of monetary policy that would maximally correspond to the existing realities of the Ukrainian market transformation. This is determined by the direct influence of the pursued money-and-credit regulation on all spheres of business life and on the emerging regularities of economic development during the transition period.

Under conditions of transformational changes, the substantiation of the strategy of optimal monetary policy realization starts with establishing its goals, which in the final analysis brings to the problem of defining the role of the Central Bank in the economy. Such strategic goals are the following: stable economy growth, low inflation and, accordingly, price stability, low unemployment level and balance of the balance of payments.

It is obvious that the realization of the mentioned tasks cannot be fulfilled in a comparatively short term. Market transformation is usually realized within longer periods, the periodization of which in the final analysis is determined by those elements of reforms that dominate at a certain stage. From this standpoint, the whole transition period could be divided into two main stages, and individual strategic goals of money-and-credit regulation should be established for each of them.

The adequate approaches to realizing money-and-credit regulation are selected at different stages of the transition period according to the indicated strategic goal priorities of the economic policy. Thus, the monetary policy should be restrictive in nature at the first stage in order to combat inflationary processes evolving in result of price liberalization. At the second stage, as far as the necessary institutional and structural transitions are realized, the monetary policy should serve for the goals of economic growth and stimulate investment processes.

Generally speaking, the elements of restrictive monetary policy, - such as terminating the direct crediting of state budget deficit by the Central Bank; setting the interest rates on commercial bank credits higher than the inflation level; increasing the norms of required reserves; and limiting commercial bank refinancing, - lead to restricted growth or contraction of monetary base and, accordingly, produce an impact on the status of money supply and inflation rate.

At the same time, if in the classical monetarism prevails the assertion that the end goal of monetary policy is price stability, whereas stable growth of production and full employment are reached upon this automatically because of the market system's disposition to self-balancing, - such a postulate is not acceptable for a transition economy owing to the insufficient development of its self-regulating mechanisms. Furthermore, the monetarists' assertion that inflation is always and everywhere the result of the money supply growth outperforming the rate of real production growth cannot be considered valid in respect to the initial stages of economic reforms during the liberalization period, when structural disproportions in the economy have not yet been removed and prices have not yet become the instrument of reaching a balance either. Under such conditions, the measures directed at restricting money supply in circulation can provide only a temporary positive effect while retaining the inflationary potential.

Therefore, price stabilization is the required condition for overcoming production decline and reviving economic growth, since it becomes profitable to invest free available monetary resources in the real sector. Even though the successful financial stabilization, along with initial formation of the new market institutions and structural readjustment of economy, allow proceeding to the second stage of transition period - the stage of economic growth, -there is also the need to reorient money-and-credit regulation towards the corresponding strategic tasks - growth of production and reduction of unemployment.

In this context, the case in point could be primarily a shift in the basic tactical goal of money-and-credit regulation from the rigid policy of maintaining money supply on a certain level to a flexible policy of interest rate regulation. A moderate expansion in pursuing monetary policy - by means of liberalizing the Central Bank's terms of commercial bank crediting - enlarges the supply of money on the market, thus lowering the price for credit resources - the interest rates, which, owing to depreciation of capital, stimulates investment processes and leads to aggregate GDP growth. At the same time, the expansionist policy should have a rather moderate nature so that not to provoke a revival of inflationary processes. In the end, as the goal of this policy should be accepted the liberalization of credit relations to the extent that would facilitate access of the enterprises of real sector to the needed money resources, herefore, the specifics of organizing money-and-credit regulation during the transition period should match its stages and base on applying separate elements of the two different approaches to strategic monetary policy goal-setting: overcoming inflation and stimulating production growth.

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