It is the main instrument of monetary policy. Basic instruments of monetary policy. Open market operations are

The main instruments of monetary policy include open market operations, changes in the discount rate (discount policy), changes in the norm required reserves.

The most actively used are open market operations carried out by the Central Bank with government securities. Thus, to prevent the emerging “overheating” of the economy, it is necessary to reduce the money supply. The central bank sells government bonds to the public and commercial banks at a tempting interest rate.

As a result of open market operations, part of the money is withdrawn from circulation, and the credit resources of banks are narrowed. There is a reduction in the volume of credit money, and therefore in the circulating money supply.

The central bank also manipulates the discount rate, which determines the fees it charges for loans it makes to commercial banks. The central bank may lower the discount rate in anticipation of increased interest in receiving loans from commercial banks, an increase in their lending activity and, ultimately, an increase in the money supply in the economy. The consequence will be a decrease in interest rates on loans from commercial banks, accompanied by an increase in investment activity in the country.

The discount rate of the Central Bank largely serves as a barometer of the ongoing monetary policy. A decrease in the discount rate means the beginning of an expansionary policy and entails a decrease in interest rates on interbank loans, and subsequently for the non-banking sector.

Also, changes in the required reserve ratio are used as a monetary policy tool. Increasing this rate reduces excess reserves, and thereby the ability of commercial banks to create credit money. When the required reserve ratio decreases, there is a multiplier expansion of the money supply.

These monetary policy measures allow for effective countercyclical regulation in countries with market economies. The government pursues a tight monetary policy, maintaining the money supply at a certain level, or a flexible monetary policy, maintaining the interest rate at a certain level.

The three main instruments of monetary policy are complemented by secondary, less important controls in the form of selective regulation. It is carried out through the stock exchange, consumer credit and exhortation.

Rampant speculation on stock exchange creates serious problems. Thus, a decline in stock prices destroys the fortunes of individuals and firms with a large number of shares. This forces them to cut consumer and investment spending and pushes the economy into recession. As a measure against excessive speculation, the stock exchange sets a margin, or minimum down payment percentage, that buyers of shares must make. The margin rate should increase when it is necessary to limit speculation (buying up shares), and decrease to revive a sluggish market.

Reducing consumer credit by introducing certain restrictions can be used as a point of anti-inflationary policy.

Exhortation means the Central Bank's use of policy statements to appeal to commercial banks not to allow excessive expansion or contraction of bank credit.

The credit system is a unified arrangement of elements of credit relations that is open to global economic relations, has a principle of ordering and a credit mechanism, capable of creating means of payment, moving them in time and space and, ultimately, influencing, firstly, economic growth and continuation poverty, and secondly, to maintain liquidity and equalize the difference between those who need borrowed funds and those who have them.

Common basis Necessities of the credit system are debt relations. The general reason for the need for a credit system is commodity-money relations. The credit mechanism, as the direct cause of the transformation of opportunity into necessity, is due to trust in the rationalization of the circulation of money using borrowed funds.

The credit process and management of society's cash flow is based on specific functions. These include:

Redistribution functions, the content of which is the accumulation of free monetary resources legally and individuals, converting them into vessel capital and, using the credit mechanism, transferring them to temporary disposal on a paid basis to various business entities and the population.

The function of creating credit circulation and saving circulation costs. In the lending process, various means of payment are created to serve cash and non-cash forms of circulation, which influence the structure of the money supply, payment turnover and the speed of circulation of money; real money is replaced by credit money.

The function of accelerating the concentration and centralization of capital. To increase the scale of production, the funds of individual economic entities are often insufficient, so scattered parts of the surplus value flock and accumulate in credit institutions. And having reached significant sizes, they allow you to expand production. The population's free funds are subject to concentration. Important role Credit also plays a role in the centralization of capital, as it contributes to the transformation of individual enterprises into a collective form of ownership, that is, the centralization of capital is carried out.

Control function. Its content boils down to monitoring the financial condition of the borrower in order to prevent untimely fulfillment of undertaken obligations. Therefore, throughout the entire lending process, control is exercised over compliance with all lending principles, allowing the lender to make a decision on issuing loans, tightening the lending regime, or early return loans

Thus, credit represents a change in the forms of capital and, on the one hand, accompanied by a temporary release cash for some economic entities, on the other hand, the formation of a need for these funds in others. These are two inseparable sides of a single process of capital circulation. And credit is any product used as an intermediary in the exchange of goods.

1.2 Instruments of the monetary system

The main instruments of monetary policy are:

1. Open market operations, i.e. transactions with government bonds (purchasing them from banks and the public leads to an increase in money in circulation; sales to banks and the public reduce the volume of money supply); A reliable type of financial asset. Securities are bought and sold on a special market where prices, as in the commodity market, are determined in accordance with supply and demand.

Operations with securities consist of the sale or purchase by the Central Bank of commercial banks of government securities - shares, bonds, treasury bills. This operation involves:

· state (through the Central Bank);

· commercial banks;

· population.

2. Changes in reserve norms of commercial banks (an increase in reserve norms leads to a decrease in the amount of money in circulation; a decrease in required reserves increases the amount of money);

3. Change in the discount rate (discount, or discount, policy), i.e. the interest rate at which central banks collect payments on loans to commercial banks (increasing the rate limits the supply of money; decreasing it reduces).

Initiator of purchase and sale securities The state always acts, and commercial banks and the population act as bidders in order to obtain economic benefits. Open market operations help to reduce or increase the money supply in circulation, which entails stimulating or restraining economic growth. To reduce money, the Central Bank imposes on commercial banks the purchase of government securities. When there is a recession in the economy and the amount of money in circulation needs to be increased, the Central Bank buys government securities. Thus, the monetary policy pursued by the Central Bank makes it possible to regulate monetary circulation in the country.

In addition, direct regulation by the state of the interest rate and the establishment of lending limits for commercial banks are applied.

Monetary policy is the main instrument of state regulation, according to economists of the monetarist school. This direction was formed as a kind of protest against Keynesianism, because monetarists consider money, which is practically not present in numerous models, as the main instrument of influence on the economy.

The theory of monetary regulation.

The theory of monetary regulation exists in two forms: monetarist and Keynesian concepts of ensuring equilibrium in the economy.

Keynesian theory denies the self-regulation of a market capitalist economy. Keynes believed that through state intervention in regulating the amount of money in circulation and interest rates, it is possible to overcome the cyclical nature of the development of imbalances in the economy of capitalism. The establishment of a low interest rate will ensure an increase in production, reduce to a minimum or eliminate unemployment, and create an incentive for investment.

Monetarists, on the contrary, believe that government regulation of the economy is useless. In their opinion, the main factor in the economy is the amount of money in circulation. Thus, by changing the money supply (increasing or decreasing) you can change the interest rate, thus affecting the volume of production. Monetary regulation is based on the money supply aggregate M1 (cash + deposits). It is established by what percentage this aggregate should increase in the coming period, the standard for aggregate M1 is calculated in order to determine the size of GDP, which increases at the same percentage.

The main directions of state regulation are:

1) The policy of the Central Bank towards financial institutions, especially banks;

2) Government tax policy at the central and local levels;

3) Government participation in mixed (semi-state) or state credit institutions;

18.2. Credit and monetary policy: goals, directions, tools.

Lecture

Credit and monetary policy- this is the policy pursued by the central bank of the country in the field of money circulation and lending.

Monetary policy, unlike fiscal policy, is an instrument of indirect influence on aggregate demand. It is carried out through the money market by regulating the money supply in the economy, and, consequently, expenses.

The main goal of monetary policy is to stabilize the economy, that is, to control the level of employment and inflation.

The instruments of monetary policy available to the Central Bank differ in the objects of influence (supply of money and demand for money), in the form (direct or administrative, and indirect or market), in the nature of the parameters established during regulation (quantitative and qualitative) , by duration of impact (short- and long-term).

The main monetary policy instruments most often used by the central bank are:

1. change in the minimum norm of required reserves;

2. discount rate or refinancing rate;

3. open market operations.

Changing the minimum required reserve ratio is one of the most traditional regulatory tools used by the central bank.

Required reserves perform two main functions:

a) insurance, since they do not allow a commercial bank to fully use all funds and thereby create a liquidity reserve;

b) regulating. Regulation using the required reserve ratio is that its increase limits the excess reserves of commercial banks, and, consequently, their lending capabilities. A decrease in the required reserve ratio increases the excess reserves of commercial banks and their ability to lend.

Discount rate- this is the interest rate at which the Central Bank provides loans to commercial banks. When receiving a loan, the size of excess reserves of commercial banks increases, which leads to an increase in the money supply in the economy. Conversely, an increase in the discount rate makes loans from the Central Bank unprofitable, which leads to a reduction in the excess reserves of commercial banks and the money supply in the economy.

Determining the size of the discount rate is one of the most important aspects of monetary policy, and changes in the discount rate are an indicator of changes in the field of monetary regulation. The size of the discount rate usually depends on the level of expected inflation and at the same time has a great influence on inflation. When the Central Bank intends to soften or tighten monetary policy, it reduces or increases the discount rate.

Central bank interest rates are not binding on commercial banks in their lending relationships with their clients and other banks. However, the level of the official discount rate is a guideline for commercial banks when conducting credit operations.

Open market operations – These are transactions for the purchase and sale of government securities to commercial banks and the public.

In order to contain the money supply in circulation, the central bank conducts operations to sell securities on the open market, which limits the excess reserves of commercial banks and their ability to create new money.

In order to increase the money supply in the economy, and therefore expenses, the central bank begins to buy securities from banks and the population at a rate favorable to them, which ultimately leads to an increase in the excess reserves of commercial banks and their lending capabilities.

The most effective among these instruments are open market operations, because:

They are carried out quickly and do not depend on administrative delays: if the central bank believes that it is necessary to change the monetary base or the volume of reserves, it only needs to give instructions to securities market dealers regarding the implementation of operations;

Easily reversible: in case of an error, you can quickly carry out a reverse transaction (in case of excessive sales, for example, you can quickly buy up part of the securities);

Flexible, they can be carried out in any volume.

Such advantages often give rise to calling open market operations the main instrument of monetary policy. However, their implementation requires a developed open market.

The instruments considered do not exhaust the arsenal of monetary regulation of the economy. In some countries, central banks resort to methods such as establishing credit restrictions, limiting the level of interest rates on deposits and loans from commercial banks, portfolio restrictions, etc.

The choice and combination of monetary instruments depends, first of all, on the tasks that the central bank solves at a particular stage of economic development.

Monetary policy, like fiscal policy, can be of two types: discretionary and non-discretionary (automatic).

Depending on the state of the economy, there are two main directions of discretionary monetary policy: stimulating (credit expansion or cheap money policy) and contractionary (credit restriction or dear money policy).

- Expansionary monetary policy is implemented during a recessionproduction and is aimed at activating it by increasing the money supply in the economy, and, consequently, expenses. To do this, the central bank must increase the excess reserves of commercial banks by reducing the reserve ratio, the discount rate and purchasing securities on the open market.

Cheap money policies expand the ability of commercial banks to lend, but do not guarantee that banks will actually issue loans and that the supply of money in the economy will increase. In addition, the money that the Central Bank sends into the economy by buying bonds from the population can be used by the population to repay existing loans, which will lead to a reduction in the money supply.

Contractionary monetary policy carried out during a period of economic growth or inflation and is aimed at limiting them by reducing the money supply in the economy, and, consequently, expenses. To do this, the central bank must reduce the excess reserves of commercial banks by increasing the reserve ratio, the discount rate and selling bonds on the open market.

Automatic monetary policy is following the monetary rule proposed by monetarists.

The monetary rule states that the growth rate of the money supply must match the growth rate of real GDP.

Moreover, the founder of monetarism M. Friedman put forward the idea of ​​​​adopting a monetary constitution, that is, the legislative establishment of a monetary rule, according to which the money supply should increase by 3-3.5% per year. The monetary rule was not adopted, but in some Western countries in the 1970s they began to apply the practice of monetary targeting - establishing lower and upper limits on the money supply for a certain period.

In monetary policy, there is a so-called goal dilemma, which means that it is impossible to simultaneously regulate the interest rate and the money supply. Monetarists choose the money supply as their goal, while Keynesians choose the interest rate. Monetarists proceed from the fundamental influence of the money supply on all macroeconomic indicators, and Keynesians see the instability of interest rates, causing investment instability, as the main cause of cyclical fluctuations.

In practice, the KDP is not 100% Keynesian or monetarist, but represents various combinations of the views of representatives of both schools.

Carrying out economic policy using a fiscal or monetary mechanism puts on the agenda the problem of their optimal combination and coordination. In Russia's economic policy, the practice of using both instruments is being developed.

Self-test questions:

What is monetary policy? What are its goals?

What are the directions of monetary policy?

Under what economic situation does the government pursue an expansionary monetary policy?

How is the problem of inflation solved by monetary policy measures?

What are the instruments of monetary policy?

Which of the monetary policy instruments used is the most effective and why?

What is the discount rate and open market operations?

If the discount rate is raised by the Central Bank, how will this affect the ability of a commercial bank to lend?

What open market operations should the Central Bank conduct if the economy experiences a decline in production?

Why is monetary policy a more flexible tool than fiscal policy?

Why is monetary policy called an instrument of indirect influence on aggregate demand?

What are the disadvantages of the “cheap money” policy?

Why is an expansionary monetary policy called a “cheap money” policy and a contractionary monetary policy called a “dear money” policy?

#Type=Exercise;QuestionToShow=10;CompletePercent=80;AttemptCount=3;TimeLimit=30TestBytopic 18.2.

Educational test (18.2. Credit and monetary policy: goals, directions, tools)

N- Economic stabilization

N+ All answers are correct

N- Commercial banks

N+ Private companies

N- Central Bank

N-Money supply

N-Money demand

N+ Tax rate

N- Discretionary

N+ Stimulating

N- Non-discretionary

N+ Containing

N- Production decline

N+ Inflation

N+ Economic recovery

N- Depression

N- Inflation

N+ Production decline

N- Economic recovery

N- Economic revival

N+ Reduction of reserve norm

N- Growth of the discount rate

N- Reduction of discount rate

N+ Increase in reserve norm

N- Increase in tax rates

N- I. Fischer

N- A. Marshall

N+ M. Friedman

#Type=Exam;QuestionToShow=10;CompletePercent=80;AttemptCount=1;TimeLimit=30TestBytopic 18.2.

Control test (18.2. Credit and monetary policy: goals, directions, tools)

S The main directions of monetary policy are:

N- Discretionary

N+ Stimulating

N- Non-discretionary

N+ Containing

S A contractionary monetary policy is carried out during the period:

N- Production decline

N+ Inflation

N+ Economic recovery

N- Depression

S Expansionary monetary policy is carried out during the period:

N- Inflation

N+ Production decline

N- Economic recovery

N- Economic revival

S Measures aimed at stimulating production through monetary policy:

N+ Reduction of reserve norm

N- Growth of the discount rate

N- Selling bonds on the open market

N- Reduction of tax rates

S Monetary policy measures taken in conditions of inflation:

N- Reduction of discount rate

N+ Increase in reserve norm

N+ Sale of bonds on the open market

N- Increase in tax rates

S The main objectives of monetary policy are:

N- Economic stabilization

N- Control over the level of employment

N- Inflation control

N+ all answers are correct

S The subjects of monetary policy do not include:

N- Commercial banks

N+ Private companies

N- Central Bank

S The object of monetary policy is not:

N-Money supply

N-Money demand

N+ Tax rate

S The founder of the theory of monetarism is:

N- I. Fischer

N- A. Marshall

N+ M. Friedman

S Which of the following dependencies reflects the Keynesian approach to monetary policy?

N- Change in interest rate - change in investment - change in GDP volume

N- Change in money supply – change in prices – change in GDP volume

N+ Change in money supply – change in interest rate – change in investment – ​​change in GDP volume

References:

Ivashkovsky S.N. Macroeconomics: Textbook. M.: Delo, 2000, chapter 7.

Stankovskaya I.K. Economic theory for business schools: Textbook. M.: Eksmo, 2005, ch. 18.

3) management of federal property 4) development and execution of the budget of the Russian Federation

inflation in the country, d) regulates the volume of money supply.??=)

1) consensus 2) authority 3) sovereignty 4) neutrality

A.3 In the state of L. there is a unified system of legislative, executive and judicial power, as well as a unified financial system and one Constitution. The state of Latvia is divided into states, which do not have independence. What is the form of the state-territorial structure of the state of L.? 1) confederation2) unitary state3) federal state4) monarchy
A.4 In the state of T., citizens do not have the right to make political choices, as well as political, ideological and economic pluralism in the country. Citizens cannot influence the government, which exercises complete control over all spheres of society. What political regime exists in the state of T.? 1) democratic2) authoritarian3) totalitarian4) tyrannical
A.5 Party “S.” defends the ideas of the rule of law, democracy, and human rights. This party is 1) conservative2) democratic3) anarchist4) fascist
A.6 Are the following judgments about state sovereignty correct? A. State sovereignty is not the main feature of the state.B. Unlimited state sovereignty really does not exist and cannot exist. 1) only A is true 2) only B is true 3) both judgments are correct 4) both judgments are incorrect
A.7 Are the following judgments about the referendum correct? A. A referendum is a form of direct democracy that allows citizens to make the final decision on the issue put to a vote.B. Issues relating to the most important problems political life.1) only A is true 2) only B is true3) both judgments are correct 4) both judgments are incorrect
A.8 Which of the following provisions does not relate to human rights? 1) the right to property2) the right to freedom of creativity 3) the right to have friends4) the right to honor and dignity
A.9 The purposes of criminal punishment include(s) 1) restoration of justice2) correction of the convicted person3) prevention of the commission of new crimes4) all of the above
A.10 The highest value of the Russian Federation according to the Constitution of the Russian Federation is (are) 1) man, his rights and freedoms2) land and other natural resources3) the principle of separation of powers4) citizenship of the Russian Federation
A.11 The main functions of the President of the Russian Federation include 1) appointment of the Prosecutor General of the Russian Federation 2) appointment of the Chairman of the Federation Council 3) appointment of the Chairman State Duma 4) appointment of the Chairman of the Government of the Russian Federation with the consent of the State Duma
A.12 Having been released after serving his sentence, citizen B. met a group of minors and decided to accustom them to the romance of a new life. According to his plan, minors entered the dacha of citizen P. and took away his jewelry, video recorder, and currency. This act of citizen B. is 1) an unfortunate accident2) a crime3) a misdemeanor4) has nothing to do with offenses
A.13 Are the following judgments about the rules of law correct? A. Rules of law determine generally binding boundaries of possible or proper behavior of people in society. B. Rules of law are ensured by the use of state coercion. 1) only A is true 2) only B is true 3) both judgments are correct 4) both judgments are incorrect

A.2 Indicate an action that is not a form of citizen participation in political life: 1) written appeal to the local administration 2) election of deputies to the legislative body 3) participation in the organization of a political party 4) participation in the activities of a trade union
A.3 In the state of Latvia there is a unified system of legislative, executive and judicial power, as well as a unified financial system and one Constitution. The state of Latvia is divided into states, which do not have independence. What is the form of the state-territorial structure of the state of L.? 1) confederation2) unitary state3) federal state4) monarchyA.4 In the state of T., citizens do not have the right to make political choices, as well as political, ideological and economic pluralism in the country. Citizens cannot influence the government, which exercises complete control over all spheres of society. What political regime exists in the state of T.? 1) democratic2) authoritarian3) totalitarian4) tyrannicalA.5 Party “S.” defends the ideas of the rule of law, democracy, and human rights. This party is 1) conservative2) democratic3) anarchist4) fascistA.6 Are the following judgments about state sovereignty correct? A. State sovereignty is not the main feature of the state.B. Unlimited state sovereignty really does not exist and cannot exist.1) only A is true 2) only B is true3) both judgments are correct 4) both judgments are incorrectA.7 Are the following judgments about the referendum correct? A. A referendum is a form of direct democracy that allows citizens to make the final decision on the issue put to a vote.B. Questions concerning the most important problems of political life are put to a national referendum.1) only A is true 2) only B is true3) both judgments are correct 4) both judgments are incorrectA.8 Which of the following provisions does not apply to human rights? 1) the right of property2) the right to freedom of creativity 3) the right to have friends4) the right to honor and dignity A.9 The goals of criminal punishment include (are) 1) restoration of justice2) correction of the convicted person3) prevention of the commission of new crimes4) all of the aboveA.10 The highest value The Russian Federation, according to the Constitution of the Russian Federation, is (are) 1) a person, his rights and freedoms2) land and other natural resources3) the principle of separation of powers4) citizenship of the Russian Federation.11 The main functions of the President of the Russian Federation include 1) the appointment of the Prosecutor General of the Russian Federation2) the appointment of the Chairman of the Federation Council3) appointment of the Chairman of the State Duma4) appointment of the Chairman of the Government of the Russian Federation with the consent of the State DumaA.12 Having been released after serving his sentence, citizen B. met a group of minors and decided to accustom them to the romance of a new life. According to his plan, minors entered the dacha of citizen P. and took away his jewelry, video recorder, and currency. This act of citizen B. is 1) an unfortunate accident 2) a crime 3) a misdemeanor 4) has nothing to do with offenses A.13 Are the following judgments about the rules of law correct? A. Rules of law determine generally binding boundaries of possible or proper behavior of people in society. B. Rules of law are ensured by the use of state coercion. 1) only A is true 2) only B is true 3) both judgments are correct 4) both judgments are incorrect

The general state of the economy largely depends on the state of the monetary sector. Therefore, state regulation of the monetary sphere can only be successful if the state, through the central bank, is able to influence the scale and nature of the operations of commercial banks.

In accordance with Art. 35 Federal Law “On the Central Bank of the Russian Federation” to the number basic tools And monetary policy methods Bank of Russia include:

1) interest rates on Bank of Russia operations;

2) standards for required reserves deposited with the Bank of Russia (reserve requirements);

3) open market operations;

4) refinancing of credit institutions;

5) currency interventions;

6) establishing guidelines for the growth of the money supply;

7) direct quantitative restrictions;

8) issue of bonds on its own behalf.

Let's briefly look at the main ones.

Let's first pay attention to discount rate policy (discount policy) or refinancing rate.

Refinancing rate- this is the percentage at which the central bank provides loans to financially stable commercial banks, acting as a lender of last resort.

Discount rate- the percentage (discount) at which the central bank takes into account bills of commercial banks, which is a type of lending secured by securities.

The discount rate (refinancing rate) is set by the central bank. Reducing it makes loans cheaper for commercial banks. When commercial banks receive credit, commercial bank reserves increase, causing a multiplier increase in the amount of money in circulation. And, conversely, an increase in the discount rate (refinancing rate) makes loans unprofitable. Moreover, some commercial banks that have borrowed reserves are trying to return them, because... they become very expensive. A reduction in bank reserves leads to a multiplier reduction in the money supply. Among the instruments of monetary policy, the policy of discount rates (refinancing rates) ranks second in importance after the central bank's open market policy (and in some countries is the main tool for managing the supply of money) and is usually carried out in combination with the activities of the central bank in the open market.

Let's move on to the characteristics of another monetary policy instrument of the Bank of Russia - changing the norm of required reserves of commercial banks.

The mechanism of action of this monetary policy instrument is in the next:

· If the central bank increases the required reserve ratio, this leads to a reduction in the free reserves of banks, which they can use for lending operations. Accordingly, this causes a multiplier decrease in the money supply;

· When the required reserve ratio decreases, there is a multiplier expansion of the money supply.

This instrument of monetary policy is, according to experts, the most powerful, but rather crude, since it affects the fundamentals of the entire banking system. Even a slight change in the required reserve ratio can cause significant changes in the volume of bank reserves and cause significant changes in the credit policy of commercial banks.

Besides economic methods, through which the central bank conducts monetary policy, it can be used in this area and administrative methods impact.

These include, for example, the use quantitative credit restrictions. This method of credit regulation is a quantitative limitation on the amount of loans issued.

In contrast to the regulatory methods discussed above, credit restrictions are a direct method of influencing the activities of banks. Also, credit restrictions lead to the fact that borrowing enterprises find themselves in different situations. Banks strive to issue loans primarily to their traditional clients, usually large enterprises. Small and medium-sized firms are the main victims of this policy. It should be noted that by achieving, through this policy, the containment of banking activity and moderate growth of the money supply, the state contributes to a decrease in business activity.

Also The central bank can set various standards (ratios), which commercial banks are obliged to maintain at the required level.

These include capital adequacy standards for a commercial bank, balance sheet liquidity standards, maximum risk per borrower standards, and some additional standards. The listed standards are mandatory for commercial banks.

Also the central bank can establish optional, so-called valuation standards, which commercial banks are recommended to maintain at the proper level. It is obvious that the use of administrative pressure by the central bank in relation to commercial banks should not be systematic, but should be used exclusively as forced measures.