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ACADEMY
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№ 9/2017

№ 9/2017

Fìnansi Ukr. 2017 (9): 53–74

MONETARY POLICY

MISHCHENKO Volodymyr 1, NAUMENKOVA Svitlana 2, LON Ihor 3

1Institute for Economics and Forecasting of the NAS of Ukraine
OrcID ID : https://orcid.org/0000-0002-8565-2686
2Taras Shevchenko National University of Kyiv, Research ID : http://www.researcherid.com/rid/N-5604-2019
OrcID ID : https://orcid.org/000-0001-8582-6044
3Banking University


World trends in monetization of the economy


Economy monetization management, despite certain unification by the international financial organizations, has different peculiarities in different countries due to the level of economic development of the country, the rate of accumulation in the national economy, the system of internal prices, volumes and dynamics of the money in circulation, the structure of monetary aggregates used by the central bank, etc. The purpose of the article is to study the world experience in managing monetization of the economy in order to use best practices in the activities of the National Bank of Ukraine to increase the effectiveness of monetary policy. The article examines the world experience in managing the process of monetization of the economy and the regulation of monetary circulation in the pre-crisis and post-crisis periods on the example of the USA, the countries of the Eurozone, the United Kingdom, Kazakhstan, China, Poland and Japan. It is determined that in the practice of monetary regulation in the formation of monetary aggregates’ structure central banks use two approaches – liquid and transactional. However, the scientific literature has not formed the final view yet as which approach to prefer. Therefore, the list of monetary aggregates and their structure in different countries vary considerably. The volume of money supply depends on money market instruments used, and therefore, the levels of monetization in different countries may vary significantly. The practice shows that the level of monetization of the economy is its objective characteristic. So, it is impossible to artificially raise the level of monetization of the economy. The study shows that the main tendencies in the process of monetization of the economy in most countries of the world are a constant increase in the level of monetization of the national economy and a decrease in the rate of money rotation; reducing the money multiplier and slowing down the processes of credit and deposit issues in developed countries as a result of quantitative easing policy and reverse processes in emerging market countries as a result of increased inflationary processes; a decrease in the cash share in the structure of the monetary base and money supply; simplification of the structure of monetary aggregates and a gradual transition to the use of broad monetary aggregates; use of non-traditional monetary policy measures by central banks. It is grounded that the main directions of improving the management of economy monetization and the regulation of monetary circulation in Ukraine should be: improving the structure of monetary aggregates; reducing electronic money in the monetary aggregate M2; decreasing the cash share in the structure of the monetary base and money supply; the formation of a favorable credit climate and mitigation of bank lending conditions in order to stimulate economic development; optimization of the ratio between loans granted by banks and attracted deposits and stimulation of banks\' credit and deposit activity. It is proved that increasing the efficiency of the monetary policy of the National Bank of Ukraine in conditions of financial instability should be based on the easing of monetary constraints and the implementation of a moderately rigid monetary policy; using the free exchange rate regime; increasing the volume of international reserves; improving fiscal discipline and the level of servicing external debt; development and implementation of stabilization programs and stimulating measures for the development of the real sector of the economy; raising the level of capitalization of the banking system and improving regulatory and supervisory measures to enhance confidence in the banking system.

Keywords:level of monetization of the economy, monetary base, monetary aggregates, money supply, money multiplier, credit activity, economic growth

JEL: E42, E51, E58


Mishchenko V. . World trends in monetization of the economy / V. . Mishchenko, S. . NAUMENKOVA, I. . Lon // Фінанси України. - 2017. - № 9. - C. 53-74.

Article original in Ukrainian (pp. 53 - 74) DownloadDownloads :1846
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