Money-credit policy. Objectives, methods and instruments of monetary policy Methods of monetary policy
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Autonomous non-profit organization
"RUSSIAN ACADEMY OF ENTREPRENEURSHIP"
Faculty of Economics and Management
Specialty "Finance and Credit"
Specialization "Banking"
COURSE WORK
in the discipline "Organization of activities The Central Bank»
on the topic: "Monetary policy of the Central Bank: methods and tools"
Completed: student
correspondence department course 5,
group VD-08-013
Gilyazeva Enghe Anyasovna
Checked:
Candidate of Economic Sciences, Associate Professor E.I. Kuznetsova
Moscow, 2012
Introduction
1. Central Bank of the Russian Federation
2. Monetary policy of the Central Bank
2.1 Main objectives, goals and forms of monetary regulation
central bank monetary credit
Introduction
Monetary policy is a set of interrelated measures taken by the Central Bank in order to regulate aggregate demand through the planned impact on the state of credit and monetary circulation.
The central bank plays a key role and occupies a monopoly position not only in the sphere of issuing banknotes, but also in the sphere of the state's monetary policy, which is designed for short-term periods and is carried out by indirect methods. The objectives of the monetary policy are: regulation of the rates of economic growth; mitigation of cyclical fluctuations in the market for goods, capital and labor; curbing inflation; achieving a balance of payments.
Today, any country in the world, even the smallest, has its own central bank. It has 2 main tasks. The first task is that the central bank must ensure the stability of the functioning of the banking and financial systems. In particular, it should prevent the emergence of financial panic, which is very likely in a financial system with a wide range of intermediary institutions. In carrying out this task, the central bank plays the role of the lender of last resort.
Conducting monetary policy is the second main task. It is carried out mainly by instructing the Bureau of Open Market Operations to control the money supply so that inflation is kept low while avoiding significant unemployment.
The central bank is the central link of the monetary system of any state, it combines the features of an ordinary (commercial) banking institution and government department. The central bank is endowed with the right to monopoly issue of banknotes, regulate monetary circulation and exchange rate, storage of gold and foreign exchange reserves... The most important function of the Central Bank is to develop a common credit policy.
Monetary policy is a very effective tool for influencing the country's economy, which does not violate the sovereignty of most of the subjects of the business system. Although at the same time there is a limitation of the scope of their economic freedom (without this, any regulation is generally impossible economic activity), but the state influences the key decisions made by these subjects only indirectly.
Ideally, monetary policy is designed to ensure price stability, full employment, and economic growth — these are its ultimate and ultimate goals. However, in practice, with its help, it is necessary to solve more narrow tasks that meet the urgent needs of the country's economy.
We must not forget that monetary policy is an extremely powerful and therefore extremely dangerous tool. With its help it is possible to get out of the crisis, but the sad alternative is also not excluded - the aggravation of the negative trends in the economy. Only very balanced decisions taken at the highest level after a serious analysis of the situation, consideration of alternative ways of influencing the monetary policy on the economy of the state, will yield positive results. Without the right monetary policy, the economy cannot function effectively.
1. CENTRAL BANK OF THE RUSSIAN FEDERATION
1.1 Status and objectives of the Central Bank of Russia
The central bank of the country is the main link in the banking system of any state. It reflects the national interest, pursues a policy in the interests of the state, forms the main principles of all banking activities.
IN banking system The country's central bank plays a key role. The sustainability of development depends on its activities. national economy and its banking sector. By regulating the circulation of money in cash and non-cash forms, the Central Bank creates economic preconditions for the movement of goods and services from producer to consumer.
The independence of the Central Bank is relative within the framework of government structures, since its economic policy is determined by the priorities of the government's macroeconomic course and cannot be successful without coordinating its main elements with the government. The main goal of the Central Bank in the development of a market economy is to maintain monetary and foreign exchange stabilization for economic growth.
The Central Bank of the Russian Federation (Bank of Russia) was established on the basis of the law "On the Central Bank of the Russian Federation (Bank of Russia)" on December 2, 1990. Its main task in the context of a two-tier banking system was to maintain the stability of the functioning of the country's banking and monetary systems, and organize management processes operations of banks at the macroeconomic level, coordination of the activities of banks and other credit and financial institutions.
The historical development of the Russian banking system, the adopted legislative and regulatory acts are reflected in the Federal Law "On Amendments and Additions to the Law of the RSFSR" On the Central Bank of the Russian Federation (Bank of Russia) "dated April 12, 1995. the bank is still guided by it. This document, which defines the goals, functions, rights and obligations and the mechanism of the Central Bank's activities, contains 95 articles (instead of 39 in the law "On the Central Bank of the Russian Federation (Bank of Russia)" on December 2, 1990).
The main objectives of its activities are:
Protection and stability of the national currency - the ruble, including its purchasing power and exchange rate against foreign currencies;
Development and strengthening of the banking system of the Russian Federation;
Ensuring the efficient and uninterrupted functioning of the settlement system.
Profit making is not the goal of the Central Bank. In accordance with the Federal Law, this is a body of state leadership that performs the role of a "bank of banks" and is endowed with the rights and powers of monopoly issue of banknotes, regulation of money circulation, credit and banking activities, foreign exchange, storage gold and foreign exchange reserves... The central bank is not responsible for the obligations of the state, just as the state is not responsible for the monetary obligations of the bank, if they are not accepted on the basis of federal legislation.
1.2 Structure of the Central Bank of Russia
The Central Bank, within the limits of its powers provided by the Constitution of the Russian Federation and federal laws, is independent in its activities from the administrative and executive bodies of state power and is accountable to the highest legislative body of its state - the State Duma of the Federal Assembly of the Russian Federation.
The supreme body of the Central Bank is the Board of Directors, which determines the main directions of its activities and carries out its leadership and management. This is a collegial body, which includes the Chairman of the Bank of Russia and 12 members of the Board of Directors. The chairman is appointed by the State Duma for a period of 4 years by a majority vote of the total number of deputies. Council members work on a permanent basis at the Bank of Russia.
The Board of Directors in accordance with Art. 16 of the Law performs the following tasks:
develops and ensures the implementation of the main directions of the unified state monetary policy of the state in cooperation with the Government of the Russian Federation;
the Central Bank approves the annual report and submits it to the State Duma;
considers and approves the expense account of the Central Bank for the next year;
determines the structure of its divisions;
makes decisions regarding:
creation and liquidation of institutions and organizations of the Central Bank;
establishing mandatory standards for credit institutions;
the amount of reserve requirements;
changes in interest rates Central Bank;
determination of limits for operations in the open market;
participation in international organizations;
purchase and sale of real estate to ensure the activities of the Central Bank;
the application of direct quantitative restrictions;
issue and withdrawal of banknotes and coins from circulation, on the total volume of cash issue;
order of formation of reserves credit institutions;
submits proposals to the State Duma on changing the authorized capital of the Central Bank;
approves the order of his work;
appoints the chief auditor by the Central Bank;
approves its internal structure;
determines the conditions for the admission of foreign capital to the banking system of the Russian Federation.
To improve the monetary system and coordinate the work of the Central Bank, legislative and executive authorities, ministries, departments, economic structures and credit institutions, the National Banking Council was created under it, which includes two chairmen each from the chambers of the Federal Assembly of the Russian Federation and the Government of the Russian Federation, as well as the Minister of Finance of the Russian Federation and the Minister of Economy of the Russian Federation. The rest of its members are appointed by the State Duma on the proposal of the Chairman of the Central Bank. As an expert advisory body, it performs the following functions:
considers drafts of the main directions of the unified state monetary policy, foreign exchange regulation and foreign exchange control policy;
defines the concept of improvement and development of the banking system;
develops the basic principles of organizing the settlement system in the Russian Federation and regulating the activities of credit institutions;
carries out examination of draft laws and other regulations in the field of banking.
The law confirms the organization of the Central Bank according to the principle of a single centralized system with a vertical subordination scheme, including the central office, territorial offices, RCC, computer centers, educational and other institutions. National banks of the republics within the Russian Federation are territorial institutions of the Central Bank. As subdivisions of the Bank of Russia, they do not have the status of a legal entity. In addition, they cannot make decisions of a regulatory nature, as well as issue guarantees, sureties, promissory notes and other obligations.
The Central Bank of the Russian Federation has an authorized capital that serves as a security for its obligations, can create reserves and funds for various purposes at the expense of its profits, including an insurance fund formed by compulsory deductions from commercial banks on the terms and in the manner determined by the Bank's Charter. The rates of deductions of profit to these funds and the procedure for their spending are determined by the Board of Directors.
The Central Bank issues regulations that are binding on federal government bodies, subjects of the federation, bodies local government, as well as for all legal entities and individuals. They are not retroactive.
The reporting period is set from January 1 to December 31 of each year. The structure of the bank's balance sheet is determined by the Board of Directors. The annual report is submitted annually to the State Duma no later than May 15. The latter considers it until July 1 of the next year and sends its conclusion to the Government and the President of the Russian Federation. After that, it is published no later than July 15 of the next year. In addition, the central bank publishes monthly its balance sheet, data on money circulation, including the dynamics and structure of money supply, summarized data on its operations.
The Central Bank transfers to the federal budget 50% of the actually received balance sheet profit for the year after approval annual report bank by the Board of Directors, the remaining profit - in reserves and funds for various purposes. He and his institutions are exempt from all taxes, collection of duties and other payments on the territory of the Russian Federation.
To consider the annual report of the central bank, the State Duma, before the end of the reporting year, makes a decision on its audit and appoints an audit firm licensed to conduct banking audits on the territory of the Russian Federation.
Internal audit of the Central Bank is carried out by the office of the chief auditor, directly subordinate to the Chairman of the Central Bank.
1.3 Functions of the Central Bank of Russia
The Bank of Russia performs its functions in accordance with the Constitution of the Russian Federation and Federal Law "On the Central Bank of the Russian Federation (Bank of Russia)" and other federal laws. According to Article 75 of the Constitution of the Russian Federation, the main function of the Bank of Russia is to protect and ensure the stability of the ruble, and the issue of money is carried out exclusively by the Bank of Russia. In accordance with Article 4 of the Federal Law "On the Central Bank of the Russian Federation (Bank of Russia)", the Bank of Russia performs the following functions:
In cooperation with the Government of the Russian Federation, develops and implements a unified monetary policy;
Monopoly issues cash and organizes cash circulation;
Is the lender of last resort for credit institutions, organizes their refinancing system;
Establishes the rules for making settlements in the Russian Federation;
Establishes the rules for conducting banking operations;
Serves the accounts of budgets of all levels of the budgetary system of the Russian Federation, unless otherwise established by federal laws, through settlements on behalf of authorized executive bodies and state extra-budgetary funds, which are responsible for organizing the execution and execution of budgets;
Carries out effective management of the gold and foreign exchange reserves of the Bank of Russia;
Decides on state registration credit institutions, issues banking licenses to credit institutions, suspends and revokes them;
Supervises the activities of credit institutions and banking groups;
Registers the issue of securities by credit institutions in accordance with federal laws;
Carries out, independently or on behalf of the Government of the Russian Federation, all types of banking operations and other transactions necessary to perform the functions of the Bank of Russia;
Organizes and implements currency regulation and currency control in accordance with the legislation of the Russian Federation;
Determines the procedure for making settlements with international organizations, foreign states, as well as with legal entities and individuals;
Sets the rules accounting and reporting for the banking system of the Russian Federation;
Establishes and publishes the official exchange rates of foreign currencies in relation to the ruble;
Participates in the development of the forecast of the balance of payments of the Russian Federation and organizes the compilation of the balance of payments of the Russian Federation;
Establishes the procedure and conditions for the implementation by currency exchanges of activities for organizing transactions for the purchase and sale of foreign currency, issues, suspension and revocation of permits for currency exchanges to organize transactions for the purchase and sale of foreign currency. (The functions of issuing, suspending and revoking permits for currency exchanges to organize transactions for the purchase and sale of foreign currency will be performed by the Bank of Russia from the date of entry into force of the federal law on amending the Federal Law on Licensing certain types activity ");
Analyzes and predicts the state of the economy of the Russian Federation as a whole and by region, primarily monetary, monetary, financial and price relations, publishes relevant materials and statistical data;
Carries out other functions in accordance with federal laws.
1.4 Monetary policy instruments and methods
According to the law, the Central Bank develops and implements, in cooperation with the Government of the Russian Federation, a unified state monetary policy. At the same time, he sets the main direction of the economic policy of the Government of the Russian Federation and uses economic levers to regulate the money supply in circulation and direct it to the relevant spheres of the economy. The main instruments and methods of the Central Bank's monetary policy are:
interest rates on Bank of Russia operations;
Required reserve ratios deposited with the Bank of Russia (reserve requirements). Required reserve ratios cannot exceed 20% of a credit institution's liabilities and can be differentiated for different credit institutions. Required reserve ratios cannot be changed by more than five points at a time;
operations on the open market (purchase and sale by the Bank of Russia of treasury bills, government bonds and other government securities, short-term operations with securities with a later return transaction);
refinancing of banks (lending by the Bank of Russia to banks, including accounting and rediscounting of bills);
currency regulation (the purchase and sale of foreign currency by the Bank of Russia in the foreign exchange market to influence the ruble exchange rate and the total demand and supply of money);
setting benchmarks for money supply growth;
direct quantitative restrictions (setting limits on refinancing
banks and the conduct of certain banking operations by credit institutions).
The main types of monetary policy (policy of cheap and expensive money).
We have already mentioned the policy of expensive money (restrictive) and the policy of cheap money (expansionist). In this section, I will consider what it is and what is the mechanism for implementing one or another.
Let the economy face unemployment and falling prices. Therefore, it is necessary to increase the money supply. To achieve this goal, a cheap money policy is applied, which consists of the following measures.
First, the central bank must purchase securities on the open market from the public and from commercial banks. Secondly, it is necessary to lower the discount rate and, thirdly, there is a need for standards for reserve deductions. As a result of the measures taken, the excess reserves of the system of commercial banks will increase. Since excess reserves are the basis for increasing the money supply by commercial banks through lending, it can be expected that the money supply in the country will increase. An increase in the money supply will lower the interest rate, causing an increase in investment and an increase in the equilibrium net national product. From the above, we can conclude that the goal of this policy is to make credit cheap and easily available in order to increase the volume of total spending and employment.
In a situation where the economy is faced with excessive spending, which gives rise to inflationary processes, the central bank should try to lower overall spending by limiting or reducing the supply of money. To solve this problem, it is necessary to lower the reserves of commercial banks. This is done in the following way. The central bank must sell government bonds on the open market in order to trim the reserves of commercial banks. Then it is necessary to increase the reserve rate, which automatically frees commercial banks from excess reserves. The third measure is to raise the discount rate to reduce the interest of commercial banks to increase their reserves by borrowing from the central bank. The above system of measures is called the policy of expensive money. As a result, banks find that their reserves are too small to meet the statutory reserve requirement, that is, their current account is too large in relation to their reserves. Therefore, in order to meet the reserve requirement for insufficient reserves, banks should maintain their checking accounts by refraining from issuing new loans after old ones have been paid off. As a consequence, the money supply will contract, causing an increase in the rate of interest, and an increase in the interest rate will reduce investment, reducing total costs and limiting inflation. The goal of the policy is to restrict the supply of money, that is, to reduce the availability of credit and increase its costs in order to lower costs and contain inflationary pressures.
It should be noted the strengths and weaknesses of the use of methods of monetary regulation when influencing the economy of the country as a whole. The following arguments can be made in favor of monetary policy. First, speed and flexibility compared to fiscal policy. It is known that the application fiscal policy may be delayed for a long time due to discussions in the legislature. The situation is different with monetary policy... The central bank and other monetary authorities can make decisions on the purchase and sale of securities on a daily basis and thereby influence the money supply and interest rate. The second important aspect is related to the fact that in developed countries this policy is isolated from political pressure, in addition, it is inherently softer than fiscal policy and operates more subtly and therefore seems more acceptable politically.
But there are also a number of negative aspects. An expensive money policy, if carried out vigorously enough, can indeed reduce the reserves of commercial banks to the point where banks are forced to limit their lending. And this means limiting the supply of money. A cheap money policy can provide commercial banks with the necessary reserves, that is, the ability to lend, but it cannot guarantee that banks will actually lend and the supply of money will increase. In such a situation, the actions of this policy will be ineffective. This phenomenon is called cyclical asymmetry, and it can be a serious obstacle to monetary regulation during a depression. In more normal periods, an increase in excess reserves leads to the provision of additional loans and, thus, to an increase in the money supply.
Another negative factor noted by some neo-Keynesians is as follows. The velocity of circulation of money tends to change in the direction opposite to the supply of money, thereby inhibiting or eliminating changes in the supply of money caused by politics, that is, when the supply of money is limited, the velocity of circulation of money tends to increase. Conversely, when policy measures are taken to increase the money supply during a downturn, it is very likely that the velocity of money will fall.
In other words, when money is cheap, the velocity of circulation of money decreases; in the reverse course of events, the policy of expensive money causes an increase in the velocity of circulation. And we know that total spending can be viewed as the money supply multiplied by the velocity of money. And, consequently, under the policy of cheap money, as mentioned above, the velocity of circulation of the money supply decreases, and, therefore, the total expenditures are reduced, which contradicts the goals of the policy. A similar phenomenon occurs with the policy of expensive money.
2. MONETARY POLICY OF THE CENTRAL BANK
2.1 Main objectives, goals, and forms of monetary regulation
Monetary regulation carried out by the Central Bank is one of the elements of the state's economic policy and is a set of measures aimed at changing the money supply in circulation, the volume of loans, the level of interest rates and other indicators of money circulation and the loan capital market. It aims to achieve sustainable economic growth, low level inflation and unemployment. The laws on Central Banks emphasize their responsibility for the stability of monetary circulation and the exchange rate of the national currency.
Implementing monetary policy, the Central Bank, influencing the lending activities of commercial banks and directing regulation to expand or reduce lending to the economy, achieves stable development of the domestic economy, strengthening monetary circulation, and balancing internal economic processes. Thus, the impact on credit allows you to achieve deeper strategic objectives for the development of the entire economy as a whole.
Monetary policy is based on the theory of money, which studies, in particular, the process of the impact of money and monetary policy on the state of the economy as a whole. In modern conditions, states with market models of the economy use one of two concepts of monetary policy:
politics credit expansion, or "cheap" money;
the policy of credit restriction, or "expensive" money.
Credit expansion of the Central Bank increases the resources of commercial banks, which, as a result of issued loans, increase the total mass of money in circulation. Credit restriction entails limiting the ability of commercial banks to issue loans and thereby saturate the economy with money.
The development of monetary policy by the Bank of Russia is carried out in accordance with Art. 45 of the Federal Law “On the Central Bank of the Russian Federation (Bank of Russia)”. The Bank of Russia annually, no later than August 26, submits to the State Duma a draft of the main directions of the unified state monetary policy for the coming year and no later than December 1 - the main directions of the unified state monetary policy for the coming year. The draft is presented to the President and the Government of Russia in advance.
The State Duma considers the main directions of the unified state monetary policy for the coming year and makes an appropriate decision no later than the adoption by the State Duma of the federal law on the federal budget for the coming year. This achieves the unity of the objectives of the monetary and financial policy.
Monetary policy is implemented using certain methods and instruments.
2.2 Methods of monetary policy
Monetary policy methods are a set of techniques and operations through which the subjects of monetary policy - the Central Bank as government body monetary regulation and commercial banks as "conductors" of monetary policy - they influence objects (demand for money and supply of money) to achieve their goals. The methods of conducting day-to-day monetary policy are also referred to as tactical monetary policy objectives.
The modern system of monetary policy methods is as diverse as monetary policy itself. The classification of methods of monetary policy can be carried out according to various criteria.
Direct and indirect regulation of the monetary sphere
Within the framework of monetary policy, methods of direct and indirect regulation of the monetary sphere are applied. Direct methods have the character of administrative measures in the form of various directives of the Central Bank concerning the volume of money supply and prices in the financial market. The implementation of these measures gives the fastest effect from the point of vision central bank control over the price or maximum volume of deposits and loans, especially in an economic crisis. However, over time, direct methods of influence in the case of "unfavorable" from the point vision economic agents influencing their activities can cause overflow, outflow financial resources to the "shadow economy" or abroad.
Indirect methods of regulating the monetary sphere affect the motivation of the behavior of business entities using market mechanisms. Naturally, the efficiency of using indirect methods of regulation is closely related to the degree of development of the money market. IN transition economies, especially at the first stages of transformations, both direct and indirect tools are used with the gradual replacement of the former by the latter.
General and selective methods of monetary regulation
In addition to dividing the methods of monetary regulation into direct and indirect, general and selective methods of implementing the monetary policy of the Central Bank are also distinguished.
General methods are predominantly indirect, affecting the money market as a whole.
Selective methods regulate specific types of credit and are mainly prescriptive in nature. Their purpose is associated with solving particular problems, such as, for example, limiting the issuance of loans by some banks or limiting the issuance of certain types of loans, refinancing on preferential terms of certain commercial banks, etc. Using selective methods, the Central Bank retains the functions of centralized redistribution of credit resources. Such functions are unusual for the central banks of countries with market economies. The use of selective methods of influence on the activities of commercial banks in the practice of central banks is typical for economic policy pursued at the stage of a cyclical recession, in conditions of a sharp violation of the proportions of reproduction.
At the same time, direct methods of monetary policy are rough methods of external influence on the functioning of the subjects of the money market, affect the basis of their economic activity... They can contradict the microeconomic interests of credit institutions, lead to inefficient allocation of credit resources, to restrictions on interbank competition, and difficulties in the emergence of new financially stable institutions in the banking market.
Thus, the negative consequences of direct methods of monetary policy often prevail over the advantage of their application in market conditions, since they distort the market mechanism.
Therefore, the central banks of countries with developed market economies have practically abandoned direct methods of monetary policy and resort to them in exceptional cases when it is necessary to take "quick response measures", for example, in the context of a sharp development of an economic crisis.
The practice of forming a market economy and its development have proven the low efficiency of direct methods of monetary policy. As a result, there is a widespread displacement of direct methods of monetary policy by indirect ones.
The choice of the type of monetary policy pursued, and, accordingly, the set of instruments for regulating the activities of commercial banks, the Central Bank carries out on the basis of the state of the economic situation in each specific case. The main directions of monetary policy developed on the basis of this choice are approved by the legislative body. In this case, it is necessary to take into account the time lag between the implementation of a particular measure of monetary regulation and the manifestation of the effect of its implementation. The effectiveness of the application of various types of monetary policy is determined by the extent to which the destabilization of monetary circulation is caused by “purely” monetary rather than general economic and political factors.
2.3 Monetary policy instruments
The influence of the subjects of monetary policy on its objects is carried out using a set of specific instruments. Monetary policy instruments are understood as a means, a method of influence of the Central Bank as a body of monetary regulation on the objects of monetary policy.
The Federal Law "On the Central Bank of the Russian Federation" (Article 35) defines the main instruments of monetary policy:
1. Operations on the open market.
2. Norms of required reserves deposited with the Central Bank (reserve requirements).
3. Interest rates on operations of the Central Bank.
4. Refinancing of credit institutions.
5. Foreign exchange interventions.
6. Establishing benchmarks for money supply growth.
7. Direct quantitative restrictions.
8. Issue of bonds in its own name.
Let us consider in more detail the instruments of the monetary policy of the Russian Federation.
Open market operations
Economic measures to regulate monetary policy also include operations of the Central Bank in the open market with securities. Open market policy refers to the sale and purchase of government securities by the Central Bank in order to influence the money market. The main task of the open market policy is to regulate the supply and demand for securities, to cause a corresponding reaction from commercial banks.
Open market policies are a quick and flexible tool. When selling and buying securities, the Central Bank tries by offering favorable interest to influence the volume of liquid funds of commercial banks and thereby to manage their credit issue. By buying securities on the open market, he increases the reserves of commercial banks and contributes to the growth of money supply. This is used especially effectively during a crisis. During a period of high market conditions, the Central Bank offers commercial banks to buy securities in order to reduce them credit opportunities in relation to the economy and to the population.
The Central Bank can pursue such a policy in two ways. First, he can determine the level of purchase and sale and the interest rates at which banks can buy securities from him. The selling rate of securities is set differentially, depending on their term. In this case, the impact on the formation of market rates will be indirect. Second, the Central Bank can set the interest rates at which it is willing to buy securities.
The success of an open market policy depends on many factors. Commercial banks purchase securities from the Central Bank only when there is a small demand for loans from entrepreneurs and the population, and also when the Central Bank offers open market securities on terms more favorable for commercial banks than the terms of providing loans from commercial banks to entrepreneurs and the population.
When it is necessary to support the liquidity of commercial banks, and, accordingly, their lending activity, the Central Bank acts as a buyer in the open market. In this case, repurchase agreements are widely used, according to which the Central Bank undertakes to buy securities from commercial banks on the condition that the latter, after a certain period of time, carry out a reverse transaction, i.e. redemption of securities, but already at a discount - the so-called reverse transactions (REPO transactions). This discount can be fixed or floating between two boundaries. Reverse operations on the open market are characterized by a softer impact on the money market and therefore are a more flexible method of regulation.
Bank refinancing
Initially, the policy of refinancing commercial banks by the Central Bank was used exclusively to influence the state of monetary circulation. As the market relations refinancing has become increasingly used as a tool for providing financial assistance to commercial banks. The central bank thus becomes the lender of last resort and acts as a “bank of banks”. Refinancing loans will allow them to minimize the stock of liquid funds as a result of using borrowings from the Central Bank. This is especially evident now in the banking system of Russia, where the main instrument for providing additional liquidity is the refinancing of banks. According to the decision of the Board of Directors of the Central Bank, during the restructuring of the banking system, banks will be provided loans to maintain liquidity, increase financial stability, as well as stabilization loans for up to one year within the guidelines of monetary policy. As the situation in the banking sector normalizes, it is planned to stop providing these loans.
Credit refinancing is distinguished by:
The form of security - discount and pawn loans;
Terms of use - short-term (for 1 or several days) and medium-term (up to 6 months);
Delivery methods - direct loans and loans sold by the Central Bank through auctions;
Target nature - adjusting and seasonal loans.
Interest rate policy or regulation of the official interest rate
The traditional function of the Central Bank is to provide loans to commercial banks. The rate of interest at which these loans are originated is called the discount rate or refinancing rate. By changing this rate, the Central Bank can influence the reserves of banks, expanding or reducing their ability to provide loans to the population or enterprises. Depending on the value of the discount interest, a system of interest rates of commercial banks is built, the cost of credit increases or decreases in general, and thus conditions for limiting or expanding the money supply in circulation are created. Commercial banks independently determine the size of the premium to the official refinancing rate of the Central Bank, depending on financial condition borrower, profitability of work, prospects and priority of the loaned object.
The central bank regulates the level of interest rates in two ways:
By fixing rates for the provision of loans to commercial banks, which serve as a specific benchmark for market rates;
Through control over the rates of credit institutions.
In the first case, the Central Bank, setting the official discount rate, determines the cost of attracting resources by banks: the higher the discount rate, the higher the cost of refinancing banking operations. In the second case, only the cost of certain types of credit or the operation of only certain banks is subject to regulation.
The interest rate policy of the Central Bank in the post-crisis period is to regulate interest rates on all operations of the bank in the money market in order to maintain the required level of liquidity in the banking system.
The central bank does not directly affect the interest rates on transactions of commercial banks with their clients. These interest rates are determined by themselves and depend on the amount of money in circulation and the effectiveness of the intermediary activities of the banking system and financial markets.
During 1991-2008. The Central Bank has repeatedly changed the refinancing rate depending on the conditions in the money market. In 2008, the Central Bank raised the refinancing rate from 10 to 12% as of November 12, 2008, and from December 1, 2008, the rate will be introduced at 13%.
Rediscounting of bills has long been one of the main methods of monetary policy of central banks in Western Europe. Central Banks made certain requirements to the bill of exchange being discounted, the main one of which was the reliability of the debt obligation.
The promissory notes are rediscounted at the discount rate. This rate is also called the official discount rate, usually it differs from the loan (refinancing) rate by a small amount downward. The Central Bank buys the debt at a lower price than commercial Bank.
The scheme of rediscounting of bills of the Central Bank is simple: a commercial bank, which receives the status of an accounting bank from one of the divisions of the Central Bank, finances an exporting organization against receipt of a promissory note issued in the name of an accounting bank. The accounting bank, in turn, rediscounts (that is, sells before maturity) this promissory note to the Central Bank at a predetermined interest rate.
Discount (discount loans) are loans provided by the Central Bank to commercial banks against bills of exchange before their expiration. According to the laws in force in different countries, the Central Bank is authorized to buy from banks and sell them commercial and treasury bills based on the established discount rate. An important tool for influencing the state of monetary circulation is the use of quantitative restrictions on the accounting loans available to banks by setting limits on the total amount of re-accounted borrowings. The limit applies to all bills rediscounted by the Central Bank and can be set individually for individual institutions or in the form of restrictions on the amount of loans provided to one borrower. Depending on the situation in the monetary sphere, the limits of rediscounting are either reduced or increased. By increasing the level of the limit, the Central Bank seeks to equalize the financial losses resulting from the change market conditions, or to increase the credit resources of banks within the framework of the envisaged increase in the money supply. Therefore, the increase in the level of the credit limit does not mean that the Central Bank is pursuing an expansionary monetary policy, but is viewed as a mechanism for regulating bank liquidity.
Lombard loans provided by the commercial Central Bank are interest-bearing loans secured by securities. Loan sizes are set depending on the type of collateral. The value of the collateral must exceed the amount of the lombard loan. Lombard loans are provided only for short-term difficulties experienced by credit institutions. The interest rate of a pawn loan usually exceeds the discount rate by 1-3%.
Central Bank refinancing loans are divided into short-term - overnight loans, intraday loans - and medium-term loans - from 1-2 months to 6 months or up to 1 year.
Mandatory reserves - one of the main instruments for implementing the monetary policy of the Central Bank - are a mechanism for regulating the overall liquidity of the banking system. Minimum reserves are a mandatory norm for commercial banks' deposits with the Central Bank, established by law in order to limit the lending opportunities of credit institutions and maintain the amount of money in circulation at a certain level. The obligation to fulfill reserve requirements arises from the moment of obtaining a license from the Central Bank for the right to carry out relevant banking operations and is a necessary condition for their implementation. The credit institution is responsible for observing the procedure for depositing required reserves. The procedure for depositing required reserves is carried out on the basis of the "Regulations on the required reserves of credit institutions deposited with the Central Bank of the Russian Federation", developed by the Central Bank in 1996. The amount of required reserves as a percentage of the liabilities of a credit institution, as well as the procedure for depositing them with the Central Bank are established By the Board of Directors of the Central Bank. Required reserve ratios may not exceed 20% of a credit institution's liabilities. They cannot be changed by more than five points at a time. If the credit institution fails to meet the requirements, the amount of underpayment to the required reserves is collected, as well as fines for violation of the reservation procedure in the established amount, but not more than double the refinancing rate.
The obligation to fulfill the reserve requirements arises from the moment of obtaining the license. After the revocation of the banking license from the credit institution, the funds of the required reserves are transferred to the account of the liquidation commission or the bankruptcy commissioner and used in accordance with the procedure established by federal laws and issued in accordance with them. regulations The Central Bank.
The Central Bank forms the reserve fund of the RF credit system from the required reserves, the funds of which are formed by reserving in it a certain share of funds from third-party enterprises and organizations attracted by commercial banks, these funds are used as credit resources. In the overwhelming part, these include temporarily free funds on settlement, current accounts, as well as funds made in deposits and deposits by enterprises, organizations and citizens. Loans from other banks are not included in these attracted funds.
The size of reserves - a part of bank assets that any commercial bank is obliged to keep in the accounts of the Central Bank, largely determines the credit capabilities of a commercial bank. He can issue loans and thereby expand the money supply only if he has free reserves in excess of the minimum rate established by law. By increasing or decreasing the official reserve requirements, the Central Bank can regulate the lending activity of banks and thereby control the money supply.
The regulation of minimum reserve requirements has a dual purpose:
firstly, it is designed to ensure a constant level of liquidity in commercial banks.
secondly, it is an important instrument of the Central Bank for regulating the money supply and the creditworthiness of commercial banks.
The Mandatory Reserve Fund was created in order, if necessary, to ensure that commercial banks can timely fulfill their obligations to clients to return previously attracted funds, since part of these funds are deposited and are not used by banks as credit resources.
The central bank, by changing the required reserve ratio, influences the credit policy of commercial banks and the state of the money supply in circulation. Thus, a decrease in the required reserve ratio allows commercial banks to use the credit resources they have formed to a fuller extent, that is, to increase credit investments. However, it should be borne in mind that such a policy leads to an increase in the money supply in circulation and, in conditions of a decline in production, causes inflationary processes.
If interest rates on required reserves are high, then the Central Bank limits the amount of money at the disposal of commercial banks. This reduces the creditworthiness of the latter and increases the interest on the loans they issue. Therefore, the reserved part of such deposits should exceed the amount of deposits with long storage periods.
The level of development of the banking system and the state of the economy as a whole also affect the size of the required reserve ratio. In countries with a developed banking system operating in a stable economy, the required reserves are set for a relatively long time.
Currency regulation
The need to regulate the exchange rate is due to the negative consequences of its sharp and unpredictable fluctuations. Maintaining the stability of the national currency rate is of great importance for ensuring the stability of prices and monetary circulation. A depreciation of the national currency leads to an increase in prices in the domestic market, i.e., to a decrease in the purchasing power of the national currency. In conditions of a constant depreciation of the national currency, prices for goods in the domestic market are guided not so much by production costs as by the fall in the national currency. The depreciation becomes a factor of inflation.
The Central Bank regulates the exchange rate by:
Carrying out monetary policy;
Foreign exchange intervention;
Use of state reserves of international means of payment or foreign loans.
In practice, two main forms of monetary policy are usually used: discount and motto.
Discount (accounting) policy is carried out not only with the aim of changing the conditions of refinancing of domestic commercial banks, but sometimes aimed at regulating the exchange rate and balance of payments.
The central bank, buying or selling foreign currencies (mottos), acts in the right direction on the change in the exchange rate of the national monetary unit - this is the motto policy. Such operations are called “ foreign exchange intervention". By purchasing the national currency at the expense of official gold and foreign exchange reserves (or through swap agreements), it increases demand, and, consequently, its rate. On the contrary, the sale by the Central Bank of large parties of the national currency leads to a decrease in its rate. The influence of the foreign exchange policy of the Central Bank in the form of transactions in the forward foreign exchange market is manifested in the stimulation of either export or import of capital. The direction of the desired movement of capital depends on the priorities of the Central Bank's policy in a given economic situation, which can be expressed either in stimulating commodity exports (dumping policy), or in maintaining the exchange rate of the national currency in relation to the foreign one.
Along with direct measures of foreign exchange regulation - discount and motto policies - and measures of direct foreign exchange regulation, many other legislative norms have a significant impact on the exchange rate. Among them, the following three groups of norms can be distinguished.
1. Norms of tax legislation:
Taxation of exchange rate differences;
Form of payments of taxes on foreign exchange transactions;
Taxation of transactions for the purchase and sale of foreign currency
2. Norms governing the economic conditions of development:
Legislative regulation of settlements in foreign currency on the territory of the country;
Requirements for enterprises wishing to use a foreign currency account and cash desk;
Norm compulsory sale foreign exchange earnings;
Interest rate on foreign currency loans written off to the prime cost;
Regulation of public procurement (selection of suppliers - domestic or foreign).
3. Norms of banking legislation:
Required reserves and the form of their transfer to the Central Bank. Many banks practice temporary restructuring of accounts before determining the amounts to be transferred as required reserves to the Central Bank, if the reserve ratio for foreign currency deposits is lower than for ruble deposits. Today it is one.
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Monetary policy methods Is a set of methods, instruments of influence of subjects of monetary policy on objects of monetary policy in order to achieve the set goals. The way in which day-to-day monetary policy is carried out is also called tactical monetary policy objectives, and this is done through appropriate instruments. The instrument of monetary policy is understood as a means, a method of influence of the central bank as a body of monetary regulation on the objects of monetary policy.
In the framework of monetary policy, direct and indirect methods are used.
Direct methodsmonetary policy are in the nature of administrative measures in the form of various directives of the central bank concerning the volume of money supply and prices in the financial market. The implementation of these measures has the most rapid effect in terms of central bank control over the price or maximum volume of deposits and loans, especially in the context of the economic crisis. However, over time, direct methods of influence in the event of an “unfavorable” influence on their activities from the point of view of business entities can cause an overflow, an outflow of financial resources into the “shadow” economy or abroad.
Indirect methodsmonetary policy regulation of the monetary sphere affects the behavior of economic entities with the help of market mechanisms. Naturally, the efficiency of using indirect methods is closely related to the level of development of the money market. In a transitional economy, especially at the first stages of transformations, both direct and indirect instruments are used, with the former being gradually replaced by the latter.
In addition to direct and indirect methods, there are general and selective methods of implementing the monetary policy of central banks.
General methods are predominantly indirect and have an impact on the money market as a whole.
Selective methods regulate specific types of credit and are mainly prescriptive in nature. Their use is associated with solving particular problems, such as limiting the issuance of loans by some banks or limiting the issuance of certain types of loans, refinancing on preferential terms of certain commercial banks, etc. Using selective methods, the central bank retains the functions of centralized redistribution of credit resources, which are unusual for central banks of countries with market economies, since they distort market prices and resource allocation, and restrain competition in financial markets. The use in the practice of central banks of selective methods of influencing the activities of commercial banks is typical for economic policy pursued at the stage of a cyclical recession, in conditions of a sharp violation of the proportions of reproduction.
In world economic practice, central banks use the following main instruments of monetary policy:
Change in the ratio of required reserves or the so-called reserve requirements;
The interest rate policy of the central bank, i.e. changing the mechanism for borrowing funds from the central bank by commercial banks or depositing funds of commercial banks with the central bank;
Operations with government securities on the open market.
Mandatory reserves represent a percentage of the liabilities of a commercial bank. Commercial banks are required to keep these reserves at the central bank. Historically, required reserves have been viewed by central banks as an economic instrument that provides commercial banks with sufficient liquidity in the event of a massive withdrawal of deposits, to prevent the insolvency of a commercial bank and thereby protect the interests of its customers, depositors and correspondents. However, at present, changing the rate of required reserves of commercial banks, or reserve requirements, is used as the simplest tool used in order to quickly set up the monetary sphere. The mechanism of action of this instrument of monetary policy is as follows:
If the central bank increases the required reserve ratio, then this leads to a reduction in excess reserves of commercial banks, which they can use for lending operations. Accordingly, this causes a multiplier decrease in the money supply, since when the required reserves ratio changes, the value of the deposit multiplier changes;
With a decrease in the required reserve ratio, a multiplier expansion of the volume of money supply occurs.
This instrument of monetary policy is, according to experts, the most powerful, but rather crude, since it affects the foundations 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 lead to a modification of the credit policy of commercial banks.
A change in the required reserve ratio affects the money supply through a multiplier. All other monetary policy instruments directly affect the size of the monetary base.
An increase in the monetary base leads partly to an increase in the amount of money in the hands of the population, partly to an increase in deposits in commercial banks. This, in turn, entails an intensification of the multiplication process and an expansion of the money supply by an amount greater than the monetary base.
Central bank interest rate policy is carried out in two directions: regulation of loans of commercial banks from the central bank and deposit policy central bank, which can also be called the policy of the discount rate or refinancing rate.
Refinancing rate- This is the percentage at which the Central Bank provides loans to financially stable commercial banks, acting as the lender of last resort.
Discount rate- the percentage (discount) at which the Central Bank takes into account bills of exchange of commercial banks, which is a kind of lending them secured by securities.
The discount rate (refinancing rate) is set by the Central Bank. Reducing it makes loans cheap for commercial banks. When commercial banks receive a loan, their reserves increase, causing a multiplier increase in the amount of money in circulation. Conversely, an increase in the discount rate (refinancing rate) makes loans unprofitable. Moreover, some commercial banks that have borrowed funds are trying to return them, as these funds are becoming very expensive. A reduction in bank reserves leads to a multiplier reduction in the money supply.
Determination of the size of the discount rate - one of the most important aspects of monetary policy, and a change in the discount rate is 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 wants to ease or tighten monetary policy, it lowers or raises the discount (interest) rate. The bank can set one or several interest rates for various types of transactions or conduct an interest rate policy without fixing the interest rate. Central bank interest rates are not binding on commercial banks in their relationships with customers and with other banks. However, the level of the official discount rate is a benchmark for commercial banks when conducting lending operations.
At the same time, it is the use of this tool that shows that the results of monetary policy are poorly predictable. For example, a reduction in the refinancing rate is viewed as a measure leading to an expansion of the money supply. However, a decrease in the refinancing rate affects the market interest rate, which decreases, therefore, the demand for cash and other assets increases, the demand for which is inversely related to the level of the interest rate. In turn, the demand for deposits decreases - the multiplier decreases, but it is difficult to say how and in what period the reduction in the refinancing rate will affect the banking multiplier. Therefore, in monetary policy, it is necessary to distinguish between short-term and long-term periods. In the short term, a reduction in the refinancing rate is an “expansive” measure, in the long term it is a deterrent.
The deposit operations of the Central Bank allow commercial banks to receive income from the so-called free, or surplus, reserves, and the Central Bank is given the opportunity to influence the size of the money supply.
Central Bank operations on the open market are currently the main instrument of monetary policy in world economic practice. The central bank sells or buys at a predetermined rate of securities, including government securities, which form the country's internal debt. This instrument is considered the most flexible instrument for regulating credit investments and liquidity of commercial banks.
Central bank operations in the open market have a direct impact on the amount of free resources available to commercial banks, which stimulates either a reduction or expansion of the volume of credit investments in the economy, while simultaneously affecting the liquidity of banks, respectively, decreasing or increasing it. This effect is carried out through the change by the central bank of the purchase price from commercial banks or their sale of securities. With a strict restrictive policy, which should result in an outflow of credit resources from the loan market, the central bank decreases the selling price or increases the purchase price, thereby increasing or decreasing its deviation from the market rate.
If the central bank buys securities from commercial banks, it transfers money to their correspondent accounts; thus, lending opportunities of banks are increased. They start to issue loans, which are in the form of non-cash real money enter the sphere of monetary circulation, and, if necessary, are transformed into cash. If the central bank sells securities, then commercial banks from their correspondent accounts pay for such a purchase, thereby reducing their lending opportunities associated with the issue of money.
Open market operations are conducted by the central bank, usually in conjunction with a group of large banks and other financial institutions. The scheme for carrying out these operations is as follows.
1. Suppose that there is a surplus of money supply in circulation in the money market and the central bank sets the task to limit or eliminate this surplus. In this case, the central bank begins to actively offer government securities on the open market to banks or the public who buy government securities through special dealers. As the supply of government securities increases, their market price falls, and their interest rates rise, and accordingly their attractiveness to buyers increases. The population (through dealers) and banks are beginning to actively buy government securities, which ultimately leads to a reduction in bank reserves. A decrease in the volume of bank reserves, in turn, leads to a decrease in the supply of money in a proportion equal to banking multiplier... At the same time, the interest rate rises.
2. Suppose now that there is a shortage of money in circulation in the money market. In this case, the central bank pursues a policy aimed at expanding the money supply, namely, the central bank begins to buy government securities from banks and the public at a favorable rate for them. Thus, the central bank increases the demand for government securities. As a result, their market price rises and their interest rate falls, making Treasury securities unattractive to their holders. The population and banks are beginning to actively sell government securities, which ultimately leads to an increase in bank reserves and (taking into account the multiplier effect) money supply. At the same time, the interest rate falls.
One can note the unpredictability of the results of monetary policy due to the fact that the open market is a financial market. An increase in sales on the open market leads to an increase in the supply of financial assets, and therefore to an increase in interest rates. In turn, the rise in interest rates will affect the increase in the multiplier, which will partly offset the effect of the decrease in the monetary base. Conversely, buying transactions on the open market can lead to an increase in the demand for financial assets, a decrease in interest rates and a multiplier.
The considered monetary policy instruments are usually used by the Central Bank in a complex in accordance with the objective of monetary policy.... The optimal combination of monetary policy instruments depends on the stage of development and structure of financial markets, the role of the central bank in the country's economy. For example, the policy of interest rates (refinancing rates), ranked second after the central bank's open market policy, is usually conducted in conjunction with the central bank's open market operations. Thus, when selling government securities on the open market in order to reduce the money supply, the central bank sets a high discount rate (higher than the yield on securities), which accelerates the process of selling government securities by commercial banks, since it becomes unprofitable for them to replenish reserves with loans from the central bank, and increases the efficiency of open market operations. Conversely, when a central bank purchases government securities on the open market, it sharply lowers the discount rate (below the yield on the securities). In this situation, it is profitable for commercial banks to borrow reserves from the central bank and use available funds to purchase more profitable government securities. The expansionary policy of the central bank is becoming more effective.
In addition to the traditional monetary instruments discussed above, within the framework of monetary policy, the establishment of benchmarks for the growth of the money supply, as well as currency regulation, can be used.
Cash management- regulation of the circulation of cash, emission, organization of their circulation and withdrawal from circulation, carried out by the Central Bank.
Example 1. From Russian practice: regulation of cash money supply. In the conditions when in Russia, in fact, there was only one State Bank, there was no problem of credit resources for its branches, because these resources were automatically created due to the functioning of the system of interbranch turnovers. During this period, the Government strictly planned and limited the transformation of the deposit issue into banknote, i.e. the transformation of non-cash money into cash, since in Russia there was an opinion that only cash circulated in monetary circulation, and the movement through bank accounts was only the circulation of bank records, but not money. The current activity of the Bank of Russia in the field of regulating money circulation and using it as a tool to stabilize the economy is directly related to the entry of our country into the international economic community and its assistance to the development of the Russian economy.
At present, the Bank of Russia is carrying out forecast calculations of cash turnover, the purpose of which is to determine the need for cash in the country as a whole, by region and by banks. With the help of such calculations, the volume and sources of cash receipts to the cash desks of commercial banks and the revolving cash desks of the Bank of Russia are determined, the size and consolidated directions of issuing cash to organizations and individuals, as well as the cash issue result, i.e. the amount of the issue of cash into circulation or its withdrawal from circulation.
Foreign exchange regulation as a tool of monetary policy has been used by central banks since the 1930s as a reaction to capital flight in the context of the economic crisis and the Great Depression. Foreign exchange regulation refers to the management of foreign exchange flows and external payments, the formation of the exchange rate of the national monetary unit. The exchange rate is influenced by many factors: the state of the balance of payments, exports and imports, the share of foreign trade in the gross domestic product, budget deficit and sources of its coverage, economic and political situation, etc. The real exchange rate under specific conditions can be determined as a result of free offers for the purchase and sale of currency on currency exchanges. An effective system of foreign exchange regulation is foreign exchange intervention. It lies in the fact that the Central Bank intervenes in operations in the foreign exchange market in order to influence the national currency rate by buying or selling foreign currency. To increase the rate of the national currency, the central bank sells foreign currency; to reduce this rate, it buys foreign currency in exchange for the national one. The Central Bank conducts foreign exchange interventions in order to bring the national currency as close as possible to its purchasing power and at the same time to find a compromise between the interests of exporters and importers. Exporting firms are interested in a certain undervaluation of the national currency; they provide the bulk of the incoming foreign exchange earnings. Enterprises that receive raw materials, materials, component parts from abroad, as well as industries producing products that are uncompetitive in comparison with foreign products, are interested in a slight overvaluation of the national currency.
The methods of monetary policy are a set of methods, instruments of influence of subjects of monetary policy on the object of monetary policy in order to achieve the set goals.
The methods of conducting day-to-day monetary policy are called tactical objectives of monetary policy. This impact is carried out with the help of appropriate tools.
The instrument of monetary policy is understood as a means, a method of influence of the Central Bank as a body of monetary regulation on the objects of monetary policy.
In the framework of monetary policy, direct and indirect methods are used.
Direct methods are in the nature of administrative measures in the form of various directives of the Central Bank concerning the volume of money supply and prices in the financial market. The implementation of these measures gives the fastest effect in terms of the Central Bank's control over the price or the maximum volume of deposits and loans, especially in the context of the economic crisis.
Indirect methods of regulating the monetary sphere affect the behavior of economic entities using market mechanisms. Naturally, the efficiency of using indirect methods is closely related to the level of development of the money market.
In addition to direct and indirect, general and selective methods of implementing the monetary policy of the Central Bank are distinguished.
General methods are predominantly indirect and have an impact on the money market as a whole.
Selective methods regulate specific types of credit and are mainly prescriptive in nature. Their use is associated with solving particular problems, such as limiting the issuance of loans by some banks or limiting the issuance of certain types of loans, refinancing on preferential terms of certain commercial banks, etc.
In world economic practice, the Central Bank uses the following main instruments of monetary policy:
Change in the ratio of required reserves or the so-called reserve requirements;
Interest rate policy of the Central Bank, i.e. changing the mechanism for borrowing funds by commercial banks from the Central Bank or depositing funds of commercial banks with the Central Bank;
Operations with government securities on the open market.
Mandatory reserves represent a percentage of the liabilities of a commercial bank. Commercial banks are obliged to keep these reserves in the Central Bank. At present, changing the rate of required reserves of commercial banks or reserve requirements is used as the simplest tool used in order to set up the monetary sphere as quickly as possible. The mechanism of action of this instrument of monetary policy is as follows:
If the Central Bank increases the rate of required reserves, then this leads to a reduction in excess reserves of commercial banks, which they can use to conduct lending operations. Accordingly, this causes a multiplier decrease in the money supply, since when the ratio of required reserves changes, the values of the deposit multiplier change;
With a decrease in the required reserve ratio, a multiplier expansion of the volume of money supply occurs.
This instrument of monetary policy is, according to experts, the most powerful, but rather crude, since it affects the foundations 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 lead to a modification of the credit policy of commercial banks.
All other monetary policy instruments directly affect the size of the monetary base.
An increase in the monetary base leads partly to an increase in the amount of money in the hands of the population, partly to an increase in deposits in commercial banks. This, in turn, entails an intensification of the multiplication process and an expansion of the money supply by an amount greater than the monetary base.
The interest rate policy of the Central Bank is carried out in two directions: the regulation of loans from commercial banks from the Central Bank and the deposit policy of the Central Bank, which can also be called the policy of the discount rate or the refinancing rate.
The refinancing rate is the percentage at which the Central Bank provides loans to financially stable commercial banks, acting as the lender of last resort.
Discount rate - the percentage (discount) at which the Central Bank takes into account bills of exchange of commercial banks, which is a type of lending them secured by securities.
The discount rate is set by the Central Bank. Reducing it makes loans cheap for commercial banks. When commercial banks receive a loan, their reserves increase, causing a multiplier increase in the amount of money in circulation. Conversely, an increase in the discount rate makes loans unprofitable. Moreover, some commercial banks that have borrowed funds are trying to return them, as these funds become very expensive. A reduction in bank reserves leads to a multiplier reduction in the money supply.
Determining the size of the discount rate is one of the most important aspects of monetary policy, and a change in the discount rate is 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 ease or tighten monetary policy, it lowers or raises the interest rate. The bank can set one or several interest rates for various types of transactions or conduct an interest rate policy without fixing the interest rate. Central Bank interest rates are optional for commercial banks in their relationships with clients and with other banks. However, the level of the official discount rate is a benchmark for commercial banks when conducting lending operations.
Operations of the Central Bank on the open market are currently the main instrument of monetary policy in world economic practice. The Central Bank sells or buys at a predetermined rate of securities, including government securities, which form the country's internal debt. This instrument is considered the most flexible instrument for regulating credit investments and liquidity of commercial banks.
Operations of the Central Bank on the open market have a direct impact on the amount of free resources available to commercial banks, which stimulates either a reduction or expansion of the volume of credit investments in the economy, while simultaneously affecting the liquidity of banks, respectively, decreasing or increasing it.
This effect is carried out by changing the Central Bank of the purchase price from commercial banks or the sale of securities. With a strict restrictive policy, which should result in an outflow of credit resources from the loan market, the Central Bank reduces the selling price or increases the purchase price, thereby increasing or decreasing its deviation from the market rate.
unpredictability of the results of monetary policy due to the fact that the open market is a financial market. An increase in sales on the open market leads to an increase in the supply of financial assets, and therefore to an increase in interest rates. In turn, the rise in interest rates will affect the increase in the multiplier, which will partially offset the effect of the reduction in the monetary base. Conversely, buying transactions on the open market can lead to an increase in the demand for financial assets, a decrease in interest rates and a multiplier.
The optimal combination of monetary policy instruments depends on the stage of development and structure of financial markets, the role of the Central Bank in the country's economy.
In addition to the traditional monetary instruments discussed above, the establishment of benchmarks for the growth of the money supply, as well as currency regulation, can be used in the framework of monetary policy.
Management of cash money supply is the regulation of the circulation of cash, emission, organization of their circulation and withdrawal from circulation, carried out by the Central Bank
Currency regulation as an instrument of monetary policy has been applied by the Central Bank since the 30s of the twentieth century. Foreign exchange regulation refers to the management of foreign exchange flows and external payments, the formation of the exchange rate of the national monetary unit. The exchange rate is influenced by many factors: the state of the balance of payments, exports and imports, the share of foreign trade in the gross domestic product, the budget deficit, the economic and political situation, etc.
An effective system of foreign exchange regulation is foreign exchange intervention. It lies in the fact that the Central Bank intervenes in operations in the foreign exchange market in order to influence the exchange rate of the national currency by buying and selling foreign currency. Currency intervention is carried out in order to bring the exchange rate of the national currency as close as possible to its purchasing power.
In modern conditions, monetary policy is the most significant form of state regulation of the economy. Monetary policy can be viewed broadly and narrowly.
From the perspective of the extended approach, monetary policy is understood as part of a single state macroeconomic policy, assuming a targeted impact on the monetary system by using predominantly market instruments in order to create conditions for economic growth in the country.
In a narrow sense, monetary policy is a set of measures of the Central Bank in the field of money circulation and credit, aimed at maintaining economic growth, curbing inflation and unemployment.
The legal basis for conducting monetary policy in Russia is the Constitution of the Russian Federation and Federal Law No. 86-FZ of July 10, 2002 "On the Central Bank of the Russian Federation (Bank of Russia)". This Law defines the powers of the Bank of Russia to develop and implement a unified state monetary policy in cooperation with the Government of the Russian Federation.
The Board of Directors of the Bank of Russia, in cooperation with the Government of the Russian Federation, annually develops a draft of the main directions of the unified state monetary policy and its main directions for the coming year. These documents are submitted for consideration to the National Banking Council, to the Government of the Russian Federation, as well as to the President of the Russian Federation, and then they are submitted to the State Duma.
In a developed economy, there are two groups of institutions that implement in practice the implementation of monetary policy:
- institutions whose main purpose is to conduct monetary policy on behalf of the state (in almost all countries of the world it is the central bank, including Russia);
- institutions that are indirectly involved in the process of conducting monetary policy (only in cases of combining the fulfillment of their direct responsibilities with elements of monetary policy - the Ministry of Finance, the Treasury, federal Service on financial markets, the Deposit Insurance Agency, etc.).
The Central Bank occupies the main place among the named institutions, since it is he who is the coordinator of the practical implementation of the state monetary policy.
The main factors determining the formation and setting of monetary policy objectives include:
- macroeconomic conditions;
- external economic factors;
- socio-economic policy of the country;
- structural changes in the economy;
- the state of the budgetary sphere;
- information uncertainty;
- level of development (depth) and degree of liberalization financial market, its involvement in the processes of globalization. It should be noted that the development and growth of the national economy
largely depend on the effectiveness of the central bank's monetary policy. In turn, the effectiveness of monetary policy depends on the correct setting of the goal and the choice of appropriate instruments for its implementation.
Under effective monetary policy the effectiveness of the management of the sphere of monetary credit relations, which is characterized by the results of accurate and rapid achievement of the set goals by the monetary authorities, the effectiveness and feasibility of the measures taken, the adequacy of the management and financial decisions taken.
Existing approaches to increasing the efficiency of monetary policy are the subject of great controversy, since monetary policy itself can have both positive and negative effects on the state of the national economy. Most economists regard it as an integral part of the stabilization policy of the state. This is evidenced by the merits of monetary policy, which include:
- flexibility and speed. Compared to fiscal, monetary policy can change rapidly. The application of an appropriate fiscal policy may be delayed for a long time due to its discussions and approval in parliament. The situation is different with monetary policy. The central bank makes daily decisions about open market operations and other instruments and thus influences the money supply and interest rates;
- independence from political pressure. This provision makes it easier for the central bank than for the government to make the unpopular decisions that are necessary for the economic recovery in the long term. In addition, monetary policy is politically softer and more conservative than fiscal. Changes in government spending directly affect the allocation of resources, and tax changes can also have political implications. Monetary policy is more subtle and therefore appears to be more politically acceptable. Monetary regulation acts as a tool for conducting monetary policy. Under monetary regulation the process of direct or indirect impact of the Central Bank on the monetary system (the amount of money in circulation, liquidity of the banking system) in order to achieve the set goals is understood.
The ultimate goals of monetary policy are:
- ensuring price stability;
- full employment of the working-age population;
- growth in real production;
- stable balance of payments of the country.
To achieve these goals, central banks can use different types and strategies of monetary policy.
Allocate structural and conjunctural monetary policies. Structural Monetary Policy is aimed at the development of certain industries by the state (for example, in a crisis or post-war economy). The modern practice of monetary regulation implies the impact not on specific market participants, but on the market as a whole - on its conjuncture. Conjunct monetary policy provides for the use of mainly market instruments: interest rates (refinancing rate, discount rate), open market operations, deposit operations, etc. The nature of the application of these instruments is determined by the chosen strategy of monetary regulation.
To achieve the strategic goals of the Central Bank, the following directions of monetary policy are distinguished:
- monetary restriction policy;
- monetary expansion policy.
Monetary restriction policy(restrictive monetary policy, “expensive money” policy) is aimed, as a rule, at the contraction of the money supply and is considered as one of the main components of anti-inflationary regulation of the economy. At the same time, there are two options for such a policy. Monetary restriction, firstly, can be carried out by directly affecting the amount of money supply and credit turnover, and secondly, it is an indirect regulation of the scale of non-cash money turnover, carried out primarily by raising interest rates. We are talking about an increase in the required reserves, discount rate and refinancing rate, which naturally leads to an increase in the cost of loans and a decrease in demand for borrowed resources.
This policy has both positive and negative impact on the state of the economy. On the one hand, it is one of the options for anti-inflationary regulation of the economy, and on the other hand, it can have an extremely negative impact on economic development countries: an increase in the interest rate in the short term leads to a decrease in aggregate demand and, accordingly, to a decline in manufacturing activity. In this case, the consequence of monetary restriction may be a fall in investment and net national product, a decrease in demand for money, and a limitation of the effectiveness of stimulating monetary policy.
A significant drawback of monetary restrictions is the increase in the cost of servicing external and internal debt, as well as the budget deficit due to an increase in real interest. In addition, in conditions of high inflation, the implementation of a monetary restriction policy is practically impossible, since it leads to a liquidity crisis.
Thus, the analysis of the negative consequences of monetary restriction for the economy allows us to conclude that it can be used only in exceptional cases.
Monetary expansion policy is carried out with the aim of reviving the market situation (increasing the rate of economic growth, stimulating business activity, achieving an optimal level of employment, smoothing out fluctuations in the rate of interest, preventing the growth of social tension and political instability, preventing panic among depositors and the outflow of savings from banks). The Central Bank helps to expand the lending opportunities of banks and reduce interest rates in the economy, which ensures the expansion of the money supply and increases the investment attractiveness of the economy.
Despite the stimulating nature of the impact on the economy of the policy of monetary expansion, its implementation in the long term may also have a negative impact through the possibility of intensifying inflationary processes in the economy.
Hence, both restriction and expansion can have negative consequences. In this regard, the main task of the Central Bank is to select the optimal model of monetary regulation that ensures the achievement of ultimate goals and does not have a destructive effect on the economy.
The following goals of monetary regulation are distinguished:
- long-term (strategic) - a decrease in the rate of inflation, unemployment, balance of payments equilibrium or the achievement of a certain level of GDP;
- medium-term - achieving the optimal volume of money supply in the economy, maintaining the level of gold and foreign exchange reserves and managing the value of the interest rate;
- short-term - smoothing fluctuations in market liquidity. The stated goals of monetary policy can be
achieved with the effective use of administrative and market instruments of monetary regulation.
TO administrative methods of regulation economic processes include such methods of redistribution of funds, which are implemented through direct intervention of government bodies (as a rule, these are direct quantitative restrictions on lending activities, setting a benchmark for money supply growth).
Other restrictions may also apply, caused by the needs of a balanced monetary policy aimed at achieving national objectives of macroeconomic stability.
Economic methods of regulation economies imply the creation of such conditions that would stimulate entrepreneurial activity... At the same time, the state can use a wide range of means and methods for regulating the economy: from the regulation of economic legislation, thereby establishing the rules for the behavior of economic agents, to influencing the money market through the policy of the discount rate.
In modern conditions, there is no consensus among economists about the effectiveness of administrative and market methods of monetary regulation. Some scholars consider administrative methods of regulation to be more effective, justifying their position by the fact that in conditions when many market mechanisms are not efficient enough or do not work at all, the administrative impact on the economy is carried out faster than the indirect, economic one. The proponents of the market approach, analyzing the efficiency and direction of monetary regulation of the economy, first of all consider the economic component of this process.
The implementation of monetary policy is carried out using its instruments and methods. Under monetary policy instruments understand the means, the way the central bank influences the objects of monetary policy. Under methods - a set of techniques and operations through which the subjects of monetary policy influence objects to achieve their goals.
Distinguish between market and non market instruments monetary policy from the standpoint of their impact on the economy.
Krynochny instruments include: discount rate and refinancing rate, reserve requirements, open market operations, deposit operations. The use of these tools presupposes the creation of conditions for stimulating entrepreneurial activity.
Non-market instruments imply a direct administrative impact of the Central Bank on certain parameters of the banking system. This means that the Central Bank directively regulates the volume of money supply and prices in the financial market, which can be expressed in limiting the volume of lending, regulation of interest rates, and certain types of loans.
By the terms of impact, monetary policy instruments are divided into long-term and short-term.
Under long-term instruments means such methods of influencing the objects of monetary policy, the implementation of which can be carried out in the period from one year to several decades. TO short-term, those. implemented in a period of less than a year, include instruments of influence, with the help of which the medium-term goals of monetary regulation are achieved.
In accordance with Art. 35 of the Federal Law "On the Central Bank (Bank of Russia)", the main instruments and methods of monetary policy of the Central Bank of the Russian Federation include:
- interest rates on Bank of Russia operations;
- Required reserve ratios deposited with the Bank of Russia (reserve requirements);
- open market operations;
- refinancing of credit institutions;
- foreign exchange intervention;
- setting benchmarks for money supply growth;
- direct quantitative restrictions;
- issue of bonds on its own behalf.
At the same time, this Law does not include in the list of monetary policy instruments deposit operations of the Bank of Russia, which are an effective tool for absorbing (absorbing) free liquidity of banks.
The advantages and disadvantages of individual instruments of monetary policy are presented in table. 11.1, and the patterns of their change in the course of monetary policy measures are given in Table. 11.2.
Table 11.1
Advantages and Disadvantages of Selected Monetary Policy Instruments
instrument |
Dignity |
disadvantages |
Mandatory reservation |
Impact on the monetary base and the amount of money supplied by banks in the process of lending. Sterilization of excess ruble mass. Limiting its pressure on the foreign exchange and commodity markets |
Non-economic interference in the operational activities of banks, a form of additional tax (increase in the cost of resources, difficulty in equitable competition - a decrease in the competitiveness of banks in comparison with other financial intermediaries) |
Operations with securities |
Covering intra-annual gaps between current income and expenses federal budget... Financing the repayment of the domestic public debt. Smoothing out market surpluses of liquidity |
Alternative to investing money in the real sector of the economy |
Deposit operations |
Immediate neutralization of possible pressure of free funds on the foreign exchange market |
Impossible due to the high liquidity of the instrument |
foreign |
Replenishment of foreign exchange reserves, preserving the relatively stable exchange rate of the national currency |
Carried out at the expense of unsecured money - creating excess liquidity |
Table 11.2
Source: Fedorova L.E. Organization of activities of the Central Bank of the Russian Federation: Textbook, manual. Yekaterinburg: AMB, 2009.
Regularities of changes in a number of indicators during monetary policy measures
Indicator |
Interconnection |
|
Increase (decrease) in the refinancing rate |
The relationship between these indicators is assessed. The presence of an inversely proportional relationship is obvious. The two quantities are completely opposite. With an increase in the indicator (refinancing rate), the value of the result decreases (the volume of lending to the economy decreases) |
|
Increase (decrease) in reserve requirements |
Decrease (growth) in lending to the real sector of the economy |
There is an inversely proportional relationship between the indicators. When the amount of reserve requirements goes up, the volume of lending to the real sector of the economy goes down |
Indicator |
Achieved result due to indicator change |
Interconnection |
Increase (decrease) in the volume of money supply |
Growth (decline) in investment, growth (decline) in national income |
The presence of a strong directly proportional connection is noted. With an increase in the volume of money supply, there is an increase in the volume of investments and national income. |
Growth (decrease) in interest rates |
Decrease (growth) in demand for loans |
There is an inversely proportional relationship between these indicators. As interest rates rise, money becomes expensive and demand for loans falls |
Increase (decrease) in the liquidity of credit institutions |
Increase (decrease) in the supply of loans |
There is a fairly strong direct proportional relationship between these indicators: with an increase in the liquidity of credit institutions, the supply of loans increases |
Growth (decline) in lending volumes |
Increase (decrease) in the value of the money supply in circulation |
The presence of a strong, directly proportional relationship between these two quantities, i.e. the value of lending volumes moves almost synchronously in the same direction with the value of the value of the money supply in circulation. With an increase in lending, the amount of money supply in circulation increases |
Refinancing is one of the most effective instruments of monetary policy in developed market economies. The Bank of Russia lends to credit institutions at the level of the refinancing rate. By changing its value, the Central Bank of the Russian Federation can influence the liquidity of the banking system and the money supply in general.
Today, the refinancing rate of the Central Bank of the Russian Federation is a tool with which the Bank of Russia influences the stimulation of lending activity of banks, interest rates on deposits of legal entities and individuals, as well as a slowdown in annual inflation in the medium term.
Open market operations, which include the purchase and sale of securities in order to increase or decrease the amount of funds at the disposal of financial institutions, are a serious instrument of the Central Bank's monetary policy. This tool allows you to regulate the economic relations of business entities.
The operations of the Central Bank on the open market are currently the main instrument in world economic practice within the framework of the applied indirect methods of monetary policy. The central bank sells or buys at a predetermined rate of highly liquid securities, including government securities, which form the country's internal debt, at its own expense in the open market. This instrument is considered the most flexible instrument for regulating credit investments and liquidity of commercial banks.
The peculiarity of operations on the open market is that the Central Bank can exert a market effect on the amount of free resources available to commercial banks, which stimulates either a reduction or expansion of credit investments in the economy, while simultaneously affecting the liquidity of banks, respectively, decreasing or increasing it. This impact is carried out by changing the Central Bank of the purchase price from commercial banks or their sale of securities on the open market.
In the Federal Law “On the Central Bank of the Russian Federation (Bank of Russia)” “open market operations mean the purchase and sale by the Bank of Russia of treasury bills, government bonds, other government securities, Bank of Russia bonds, as well as short-term operations with these securities with making a later return transaction ”.
Open market operations include REPO operations. The Bank of Russia conducts them in accordance with the provisions of the Central Bank of the Russian Federation dated March 25, 2003 No. 220-P "On the procedure for concluding and executing REPO transactions with government securities of the Russian Federation", dated November 28, 2008 No. 329-P "On the terms of The Bank of Russia of direct REPO transactions with Russian credit institutions on Stock exchange MICEX ", as well as dated March 4, 2010 No. 357-P" On the conditions for the Bank of Russia to conclude direct REPO transactions with Russian credit institutions on the government securities market. " This operation includes the sale and subsequent purchase of securities after a certain period of time at a predetermined price. The difference between the sale price and the purchase price is the cost of borrowing with the specified operation.
Until 2004, the Bank of Russia used reverse modified REPO transactions, which were used as a tool to absorb bank liquidity. Today, only direct REPO operations are used to provide liquidity to the banking sector against collateral in the form of an established list of securities.
Securities admitted to public circulation in the Russian Federation and included in the Lombard List of the Central Bank of the Russian Federation are accepted as collateral for direct REPO operations with the Bank of Russia. This list is quite extensive. So, at the end of February 2012, it included 217 issuers. Table 11.3 shows the financial instruments that make up the Lombard List, and examples of such issuers.
Table 11.3
Lombard list of the Bank of Russia
Financial instrument |
|
|
RF Ministry of Finance |
2. Bonds of constituent entities of the Russian Federation and municipalities |
Belgorod region, Moscow, Republic of Sakha (Yakutia], etc. |
|
Agency for Housing Mortgage Lending (AHML) Agency for Restructuring of Housing Mortgage Loans (ARIZHK) |
4. Bonds with mortgage backing |
Bank VTB 24 is a mortgage agent for MBRD, ISO GPB-Ipoteka, etc. |
|
JSCB Absolut Bank, Bank VTB 24, Vnesheconombank, OJSC CB Vostochny, etc. ALROSA, Gazprom, Lukoil, etc. TGK-1, TGK-4, Miratorg Finance, etc. |
6. Bonds of international financial organizations |
Eurasian Development Bank, European Bank for Reconstruction and Development |
7. Debt equity securities issued by legal entities - non-residents of the Russian Federation outside the Russian Federation |
AVN Financial Limited, Dresdner Bank AG, GAZ Capital S.A. etc. |
Plan
Introduction ………………………………………………………………. …… ..… 3
1. The banking system of the Russian Federation ……………………. ……….… .4
1.1 Formation of a two-tier banking system ………………….… ..4
1.2 Modern banking system of the Russian Federation ……………… .6
2. The Central Bank of the Russian Federation ………………………………… 7
2.1 Status and objectives of the Central Bank of Russia ……………………………… ..7
2.2 Structure of the Central Bank of Russia …………………………………… .8
2.3 Functions of the Central Bank of Russia …………………………………… .12
2.4 Monetary policy instruments and methods ………………… 14
3. Monetary policy of the Central Bank of the Russian Federation ……………………………………………………………………… .16
3.1 Main objectives, goals and forms of monetary regulation ... 16
3.2 Monetary policy methods …………………………………… .17
3.3 Monetary policy instruments …………………………… ..20
4. The main directions of the unified state monetary policy for 2008 ……………………………………………………… ... 34
4.1 Principles of monetary policy for the medium term …………………………………………………… .. ……… ..… ..34
4.2 Objectives and instruments of monetary policy in 2008 ..................... 37
Conclusion ……………………………………………………………………… 41
List of used literature …………………………………………… 43
The central bank is the central link of the monetary system of any state; it combines the features of an ordinary (commercial) banking institution and a government department. The central bank is endowed with the right to monopoly issue of banknotes, regulate monetary circulation and exchange rates, and store gold and foreign exchange reserves. The most important function of the Central Bank is to develop a common credit policy.
Monetary policy is a very effective tool for influencing the country's economy, which does not violate the sovereignty of most of the subjects of the business system. Although at the same time there is a limitation of the scope of their economic freedom (without this, any regulation of economic activity is generally impossible), the state influences the key decisions made by these entities only indirectly.
Ideally, monetary policy is designed to ensure price stability, full employment, and economic growth — these are its ultimate and ultimate goals. However, in practice, with its help, it is necessary to solve more narrow tasks that meet the urgent needs of the country's economy.
We must not forget that monetary policy is an extremely powerful and therefore extremely dangerous tool. With its help it is possible to get out of the crisis, but the sad alternative is also not excluded - the aggravation of the negative trends in the economy. Only very balanced decisions taken at the highest level after a serious analysis of the situation, consideration of alternative ways of influencing the monetary policy on the economy of the state, will yield positive results. Without the right monetary policy, the economy cannot function effectively.
1. BANKING SYSTEM OF RUSSIA
1.1. Formation of a two-tier banking system
The modern banking system was created as a result of reforming the state credit system that emerged during the period of the centralized planned economy. At that time, the state credit system included three monopoly banks: the State Bank of the USSR, Stroybank of the USSR, Vneshtorgbank of the USSR, each of which performed strictly defined functions in the system of centralized planned management of the economy.
The basis of monetary regulation at that time was credit and cash planning, as well as balancing the income and expenses of the population, including measures to change the retail prices of goods and services, wages, pensions, etc. building socialism, fully consistent with a centrally planned, administratively controlled economy.
The proclamation of new principles of economic management required a revision of the existing structure of the credit system, the functions of its individual links and forms of organization of credit relations. The reform of the state credit system began as part of a radical economic reform 1987 It provided for a change organizational structure banking system, increasing the role of banks in the economy and strengthening their influence on the development of the national economy.
In 1987, at the first stage of reforming the state credit system, the concept of reorganizing the banking system was developed, which included:
· Creation of a two-tier banking system, the upper level of which was to be occupied by the State Bank of the USSR as the Central Bank of the country, and the lower level by newly created state specialized banks (Promstroybank of the USSR, Zhilsotsbank of the USSR, Agroprombank of the USSR, Vnesheconombank of the USSR, Sberbank of the USSR). These banks were entrusted with credit and settlement services for the relevant national economic complexes. The State Bank of the USSR was supposed to act as a coordinator of the activities of specialized banks and a conductor of a unified state monetary policy:
· Transfer of state specialized banks to cost accounting and self-financing, increasing the interest of the lower levels of banks in efficient and high-quality service of enterprises in various sectors of the economy;
Introduction of new forms and methods of credit relations with enterprises and organizations (crediting for the aggregate of inventories and production costs, bill settlements, factoring, leasing, etc.)
As a result of the system of banks, their ties with the economy have been strengthened, the role of credit in the innovation process has increased, and the structure of credit investments has improved. However, there were no fundamental changes in the credit system (in fact, they were not supposed to): the monopoly structure of the banking system was not eliminated, since the spheres of influence between the banks were distributed administratively according to the departmental type; conditions for the free flow of capital and the formation of the financial market were not created.
The State Bank of the USSR, subordinate to the government of the country, remained an administrative body and could not pursue an independent monetary policy. He failed to master the tools inherent in central banks to influence the monetary system. The problems of economic management of the country's money turnover, regulation of the activities of the lower levels of the banking system, the development of competition between banks led to the need for deepening reforms in the banking system.
1.2 Modern banking system in Russia
The second stage of banking reform, aimed at a comprehensive reconstruction of the system of economic relations in the field of credit, began in 1988 with the creation of the first commercial banks on a share and joint-stock basis. In parallel with the creation of commercial banks, the process of corporatization of state specialized banks began. These banks were full-fledged market entities: they pursued an independent credit policy, were focused on making a profit, and bore full responsibility for the decisions they made, which fundamentally differed from the institutions of specialized banks.
The creation of non-state commercial banks meant overcoming the monopoly in the banking sector, abandoning the sectoral specialization of banks, and the development of commercial principles in banking. Thus, the foundations were laid for a two-tier banking system with its inherent self-regulation capability. Commercial banks have played a positive role in the formation and development of the economic market system in the country, in creating an innovative environment that breaks traditional structures and opens the way for further transformations.
In order to create a system of monetary regulation, adequate to the emerging market relations, the status of the State Bank and its role in the national economy of the country were changed. The bank was taken out of subordination to the government and thus received the necessary economic independence. After Russia gained sovereignty, the Central Bank of Russia was created on the basis of the State Bank on the basis of the concept adopted in countries with developed market economies.
2. CENTRAL BANK OF THE RUSSIAN FEDERATION
2.1 The status and objectives of the Central Bank of Russia
The central bank of the country is the main link in the banking system of any state. It reflects the national interest, pursues a policy in the interests of the state, forms the main principles of all banking activities.
In the banking system, the country's Central Bank plays a key role. The sustainability of the development of the national economy and its banking sector depends on its activities. By regulating the circulation of money in cash and non-cash forms, the Central Bank creates economic preconditions for the movement of goods and services from producer to consumer.
The independence of the Central Bank is relative within the framework of government structures, since its economic policy is determined by the priorities of the government's macroeconomic course and cannot be successful without coordinating its main elements with the government. The main goal of the Central Bank in the development of a market economy is to maintain monetary and foreign exchange stabilization for economic growth.
The Central Bank of the Russian Federation (Bank of Russia) was established on the basis of the law "On the Central Bank of the Russian Federation (Bank of Russia)" on December 2, 1990. Its main task in the context of a two-tier banking system was to maintain the stability of the functioning of the country's banking and monetary systems, and organize management processes operations of banks at the macroeconomic level, coordination of the activities of banks and other credit and financial institutions.
The historical development of the Russian banking system, the adopted legislative and regulatory acts are reflected in the Federal Law "On Amendments and Additions to the Law of the RSFSR" On the Central Bank of the Russian Federation (Bank of Russia) "dated April 12, 1995. the bank is still guided by it. This document, which defines the goals, functions, rights and obligations and the mechanism of the Central Bank's activities, contains 95 articles (instead of 39 in the law "On the Central Bank of the Russian Federation (Bank of Russia)" on December 2, 1990).
The main objectives of its activities are:
Protection and stability of the national currency - the ruble, including its purchasing power and exchange rate against foreign currencies;
Development and strengthening of the banking system of the Russian Federation;
Ensuring the efficient and uninterrupted functioning of the settlement system.
Profit making is not the goal of the Central Bank. In accordance with the Federal Law, this is a body of state leadership that acts as a "bank of banks" and is endowed with the rights and powers of monopoly issue of banknotes, regulation of money circulation, credit and banking activities, currency sphere, storage of gold and foreign exchange reserves. The central bank is not responsible for the obligations of the state, just as the state is not responsible for the monetary obligations of the bank, if they are not accepted on the basis of federal legislation.
2.2 Structure of the Central Bank of Russia
The Central Bank, within the limits of its powers provided by the Constitution of the Russian Federation and federal laws, is independent in its activities from the administrative and executive bodies of state power and is accountable to the highest legislative body of its state - the State Duma of the Federal Assembly of the Russian Federation.
The supreme body of the Central Bank is the Board of Directors, which determines the main directions of its activities and carries out its leadership and management. This is a collegial body, which includes the Chairman of the Bank of Russia and 12 members of the Board of Directors. The chairman is appointed by the State Duma for a period of 4 years by a majority vote of the total number of deputies. Council members work on a permanent basis at the Bank of Russia.
The Board of Directors in accordance with Art. 16 of the Law performs the following tasks:
1) develops and ensures the implementation of the main directions of the unified state monetary policy of the state in cooperation with the Government of the Russian Federation;
2) approves the annual report of the Central Bank and submits it to the State Duma;
3) considers and approves the expense account of the Central Bank for the next year;
4) determines the structure of its subdivisions;
5) makes decisions concerning:
· Creation and liquidation of institutions and organizations of the Central Bank;
· Establishment of mandatory standards for credit institutions;
· The amount of reserve requirements;
· Changes in interest rates of the Central Bank;
· Determination of limits for operations in the open market;
· Participation in international organizations;
· Purchase and sale of real estate to ensure the activities of the Central Bank;
· Application of direct quantitative restrictions;
· Issue and withdrawal of banknotes and coins from circulation, on the total volume of issue of cash;
· The procedure for the formation of reserves by credit institutions;
6) submits proposals to the State Duma on changing the authorized capital of the Central Bank;
7) approve the procedure for its work;
8) appoints the chief auditor by the Central Bank;
9) approves its internal structure;
10) determines the conditions for the admission of foreign capital to the banking system of the Russian Federation.
To improve the monetary system and coordinate the work of the Central Bank, legislative and executive authorities, ministries, departments, economic structures and credit institutions, the National Banking Council was created under it, which includes two chairmen each from the chambers of the Federal Assembly of the Russian Federation and the Government of the Russian Federation, as well as the Minister of Finance of the Russian Federation and the Minister of Economy of the Russian Federation. The rest of its members are appointed by the State Duma on the proposal of the Chairman of the Central Bank. As an expert advisory body, it performs the following functions:
· Considers drafts of the main directions of the unified state monetary policy, foreign exchange regulation and foreign exchange control policy;
· Defines the concept of improvement and development of the banking system;
· Develops the basic principles of organizing the settlement system in the Russian Federation and regulating the activities of credit institutions;
· Carries out examination of draft laws and other regulations in the field of banking.
The law confirms the organization of the Central Bank according to the principle of a single centralized system with a vertical subordination scheme, including the central office, territorial offices, RCC, computer centers, educational and other institutions. National banks of the republics within the Russian Federation are territorial institutions of the Central Bank. As subdivisions of the Bank of Russia, they do not have the status of a legal entity. In addition, they cannot make decisions of a regulatory nature, as well as issue guarantees, sureties, promissory notes and other obligations.
The Central Bank of the Russian Federation has an authorized capital that serves as a security for its obligations, can create reserves and funds for various purposes at the expense of its profits, including an insurance fund formed by compulsory deductions from commercial banks on the terms and in the manner determined by the Bank's Charter. The rates of deductions of profit to these funds and the procedure for their spending are determined by the Board of Directors.
The Central Bank issues regulations that are binding on federal government bodies, federal subjects, local government bodies, as well as for all legal entities and individuals. They are not retroactive.
The reporting period is set from January 1 to December 31 of each year. The structure of the bank's balance sheet is determined by the Board of Directors. The annual report is submitted annually to the State Duma no later than May 15. The latter considers it until July 1 of the next year and sends its conclusion to the Government and the President of the Russian Federation. After that, it is published no later than July 15 of the next year. In addition, the central bank publishes monthly its balance sheet, data on money circulation, including the dynamics and structure of money supply, summarized data on its operations.
The Central Bank transfers to the federal budget 50% of the actually received balance sheet profit for the year after the approval of the bank's annual report by the Board of Directors, the remaining profit - to reserves and funds for various purposes. He and his institutions are exempt from all taxes, collection of duties and other payments on the territory of the Russian Federation.
To consider the annual report of the central bank, the State Duma, before the end of the reporting year, makes a decision on its audit and appoints an audit firm licensed to conduct banking audits on the territory of the Russian Federation.
Internal audit of the Central Bank is carried out by the office of the chief auditor, directly subordinate to the Chairman of the Central Bank.
2.3 Functions of the Central Bank of Russia
The Bank of Russia performs its functions in accordance with the Constitution of the Russian Federation and the Federal Law "On the Central Bank of the Russian Federation (Bank of Russia)" and other federal laws. According to Article 75 of the Constitution of the Russian Federation, the main function of the Bank of Russia is to protect and ensure the stability of the ruble, and the issue of money is carried out exclusively by the Bank of Russia. In accordance with Article 4 of the Federal Law "On the Central Bank of the Russian Federation (Bank of Russia)", the Bank of Russia performs the following functions:
In cooperation with the Government of the Russian Federation, develops and implements a unified monetary policy;
Monopoly issues cash and organizes cash circulation;
Is the lender of last resort for credit institutions, organizes their refinancing system;
Establishes the rules for making settlements in the Russian Federation;
Establishes the rules for conducting banking operations;
Serves the accounts of budgets of all levels of the budgetary system of the Russian Federation, unless otherwise established by federal laws, through settlements on behalf of authorized executive bodies and state extra-budgetary funds, which are responsible for organizing the execution and execution of budgets;
Carries out effective management of the gold and foreign exchange reserves of the Bank of Russia;
Decides on state registration of credit institutions, issues banking licenses to credit institutions, suspends and revokes them;
Supervises the activities of credit institutions and banking groups;
Registers the issue of securities by credit institutions in accordance with federal laws;
Carries out, independently or on behalf of the Government of the Russian Federation, all types of banking operations and other transactions necessary to perform the functions of the Bank of Russia;
Organizes and implements currency regulation and currency control in accordance with the legislation of the Russian Federation;
Determines the procedure for making settlements with international organizations, foreign states, as well as with legal entities and individuals;
Establishes the rules of accounting and reporting for the banking system of the Russian Federation;
Establishes and publishes the official exchange rates of foreign currencies in relation to the ruble;
Participates in the development of the forecast of the balance of payments of the Russian Federation and organizes the compilation of the balance of payments of the Russian Federation;
Establishes the procedure and conditions for the implementation by currency exchanges of activities for organizing transactions for the purchase and sale of foreign currency, issues, suspension and revocation of permits for currency exchanges to organize transactions for the purchase and sale of foreign currency. (The functions of issuing, suspending and revoking permits for currency exchanges to organize transactions for the purchase and sale of foreign currency will be performed by the Bank of Russia from the date the federal law enters into force on amending the Federal Law "On Licensing Certain Types of Activities");
Analyzes and predicts the state of the economy of the Russian Federation as a whole and by region, primarily monetary, monetary, financial and price relations, publishes relevant materials and statistical data;
Carries out other functions in accordance with federal laws.
2.4 Monetary policy instruments and methods
According to the law, the Central Bank develops and implements, in cooperation with the Government of the Russian Federation, a unified state monetary policy. At the same time, he sets the main direction of the economic policy of the Government of the Russian Federation and uses economic levers to regulate the money supply in circulation and direct it to the relevant spheres of the economy. The main instruments and methods of the Central Bank's monetary policy are:
1) interest rates on Bank of Russia operations;
2) ratios of required reserves deposited with the Bank of Russia (reserve requirements). Required reserve ratios cannot exceed 20% of a credit institution's liabilities and can be differentiated for different credit institutions. Required reserve ratios cannot be changed by more than five points at a time;
3) operations on the open market (purchase and sale by the Bank of Russia of treasury bills, government bonds and other government securities, short-term operations with securities with a later return transaction);
4) refinancing of banks (lending by the Bank of Russia to banks, including accounting and rediscounting of bills);
5) currency regulation (the purchase and sale of foreign currency by the Bank of Russia in the foreign exchange market to influence the ruble exchange rate and the total demand and supply of money);
6) the establishment of benchmarks for the growth of the money supply;
7) direct quantitative restrictions (setting limits on refinancing
8) banks and the conduct of certain banking operations by credit institutions).
3. MONETARY POLICY OF THE CENTRAL BANK
3.3 The main tasks, goals, and forms of monetary regulation
Monetary regulation carried out by the Central Bank is one of the elements of the state's economic policy and is a set of measures aimed at changing the money supply in circulation, the volume of loans, the level of interest rates and other indicators of money circulation and the loan capital market. It aims to achieve stable economic growth, low inflation and unemployment. The laws on Central Banks emphasize their responsibility for the stability of monetary circulation and the exchange rate of the national currency.
Implementing monetary policy, the Central Bank, influencing the lending activities of commercial banks and directing regulation to expand or reduce lending to the economy, achieves stable development of the domestic economy, strengthening monetary circulation, and balancing internal economic processes. Thus, the impact on credit allows you to achieve deeper strategic objectives for the development of the entire economy as a whole.
Monetary policy is based on the theory of money, which studies, in particular, the process of the impact of money and monetary policy on the state of the economy as a whole. In modern conditions, states with market models of the economy use one of two concepts of monetary policy:
· Policy of credit expansion, or "cheap" money;
· Policy of credit restriction, or "expensive" money.
Credit expansion of the Central Bank increases the resources of commercial banks, which, as a result of issued loans, increase the total mass of money in circulation. Credit restriction entails limiting the ability of commercial banks to issue loans and thereby saturate the economy with money.
The development of monetary policy by the Bank of Russia is carried out in accordance with Art. 45 of the Federal Law “On the Central Bank of the Russian Federation (Bank of Russia)”. The Bank of Russia annually, no later than August 26, submits to the State Duma a draft of the main directions of the unified state monetary policy for the coming year and no later than December 1 - the main directions of the unified state monetary policy for the coming year. The draft is presented to the President and the Government of Russia in advance.
The State Duma considers the main directions of the unified state monetary policy for the coming year and makes an appropriate decision no later than the adoption by the State Duma of the federal law on the federal budget for the coming year. This achieves the unity of the objectives of the monetary and financial policy.
Monetary policy is implemented using certain methods and instruments.
3.2 Monetary policy methods
Monetary policy methods are a set of techniques and operations through which the subjects of monetary policy - the Central Bank as a state body for monetary regulation and commercial banks as "conductors" of monetary policy - affect objects (demand for money and supply money) to achieve the goals. The methods of conducting day-to-day monetary policy are also referred to as tactical monetary policy objectives.
The modern system of monetary policy methods is as diverse as monetary policy itself. The classification of methods of monetary policy can be carried out according to various criteria.
Direct and indirect regulation of the monetary sphere
Within the framework of monetary policy, methods of direct and indirect regulation of the monetary sphere are applied. Direct methods have the character of administrative measures in the form of various directives of the Central Bank concerning the volume of money supply and prices in the financial market. The implementation of these measures has the most rapid effect in terms of central bank control over the price or maximum volume of deposits and loans, especially in the context of the economic crisis. However, over time, direct methods of influence in the event of an “unfavorable” influence on their activities from the point of view of business entities may cause an overflow, an outflow of financial resources into the “shadow economy” or abroad.
Indirect methods of regulating the monetary sphere affect the motivation of the behavior of business entities using market mechanisms. Naturally, the efficiency of using indirect methods of regulation is closely related to the degree of development of the money market. In transition economies, especially at the first stages of transformations, both direct and indirect instruments are used, with the former being gradually replaced by the latter.
General and selective methods of monetary regulation
In addition to dividing the methods of monetary regulation into direct and indirect, general and selective methods of implementing the monetary policy of the Central Bank are also distinguished.
General methods are predominantly indirect, affecting the money market as a whole.
Selective methods regulate specific types of credit and are mainly prescriptive in nature. Their purpose is associated with solving particular problems, such as, for example, limiting the issuance of loans by some banks or limiting the issuance of certain types of loans, refinancing on preferential terms of certain commercial banks, etc. Using selective methods, the Central Bank retains the functions of centralized redistribution of credit resources. Such functions are unusual for the central banks of countries with market economies. The use of selective methods of influence on the activities of commercial banks in the practice of central banks is typical for economic policy pursued at the stage of a cyclical recession, in conditions of a sharp violation of the proportions of reproduction.
At the same time, direct methods of monetary policy are rough methods of external influence on the functioning of the subjects of the money market, affecting the foundations of their economic activity. They can contradict the microeconomic interests of credit institutions, lead to inefficient allocation of credit resources, to restrictions on interbank competition, and difficulties in the emergence of new financially stable institutions in the banking market.
Thus, the negative consequences of direct methods of monetary policy often prevail over the advantage of their application in market conditions, since they distort the market mechanism.
Therefore, the central banks of countries with developed market economies have practically abandoned direct methods of monetary policy and resort to them in exceptional cases when it is necessary to take "quick response measures", for example, in the context of a sharp development of an economic crisis.
The practice of forming a market economy and its development have proven the low efficiency of direct methods of monetary policy. As a result, there is a widespread displacement of direct methods of monetary policy by indirect ones.
The choice of the type of monetary policy pursued, and, accordingly, the set of instruments for regulating the activities of commercial banks, the Central Bank carries out on the basis of the state of the economic situation in each specific case. The main directions of monetary policy developed on the basis of this choice are approved by the legislative body. In this case, it is necessary to take into account the time lag between the implementation of a particular measure of monetary regulation and the manifestation of the effect of its implementation. The effectiveness of the application of various types of monetary policy is determined by the extent to which the destabilization of monetary circulation is caused by “purely” monetary rather than general economic and political factors.
3.3 Monetary policy instruments
The influence of the subjects of monetary policy on its objects is carried out using a set of specific instruments. Monetary policy instruments are understood as a means, a method of influence of the Central Bank as a body of monetary regulation on the objects of monetary policy.
The Federal Law "On the Central Bank of the Russian Federation" (Article 35) defines the main instruments of monetary policy:
1. Operations on the open market.
2. Norms of required reserves deposited with the Central Bank (reserve requirements).
3. Interest rates on operations of the Central Bank.
4. Refinancing of credit institutions.
5. Foreign exchange interventions.
6. Establishing benchmarks for money supply growth.
7. Direct quantitative restrictions.
8. Issue of bonds in its own name.
Let us consider in more detail the instruments of the monetary policy of the Russian Federation.
Open market operations
Economic measures to regulate monetary policy also include operations of the Central Bank in the open market with securities. Open market policy refers to the sale and purchase of government securities by the Central Bank in order to influence the money market. The main task of the open market policy is to regulate the supply and demand for securities, to cause a corresponding reaction from commercial banks.
Open market policies are a quick and flexible tool. When selling and buying securities, the Central Bank tries by offering favorable interest to influence the volume of liquid funds of commercial banks and thereby to manage their credit issue. By buying securities on the open market, he increases the reserves of commercial banks and contributes to the growth of money supply. This is used especially effectively during a crisis. During a period of high market conditions, the Central Bank offers commercial banks to buy securities in order to reduce their lending opportunities in relation to the economy and the population.
The Central Bank can pursue such a policy in two ways. First, he can determine the level of purchase and sale and the interest rates at which banks can buy securities from him. The selling rate of securities is set differentially, depending on their term. In this case, the impact on the formation of market rates will be indirect. Second, the Central Bank can set the interest rates at which it is willing to buy securities.
The success of an open market policy depends on many factors. Commercial banks purchase securities from the Central Bank only when there is a small demand for loans from entrepreneurs and the population, and also when the Central Bank offers open market securities on terms more favorable for commercial banks than the terms of providing loans from commercial banks to entrepreneurs and the population.
When it is necessary to support the liquidity of commercial banks, and, accordingly, their lending activity, the Central Bank acts as a buyer in the open market. In this case, repurchase agreements are widely used, according to which the Central Bank undertakes to buy securities from commercial banks on the condition that the latter, after a certain period of time, carry out a reverse transaction, i.e. redemption of securities, but already at a discount - the so-called reverse transactions (REPO transactions). This discount can be fixed or floating between two boundaries. Reverse operations on the open market are characterized by a softer impact on the money market and therefore are a more flexible method of regulation.
Bank refinancing
Initially, the policy of refinancing commercial banks by the Central Bank was used exclusively to influence the state of monetary circulation. With the development of market relations, refinancing began to be used more and more actively as a tool for providing financial assistance to commercial banks. The central bank thus becomes the lender of last resort and acts as a “bank of banks”. Refinancing loans will allow them to minimize the stock of liquid funds as a result of using borrowings from the Central Bank. This is especially evident now in the banking system of Russia, where the main instrument for providing additional liquidity is the refinancing of banks. According to the decision of the Board of Directors of the Central Bank, during the restructuring of the banking system, banks will be provided loans to maintain liquidity, increase financial stability, as well as stabilization loans for up to one year within the guidelines of monetary policy. As the situation in the banking sector normalizes, it is planned to stop providing these loans.
Credit refinancing is distinguished by:
The form of security - discount and pawn loans;
Terms of use - short-term (for 1 or several days) and medium-term (up to 6 months);
Delivery methods - direct loans and loans sold by the Central Bank through auctions;
Target nature - adjusting and seasonal loans.
Interest rate policy or regulation of the official interest rate
The traditional function of the Central Bank is to provide loans to commercial banks. The rate of interest at which these loans are originated is called the discount rate or refinancing rate. By changing this rate, the Central Bank can influence the reserves of banks, expanding or reducing their ability to provide loans to the population or enterprises. Depending on the value of the discount interest, a system of interest rates of commercial banks is built, the cost of credit increases or decreases in general, and thus conditions for limiting or expanding the money supply in circulation are created. Commercial banks independently determine the size of the premium to the official refinancing rate of the Central Bank, depending on the financial condition of the borrower, profitability, prospects and priority of the loaned object.
The central bank regulates the level of interest rates in two ways:
By fixing rates for the provision of loans to commercial banks, which serve as a specific benchmark for market rates;
Through control over the rates of credit institutions.
In the first case, the Central Bank, setting the official discount rate, determines the cost of attracting resources by banks: the higher the discount rate, the higher the cost of refinancing banking operations. In the second case, only the cost of certain types of credit or the operation of only certain banks is subject to regulation.
The interest rate policy of the Central Bank in the post-crisis period is to regulate interest rates on all operations of the bank in the money market in order to maintain the required level of liquidity in the banking system.
The central bank does not directly affect the interest rates on transactions of commercial banks with their clients. These interest rates are determined by themselves and depend on the amount of money in circulation and the effectiveness of the intermediary activities of the banking system and financial markets.
During 1991-2008. The Central Bank has repeatedly changed the refinancing rate depending on the conditions in the money market. In 2008, the Central Bank raised the refinancing rate from 10 to 12% as of November 12, 2008, and from December 1, 2008, the rate will be introduced at 13%.
Rediscounting of bills has long been one of the main methods of monetary policy of central banks in Western Europe. Central Banks made certain requirements to the bill of exchange being discounted, the main one of which was the reliability of the debt obligation.
The promissory notes are rediscounted at the discount rate. This rate is also called the official discount rate, usually it differs from the loan (refinancing) rate by a small amount downward. The central bank buys the debt at a lower price than the commercial bank.
The scheme of rediscounting of bills of the Central Bank is simple: a commercial bank, which receives the status of an accounting bank from one of the divisions of the Central Bank, finances an exporting organization against receipt of a promissory note issued in the name of an accounting bank. The accounting bank, in turn, rediscounts (that is, sells before maturity) this promissory note to the Central Bank at a predetermined interest rate.
Discount (discount loans) are loans provided by the Central Bank to commercial banks against bills of exchange before their expiration. According to the laws in force in different countries, the Central Bank is authorized to buy from banks and sell them commercial and treasury bills based on the established discount rate. An important tool for influencing the state of monetary circulation is the use of quantitative restrictions on the accounting loans available to banks by setting limits on the total amount of re-accounted borrowings. The limit applies to all bills rediscounted by the Central Bank and can be set individually for individual institutions or in the form of restrictions on the amount of loans provided to one borrower. Depending on the situation in the monetary sphere, the limits of rediscounting are either reduced or increased. By increasing the level of the limit, the Central Bank seeks to equalize financial losses resulting from changes in market conditions, or to increase the credit resources of banks within the framework of the foreseen increase in the money supply. Therefore, the increase in the level of the credit limit does not mean that the Central Bank is pursuing an expansionary monetary policy, but is viewed as a mechanism for regulating bank liquidity.
Lombard loans provided by the commercial Central Bank are interest-bearing loans secured by securities. Loan sizes are set depending on the type of collateral. The value of the collateral must exceed the amount of the lombard loan. Lombard loans are provided only for short-term difficulties experienced by credit institutions. The interest rate of a pawn loan usually exceeds the discount rate by 1-3%.
Central Bank refinancing loans are divided into short-term - overnight loans, intraday loans - and medium-term loans - from 1-2 months to 6 months or up to 1 year.
Mandatory reserves - one of the main instruments for implementing the monetary policy of the Central Bank - are a mechanism for regulating the overall liquidity of the banking system. Minimum reserves is a mandatory norm for commercial banks' deposits in the Central Bank, established by law in order to limit the lending opportunities of credit institutions and maintain the amount of money in circulation at a certain level. The obligation to fulfill reserve requirements arises from the moment of obtaining a license from the Central Bank for the right to carry out relevant banking operations and is a necessary condition for their implementation. The credit institution is responsible for observing the procedure for depositing required reserves. The procedure for depositing required reserves is carried out on the basis of the "Regulations on the required reserves of credit institutions deposited with the Central Bank of the Russian Federation", developed by the Central Bank in 1996. The amount of required reserves as a percentage of the liabilities of a credit institution, as well as the procedure for depositing them with the Central Bank are established By the Board of Directors of the Central Bank. Required reserve ratios may not exceed 20% of a credit institution's liabilities. They cannot be changed by more than five points at a time. If the credit institution fails to meet the requirements, the amount of underpayment to the required reserves is collected, as well as fines for violation of the reservation procedure in the established amount, but not more than double the refinancing rate.
The obligation to fulfill the reserve requirements arises from the moment of obtaining the license. After the revocation of the banking license from the credit institution, the funds of the required reserves are transferred to the account of the liquidation commission or the bankruptcy commissioner and used in the manner established by federal laws and regulations of the Central Bank issued in accordance with them.
The Central Bank forms the reserve fund of the RF credit system from the required reserves, the funds of which are formed by reserving in it a certain share of funds from third-party enterprises and organizations attracted by commercial banks, these funds are used as credit resources. In the overwhelming part, these include temporarily free funds on settlement, current accounts, as well as funds made in deposits and deposits by enterprises, organizations and citizens. Loans from other banks are not included in these attracted funds.
The size of reserves - a part of bank assets that any commercial bank is obliged to keep in the accounts of the Central Bank, largely determines the credit capabilities of a commercial bank. He can issue loans and thereby expand the money supply only if he has free reserves in excess of the minimum rate established by law. By increasing or decreasing the official reserve requirements, the Central Bank can regulate the lending activity of banks and thereby control the money supply.
The regulation of minimum reserve requirements has a dual purpose:
· Firstly, it is designed to ensure a constant level of liquidity in commercial banks.
· Secondly, it is an important instrument of the Central Bank for regulating the money supply and the creditworthiness of commercial banks.
The Mandatory Reserve Fund was created in order, if necessary, to ensure that commercial banks can timely fulfill their obligations to clients to return previously attracted funds, since part of these funds are deposited and are not used by banks as credit resources.
The central bank, by changing the required reserve ratio, influences the credit policy of commercial banks and the state of the money supply in circulation. Thus, a decrease in the required reserve ratio allows commercial banks to use the credit resources they have formed to a fuller extent, that is, to increase credit investments. However, it should be borne in mind that such a policy leads to an increase in the money supply in circulation and, in conditions of a decline in production, causes inflationary processes.
If interest rates on required reserves are high, then the Central Bank limits the amount of money at the disposal of commercial banks. This reduces the creditworthiness of the latter and increases the interest on the loans they issue. Therefore, the reserved part of such deposits should exceed the amount of deposits with long storage periods.
The level of development of the banking system and the state of the economy as a whole also affect the size of the required reserve ratio. In countries with a developed banking system operating in a stable economy, the required reserves are set for a relatively long time.
Currency regulation
The need to regulate the exchange rate is due to the negative consequences of its sharp and unpredictable fluctuations. Maintaining the stability of the national currency rate is of great importance for ensuring the stability of prices and monetary circulation. A depreciation of the national currency leads to an increase in prices in the domestic market, i.e., to a decrease in the purchasing power of the national currency. In conditions of a constant depreciation of the national currency, prices for goods in the domestic market are guided not so much by production costs as by the fall in the national currency. The depreciation becomes a factor of inflation.
The Central Bank regulates the exchange rate by:
Carrying out monetary policy;
Foreign exchange intervention;
Use of state reserves of international means of payment or foreign loans.
In practice, two main forms of monetary policy are usually used: discount and motto.
Discount (accounting) policy is carried out not only with the aim of changing the conditions of refinancing of domestic commercial banks, but sometimes aimed at regulating the exchange rate and balance of payments.
The central bank, buying or selling foreign currencies (mottos), acts in the right direction on the change in the exchange rate of the national monetary unit - this is the motto policy. Such operations are called "foreign exchange interventions". By purchasing the national currency at the expense of official gold and foreign exchange reserves (or through swap agreements), it increases demand, and, consequently, its rate. On the contrary, the sale by the Central Bank of large parties of the national currency leads to a decrease in its rate. The influence of the foreign exchange policy of the Central Bank in the form of transactions in the forward foreign exchange market is manifested in the stimulation of either export or import of capital. The direction of the desired movement of capital depends on the priorities of the Central Bank's policy in a given economic situation, which can be expressed either in stimulating commodity exports (dumping policy), or in maintaining the exchange rate of the national currency in relation to the foreign one.
Along with direct measures of foreign exchange regulation - discount and motto policies - and measures of direct foreign exchange regulation, many other legislative norms have a significant impact on the exchange rate. Among them, the following three groups of norms can be distinguished.
1. Norms of tax legislation:
Taxation of exchange rate differences;
Form of payments of taxes on foreign exchange transactions;
Taxation of transactions for the purchase and sale of foreign currency
2. Norms governing the economic conditions of development:
Legislative regulation of settlements in foreign currency on the territory of the country;
Requirements for enterprises wishing to use a foreign currency account and cash desk;
The rate of compulsory sale of foreign exchange earnings;
Interest rate on foreign currency loans written off to the prime cost;
Regulation of public procurement (selection of suppliers - domestic or foreign).
3. Norms of banking legislation:
Required reserves and the form of their transfer to the Central Bank. Many banks practice temporary restructuring of accounts before determining the amounts to be transferred as required reserves to the Central Bank, if the reserve ratio for foreign currency deposits is lower than for ruble deposits. Today it is one.
Requirements for banks wishing to carry out transactions in foreign currency. The tightening of the listed requirements leads, on the one hand, to an increase in the professionalism of banks that maintain foreign currency accounts, and on the other hand
To change in value banking services for servicing foreign currency accounts. At the same time, two tendencies are manifested: a decrease in supply and a limitation of competitiveness leads to an increase in the cost of banking services, and the concentration of operations in large banks reduces costs and, accordingly, the cost of services. This, in turn, affects the number of enterprises wishing to have foreign currency accounts. As a result, the demand in the foreign exchange market changes.
Setting benchmarks for money supply growth and direct quantitative restrictions: targeting policy
Targeting, that is, setting targets for the growth of the money supply in circulation, setting upper and lower limits for its increase for a certain period.
In essence, targeting is the establishment of direct restrictions on the growth of the money supply. An important point affecting the effectiveness of regulating the dynamics of the money supply using targets.
There is a direct link between the establishment of benchmarks for the dynamics of the money supply and the effectiveness of other instruments of monetary regulation used by the Central Bank. Comparison of the dynamics of the money supply with the established benchmarks makes it possible to quite accurately determine the period during which the intervention of regulatory bodies is required, and the timeliness of the adoption of measures increases their effectiveness.
The use by the Central Bank of target benchmarks of money supply dynamics contributes to an increase in the efficiency and reliability of the monetary regulation system.
Along with the economic methods by which the central bank regulates the activities of commercial banks, it can use administrative methods of influence in this area. These include, for example, the use of quantitative credit limits. This method of credit regulation is a quantitative limitation of the amount of loans issued. Unlike the regulatory methods discussed above, credit allocation is a direct method of influencing the activities of banks. Also, credit restrictions lead to the fact that borrowing companies find themselves in an unequal position. Banks tend to lend 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 with the help of the specified policy of curbing banking activity and moderate growth of the money supply, the state contributes to a decrease in business activity. Therefore, the method of quantitative restrictions was not used as actively as before, and in some countries it was completely canceled.
Also, the Central Bank can establish various standards (ratios) that commercial banks are required to maintain at the required level. These include the capital adequacy ratios of a commercial bank, balance sheet liquidity ratios, ratios maximum size risk per borrower and some complementary regulations. The listed standards are mandatory for commercial banks. Also, the Central Bank may establish optional, so-called valuation standards, which are recommended for commercial banks to maintain at the proper level. If commercial banks violate banking legislation, the rules for conducting banking operations, and other serious shortcomings in their work, which leads to the infringement of the rights of their shareholders, depositors, customers, the central bank may apply the most severe administrative measures against them, up to the liquidation of banks.
It is obvious that the use of administrative influence by the central bank in relation to commercial banks should not be systematic, but should be applied in the order of exclusively forced measures.
All of the above tools are indirect methods.
The law stipulates that the Central Bank can also apply direct quantitative restrictions (setting limits) on refinancing banks, conducting certain banking operations by credit institutions. But this happens in exceptional cases in order to carry out a single state monetary policy only after consultation with the Government of the Russian Federation. The central bank can set the benchmarks for the growth of one or several indicators of the money supply, based on the main directions of the unified state monetary policy.
4. MAIN DIRECTIONS OF THE UNIFIED STATE MONETARY POLICY FOR 2008
4.1 Medium-Term Monetary Policy Principles
In 2008, the principles of a single state monetary policy that have been formed in recent years will be used, however, in the medium term, the macroeconomic conditions for its implementation are expected to change, which will require a shift in emphasis from programming the money supply to using the interest rate and a transition from exchange rate management to a free regime. floating exchange rate.
External changes are mainly related to the uncertainty in the dynamics of world prices for energy resources, which form the basis of Russian exports. According to the forecast of socio-economic development in 2008 and especially in the next two years, a possible decrease in these prices will entail a reduction in the trade balance and a decrease in the inflow of foreign exchange. High prices for Russian export goods have recently been a fundamental factor in the choice of a managed floating exchange rate regime, within which the Bank of Russia actively counteracted the excessive strengthening of the ruble through interventions in the domestic foreign exchange market. Changes in the terms of trade will reduce the imbalance between supply and demand in the domestic foreign exchange market and reduce the need for the Bank of Russia to be present on it. It is expected that by 2010 the increase in foreign exchange reserves may significantly decrease and the increase in net foreign assets of the monetary authorities will cease to serve as the main source of growth in the money supply.
In these conditions, in order to ensure that the volume of the money supply corresponds to the demand for money, the Bank of Russia will need to intensify its refinancing operations for banks. At the same time, the possibilities for the influence of monetary policy on the dynamics of inflationary processes with the help of the interest rate will expand.
The most important internal condition that will have an impact on the conduct of monetary policy is a change in the principles of formation state budget... The main new aspects of the budget strategy are:
Planning and approval of the federal budget for a three-year period in the form of a law;
Separation of revenues into oil and gas and non-oil and gas revenues with the determination of the size of the oil and gas transfer directed to federal budget expenditures as part of the transformation of the Stabilization Fund of the Russian Federation into the Reserve Fund and the Fund for Future Generations.
The transition to a "sliding" three-year horizon of budget formation will contribute to a more even spending of state budget funds throughout the year, as a result of which the dependence of the money supply dynamics on seasonal fluctuations in the movement of budget funds will decrease.
The implementation of the interest rate policy by narrowing the range of interest rates on refinancing operations of credit institutions and the absorption of their surplus funds makes it possible to influence the change in the boundaries of fluctuations in money market rates. The Bank of Russia considers reducing the volatility of short-term interest rates in the interbank market and the formation of a long-term segment of the money market among the main tasks of its operations in the open market.
At present, the value of money in the economy is formed under conditions of a high level of liquidity resulting from the inflow of large volumes of foreign exchange earnings and active foreign exchange interventions by the Bank of Russia. As the volume of Bank of Russia interventions in the domestic foreign exchange market decreases, the rates on market-based refinancing instruments of banks (direct REPO transactions) will have an increasing influence on the formation of money market interest rates. A decrease in the refinancing rate in line with a decrease in inflation rates will help maintain a stable value of the real interest rate and reduce inflationary expectations of market participants. At the same time, the level of interest rates on liquidity tying operations will be influenced by the differential of internal and external interest rates.
To maintain macroeconomic stability, the Bank of Russia will continue to apply and develop elements of the inflation targeting regime, the most important of which are the priority of the goal of reducing inflation over other goals and the medium-term nature of its establishment. To introduce inflation targeting in full, the Bank of Russia will need to switch to a free floating exchange rate regime, as well as implement measures aimed at using the interest rate as the main instrument of monetary policy, performing a signal function and affecting the monetary conditions of the economy.
One of the key conditions for the successful application of the inflation targeting regime is the ability of the central bank to influence inflation expectations of economic agents. Therefore, the Bank of Russia sees its task as increasing the openness and transparency of its actions and increasing the degree of public confidence in its policies. The publication of analytical materials and information on the development of the situation in the economy, the monetary sphere and the banking system is aimed at explaining to the public the goals and measures of the policy pursued by the Bank of Russia.
When making monetary policy decisions, the Bank of Russia will rely on a wide range of macroeconomic and financial indicators, as well as on monetary aggregates that characterize current monetary conditions and are indicators of future inflationary pressures.
The effectiveness of monetary policy implementation is determined by the Bank of Russia 's capabilities to manage the banking sector liquidity, which, in turn, are closely related to the state of the domestic financial market and payment system. The actions of the Bank of Russia will be aimed at increasing the availability of refinancing instruments for credit institutions, reducing transaction costs and developing market infrastructure, and building a system of gross settlements in real time.
4.2 Monetary Policy Objectives and Instruments in 2008
In 2008, the Bank of Russia will continue to work on improving the system of monetary policy instruments and their operational use to ensure a stable state of the monetary sphere under various scenarios of the country's socio-economic development.
The priority will be given to the consistent activation of interest rate policy and the increase in the importance of the interest rate channel in the transmission mechanism of monetary policy as the necessary economic preconditions are formed. The key factors include: a significant decrease in the balance of payments surplus predicted in the medium term, a corresponding decrease in the Bank of Russia participation in operations in the domestic foreign exchange market. The consequence of this should be a slowdown in the dynamics of money supply. In these conditions, one can expect an increase in the influence of rates on Bank of Russia operations on interest rates in the Russian economy.
The consistent narrowing of the interest rate corridor for the Bank of Russia operations in the money market in 2008 will remain the strategic direction of the interest rate policy. In the context of the abolition of restrictions on capital flows, the lower border of the corridor will be raised taking into account the risk of large-scale inflow of foreign capital.
The Bank of Russia will use instruments for absorbing free banking liquidity, primarily operations with OBR and deposit operations carried out on a regular basis. At the same time, in 2008, the main sterilization channel (in terms of the amount of absorbed funds) will continue to be the use of the budgetary mechanism within the framework of the planned transition to the formation of Reserve fund and the Fund for Future Generations.
Market instruments used on an auction basis (auctions for the sale of OBR and deposit auctions) will play a leading role in tying up free cash resources by the Bank of Russia. The transition to the issuance of short-term OBRs will help to simplify the use of this sterilization instrument and, accordingly, increase the demand for it from the money market participants. At the same time, in 2008, the Bank of Russia will continue to use standing instruments to tie up liquidity for short periods (deposit operations at fixed rates on standard terms).
In addition, if a long-term absorption of liquidity is required, the Bank of Russia intends to carry out transactions for the sale of government securities from its own portfolio (without an obligation to repurchase). In 2008, it is planned to consider the issue of changing the structure of the portfolio of government securities owned by the Bank of Russia through the exchange of bonds federal loan(OFZ) with non-market characteristics for more liquid issues, which will increase the efficiency of using this instrument.
Mandatory reserve requirements will continue to be used by the Bank of Russia as a direct instrument for regulating banking sector liquidity. In the event of a significant increase in banking liquidity, in particular as a result of an intensive inflow of short-term foreign capital into the Russian economy, when the use of other instruments to absorb it will not be able to produce the desired effect, the Bank of Russia admits the possibility of an increase in the required reserve ratios. At the same time, in order to provide credit institutions with the opportunity to efficiently manage their own liquidity, the Bank of Russia may continue to gradually increase the required reserves averaging ratio.
The Bank of Russia takes into account the possibility of changes in the level of liquidity of the banking sector associated with external shocks, including the risks of a significant reduction in the level of liquidity in the context of continued uncertainty regarding the direction of cross-border capital flows, as well as changes in world prices for Russian export goods.
In the event of a decrease in the level of bank liquidity, including those of a short-term nature, the Bank of Russia is ready to intensify the use of instruments for the provision of funds to credit institutions on auction and fixed terms. For this, direct REPO auctions, Lombard credit auctions, the use of standing instruments (Lombard loans provided at fixed interest rates, “currency swap” transactions) will continue. To ensure the smooth execution of settlements, credit institutions will be provided with intraday and overnight loans from the Bank of Russia on a daily basis.
In order to improve the efficiency of refinancing operations of credit institutions, the Bank of Russia will continue in 2008 to create a unified refinancing mechanism. At the same time, the main task of the Bank of Russia is to create a system that will provide any financially stable credit institution with the opportunity to receive intraday loans, overnight loans and loans for up to 1 year under any type of collateral included in the "single pool" of collateral.
The planned measures are aimed at ensuring prompt access of credit institutions to a sufficient amount of funds provided through the operations of the Bank of Russia.
In 2008, work will continue to include securities that meet the requirements of the Bank of Russia in the Bank of Russia Lombard List, as well as to expand the range of Bank of Russia counterparties for refinancing operations and the number of credited accounts of credit institutions opened in all regional branches of the Bank of Russia.
In connection with the planned expansion of the composition of property accepted as collateral for Bank of Russia loans, during 2008 the Bank of Russia will develop a mechanism for attracting specialized organizations, including the Deposit Insurance Agency, to organize public auctions for the sale of property accepted as collateral for Bank loans. Russia and not circulating in Russia on the organized market, in case of non-repayment by credit institutions - borrowers of loans from the Bank of Russia.
The development of the repo market with a central counterparty will help to increase the efficiency of the Bank of Russia instruments for providing and withdrawing liquidity. Due to the anonymity of transactions and the absence of counterparty risk, this type of transactions allows to overcome the segmentation of the interbank market and facilitate a more efficient flow of liquidity within the banking system.
Summing up the work done, it should be noted once again that monetary policy is one of the most powerful instruments of economic policy at the disposal of the state.
At present, the activities of the Central Bank of Russia are acquiring great importance, since stability and further growth of the economic potential of the country, individual sectors of the economy, as well as the strengthening of positions in the international market depend on its effective functioning and the correctly chosen methods by which it carries out its activities.
Based on the results of the work carried out, I made the following conclusions:
1. The goals, objectives and functions of the Central Bank of Russia correspond to its essence. All those goals and tasks that face him, the powers granted to him, are ultimately determined by the fact that the Central Bank acts as a nationwide center designed to regulate money circulation in the country.
2. The role of the Central Bank, as a subject of monetary policy, in monetary regulation of the economy lies in the fact that the Bank of Russia, in accordance with its inherent functions, carries out monetary policy to directly regulate the country's economic growth, increase production efficiency, ensure employment of the population, etc.
Monetary policy, originally intended for conjuncture regulation, having a variety of goals and a variety of instruments, has increasingly become focused on improving the financial environment: stability of exchange rates and prices of financial assets; control over the risks of financial intermediaries; creation of conditions necessary to improve the efficiency of the credit and financial system. In pursuit of these goals, the Central Bank changed the methods of monetary policy. The regulatory action using a variety of instruments has been replaced by the use of several indirect tools for “fine tuning” the money market, which make it possible to quickly respond to market fluctuations.
With such means as a revision of the reserve rate, a change in the discount rate, and open market operations, the Central Bank can exert a decisive influence on the money supply, and through it, on the real national product, employment and the price index.
Monetary policy largely determines exchange rates, thereby affecting the efficiency of foreign trade operations for exports and imports. It can be used not only to change the main internal macroeconomic variables, but also to manage the foreign trade balance.
In conclusion, I would like to note that the role of the Central Bank in the current conditions of economic development and stabilization is increasing day by day.
Bibliography
1. Banking: textbook / E.P. Zharkovskaya - M .: Omega-L, 2006
2. Banks and banking. / Ed. I.T.Balabanov. - SPb: Peter, 2001
3. Isaeva E. B. Monetary policy in Russia: opportunities and results // Money and Credit 1993 No. 9
4. Obukhov N.P. Credit market and monetary policy // Finance. 1995. No. 2
5. Official website of the Central Bank of the Russian Federation: http://www.cbr.ru
6. Collection of Laws of the Russian Federation. - M .: Publishing house "EKSMO", 2006
7. Semenyuta O.G. Banking Basics
8. Central Bank of the Russian Federation Main directions of the unified monetary and credit state policy for 2008 http://cbr.ru
9. Chekmaeva E. N. Interbank credit market and its regulation // Money and credit. 1994. No. 5-6.
10. http://www.akdi.ru - Internet server Agency of consultations and business information "AKDI Economy and Life"
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