MONETARY POLICY AND CREDIT SUPPORT OF THE ECONOMY IN CONDITIONS OF WAR AND GLOBAL INSTABILITY
DOI:
https://doi.org/10.15407/economyukr.2024.10.027Keywords:
monetary policy; bank lending; inflation targeting; money supply; global instability; financial mechanisms of developmentAbstract
The aggravation of global instability challenges, caused by the critical accumulation of socio-economic contradictions, foregrounds at the international level the problem of ensuring resilient development of the national economy, free from negative external influences. In this context, there is a need to revise existing approaches to the implementation of monetary policy as a tool for supporting resilient nationally rooted economic development.
It is shown that thanks to international aid in 2022-2023, unprecedented financial capital was formed in Ukrainian economy which is not used in the interests of economic reconstruction and defense, but is sterilized within the framework of the existing monetary regulation model in the NBU’s accounts, as well as in domestic government bonds and other liquid short-term instruments. This is a consequence of the weak institutional capacity of the state to freely use available financial resources, the inadequacy of chosen monetary policy model to current challenges and a certain manifestation of national de-sovereignization in the monetary sphere.
Tasks critical for the design of nationally rooted monetary policy and the productive functioning of Ukraine’s banking sector in wartime and in the period of post-war recovery are identified and substantiated. Such tasks are controllability of exchange rate and productive use of accumulated liquidity in the interests of economic development in priority directions. Implementation of the first point requires the development of currency control system using restrictions on foreign currency transactions and on the movement of cross-border capital flows. Solving the second task requires the involvement of specialized credit institutions with state participation. Financing of priority areas for the economy of a warring country involves the controllability of credit issuance process, supplemented by measures to localize the issued money supply with the entire array of monetary policy instruments available to the NBU.
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