Tools of monetary policy

Monetary policy is aimed at the implementation of measures taken by the Government in the area of ​​monetary and credit relations with a view to the regulation of economic processes.Coordinator of its implementation is the central bank.The policy itself is carried out in two stages.The first stage - the central bank influences the parameters of the monetary sphere.The second stage - to adjust the parameters passed to the manufacturing sector.The result of the effective implementation of these steps will serve the stability of economic growth, the unemployment rate is quite low, stable price levels and balance characteristic of the state of balance.The priority in achieving the improvement of the economic status of any state is a stable price level.

main instruments of monetary policy should have an impact on all financial processes in the country as both a direct (or administrative) and indirect (or economic) levers.It should appear in state control of the main financial indicators, as the balance of payments.

Administrative tools of monetary policy are of the form requirements, directives and instructions that should come from the Central Bank and regulate limits on interest rates and on the lending.Control over the limit of the interest rate by means of determining the limit of loan interest and deposit interest rates and the interest rates on savings deposits.

Limiting the volume of transactions on the credits provides for the establishment of the upper limit of credit issue.This concept is well known, and under this name - "credit ceiling".In other words, the total amount of loans provided by the banking sector, defines the credit ceiling.The same restrictions on the volume and rate of growth of loans are set for all commercial banks.Sometimes, the credit crunch is only set for some sectors of the economy and is called selective credit controls.By this method of control is limiting outside accounting bills and credit limit on consumption.

Direct instruments of monetary policy are effective during the crisis of the credit system, as well as in underdeveloped domestic financial market.Their main drawback is to facilitate the outflow of funds in the "shadow" and abroad.

Indirect instruments of monetary policy include: changes in interest rates, setting the volume of required reserves, and the implementation of open market operations.

One of the first methods involved in the regulation of monetary relations, considered to be the change in the discount rate.Its essence is to influence the central bank's liquidity to other banks and the overall monetary base.Thus, under the liquidity need to understand the ability of banks to various forms of ownership in a timely manner to carry out repayment of all its financial obligations.

main instruments of monetary policy, to monitor bank liquidity, and include the determination of the amount of required reserves.These provisions are necessary to ensure the payment of deposits to customers in the event of a bank failure.Central Bank set standards for a certain number of required reserves.For example, to increase the savings of the population by the central bank set lower rates for deposits with a small contribution for the period and higher - for demand deposits.

described indirect instruments of monetary policy have a significant impact on the scale and structure of the credit operations.Their advantage is an effective impact on the controlled system, the lack of appearances under their influence disparities in economic processes.

Based on the above, we can conclude that all the instruments of monetary policy should be the levers of economic impact to achieve a positive macroeconomic effect.