CENTRAL BANKS MONETARY MEASURES IN SUPPORT of THE ECONOMY IN A PANDEMIC CONDITIONS
Keywords:monetary policy, key interest rate, traditional monetary policy instruments, liquidity of the banking system, interest rate swap.
The banking sector is an important regulator of economic processes in the country. It is through the conduct of effective monetary policy that its positive impact on economic growth is achieved. The global economic crisis caused by the spread of the COVID-19 pandemic has forced central banks to change their strategic approaches and take innovative measures to tackle the difficult economic situation.
The aim of the article lies in a detailed overview of monetary measures used by central banks to overcome the effects of the crisis, in particular the following countries were selected for analysis: Croatia, Serbia, Georgia, Poland, Romania and Hungary and their adaptation to the banking sector of Ukraine.
The central banks of many countries have faced the problem of overcoming the consequences of the crisis, and the list of monetary instruments to minimize it has gradually been exhausted. This applies to traditional instruments, which include lowering the key interest rate. That is, the ability of central banks to support the economy through low interest rates and cheap credit has declined. Therefore, the list of monetary measures was supplemented by non-traditional measures, such as quantitative easing, credit easing, targeted refinancing, etc. In general, the surveyed countries and their central banks coordinated their efforts to support the banking sector, ensure financial stability, and support the situation in the foreign exchange market.
The National Bank of Ukraine also responded fairly quickly to the beginning of the crisis with effective measures. Initially, the key interest rate was reduced to 6% and the situation on the foreign exchange market was stabilized. The next step of the central bank was the introduction of long-term refinancing and interest rate swaps. That is, an integrated approach aimed at: increasing the availability of credit resources in the economy, which will help restore economic growth; maintaining financial stability; ensuring uninterrupted payments in the system. Thus, considering the experience of foreign countries in applying measures to combat the effects of the pandemic on the economy, it should be noted that the use of traditional monetary instruments could not provide the positive effects that countries sought to obtain. Therefore, more unconventional instruments have been introduced in practice, the disadvantage of which is the inability to accurately predict their impact on the economy. For the situation in the Ukrainian banking sector, it will be more effective to continue using traditional instruments, in particular the key interest rate, as the potential for its use remains quite significant.
How to quote:
Shchurevych OI, Kalyniv OY Monetary measures of central banks to support the economy in a pandemic. Scientific notes of the National University
"Ostroh Academy". Series "Economics": a scientific journal. Jail: View
NaUAA, March 2021. № 20 (48). Pp. 125–132.
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