Monetary policy of the national bank of Ukraine: stages of development and current state

Zherdetska Liliia
D.Sc. (Economics), Associate Professor, Head of the Banking Department, Odesa National Economic University, Odesa, E-mail: lzherdetska@gmail.com, ORCID ID: https://orcid.org/0000-0001-5398-868X

Cheprazova Diana
4th year student of the Odesa National Economic University, Odesa, E-mail:cheprazovad@gmail.com, ORCID ID: https://orcid.org/0000-0001-5398-868X

Cite this article:

Zherdetska L., Cheprazova D. (2023) Monetary policy of the national bank of Ukraine: stages of development and current state. Ed.: V.V. Kovalenko (ed.-in-ch.) and others [Monetarna polityka natsionalnoho banku Ukrainy: etapy rozvytku ta suchasnyi stan; za red.: V.V. Kovalenko (gol. red.)], Scientific Bulletin of the Odessa National Economic University (ISSN 2313-4569), Odessa National Economics University, Odessa, No. 7-8 (308-309), pp. 68-75.

Abstract

The main challenges of modern environment, that require improvement of approaches to the monetary policy design, are the following: quarantine restrictions in connection with the Covid-19 pandemic; geopolitical instability and war in Ukraine in connection with full scale invasion of russia. Under such circumstances new approaches related to evaluation of monetary policy should be substantiated. In the article we propose one of those approaches based on the allocation of stages of monetary policy development of the National Bank of Ukraine. The purpose of the article is to form the stages of monetary policy development of the National Bank of Ukraine and on its basis to identify specifics of the modern monetary policy. The study highlights the stages of the formation and development of the monetary policy of the National Bank of Ukraine. They are (1) the creation of an institutional base of monetary policy, (2) the introduction of the national currency and monetary regulation, (3) the development of legislative support and the unfolding of the global financial crisis, (4) overcoming the consequences of the crisis and aggression from the russian federation, (5) reforming the banking sector and (6) the current stage. The current stage is characterized by the Covid-19 pandemic and full-scale war. Based on the results of the research, it is argued that in response to the crisis caused by pandemic restrictions, the National Bank of Ukraine weakened the tools of monetary policy. However, the main determinant that forms the modern conditions for the justification and implementation of monetary policy is the full-scale invasion of russia into Ukraine. On this basis, the research analyzed the actions of the National Bank of Ukraine in the field of monetary, currency and prudential regulation. It is argued that in the current conditions, a restrictive monetary policy with a simultaneous softening of the macroprudential toolkit and a number of fiscal measures, which should contribute to the restoration of bank lending, appears to be fully justified. It was established that in modern conditions the monetary restrictive policy seemed to be fully justified. At the same time, tendencies towards a loosening of monetary restrictions are planned, which, along with the simultaneous softening of macroprudential instruments and a number of fiscal measures, should contribute to the recovery of bank lending.

Keywords

monetary policy, key policy rate, Covid-19 pandemic, full-scale invasion, anti-crisis measures.

JEL classification: E520; DOI: 10.32680/2409-9260-2023-7-8-308-309-68-75

UD classification: 336.7

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