MONETARY POLICY: REGULATORY NEWS AND CHANGE  IN THE MOVEMENT OF FINANCIAL FLOWS

This article examines the new trends in research on capital flows fueled by the 2007–2009 Global Crisis. Previous studies on capital flows focused on current account imbalances and net capital flows. The Global Crisis changed that. The onset of this crisis was preceded by a dramatic increase in gross financial flows while net capital flows remained mostly subdued. The attention in academia zoomed in on gross inflows and outflows with special attention to cross-border banking flows before the crisis erupted and the shift towards corporate bond issuance in its aftermath. The boom and bust in capital flows around the Global Crisis also stimulated a new area of research: capturing the “global factor.” This research adopts two different approaches. The traditional literature on the push–pull factors, which before the crisis was mostly focused on monetary policy in the financial center as the “push factor,” started to explore what other factors contribute to the co-movement of capital flows as well as to amplify the role of monetary policy in the financial center on capital flows. This new research focuses on global banks’ leverage, risk appetite, and global uncertainty. Since the “global factor” is not known, a second branch of the literature has captured this factor indirectly using dynamic common factors extracted from actual capital flows or movements in asset prices.

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Financial stability instruments for the banking systems of Ukraine

Social Economics ◽

10.26565/2524-2547-2020-59-10 ◽

2020 ◽

Vol 59 ◽

Keyword(s):

Monetary Policy ◽

Interest Rates ◽

Financial Stability ◽

Banking System ◽

Classification Criterion ◽

Financial Flows ◽

Organizational Influences ◽

Policy Goals ◽

Credit Cycle ◽

The Impact

The article focuses on the issues of systematization, analysis and development of the classification of instruments for ensuring the financial stability of the banking system, which is a determining factor in the formation of the necessary influences to ensure the financial stability of the banking system. For the selection and application of the toolkit that most precisely meets the goals, current conditions and priorities of ensuring the financial stability of the banking system, its classification was supplemented by the introduction of new classification features. In particular, in order to take into account the importance of maintaining the continuous circulation of financial flows in the banking system, their consistency and synchrony, we developed a classification criterion ‘for influencing the inflow and outflow of financial flows’, which makes it possible to use the appropriate instrument to complete such specific tasks as ensuring continuity, streamlining the cost of resources, smoothing the impact on interest rates of liquidity changes. Based on the presence of different levels of regulatory influences on ensuring the financial stability of the banking system – strategic and operational – the classification criteria ‘to influence the achievement of monetary policy operational goals’ and ‘to influence the achievement of strategic monetary policy goals’ were introduced. The classification criterion ‘impact on systemic/state-owned banks’ is justified by the significance of systemically important banks for ensuring the financial stability of the banking system, since a significant concentration of assets and capital in such banks requires the use of special tools aimed at preventing systemic risks. Taking into account the need for balancing the flows of credits provided by the banking system, the impact of risks on banking activities, the classification features of instruments for ensuring the financial stability of the banking system ‘by impact on the credit cycle’, ‘by key risks’, ‘by organizational elements’ were proposed. Allocation of the classification features of the instruments for ensuring the financial stability of the banking system will contribute to the achievement of targeting of regulatory and organizational influences and compliance with the criteria of rationality and adequacy when choosing specific instruments. This will create the basis for the selection and application of such a combination of instruments that most closely meets the goals, current conditions and priorities for ensuring the financial stability of the banking system.

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The Relationship Between Monetary Policy and Banking Policy to Manage Macro-Financial Flows of the Russian Banking Sector

Finance and Credit ◽

10.24891/fc.27.8.1790 ◽

2021 ◽

Vol 27 (8) ◽

pp. 1790-1812

Author(s):

Aleksei A. KONYAEV

Keyword(s):

Monetary Policy ◽

Banking Sector ◽

Transmission Mechanism ◽

Financial Flows ◽

Current State ◽

Banking Policy ◽

Promising Area ◽

General Scientific ◽

Monetary Policy Transmission Mechanism ◽

The Relationship

Subject. This article analyzes the current state of the relationship between monetary policy and banking policy to manage macro-financial flows of the banking sector of Russia. Objectives. The article aims to assess how closely monetary policy and banking policy are linked in order to manage the macro-financial flows of the Russian banking sector. Methods. For the study, I used normative and integrated approaches, and general scientific and special methods of scientific knowledge. Results. The article assesses the relationship between monetary policy and banking policy to manage macro-financial flows of the banking sector of Russia. Conclusions. The Bank of Russia's monetary policy transmission mechanism needs to be developed and improved. Developing a new channel of influence, i.e. the digital channel of the transmission mechanism, is a promising area to improve it.

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Influence of Monetary Policy on Technological Development of the Economy in a Long-Term Aspect

Economic Strategies ◽

10.33917/es-5.171.2020.136-143 ◽

2020 ◽

Vol 144 ◽

pp. 136-143

Author(s):

Elena A. Matchenko ◽

Keyword(s):

Economic Growth ◽

Monetary Policy ◽

Foreign Exchange ◽

Russian Federation ◽

Oil Prices ◽

Financial Resources ◽

Financial Flows ◽

Russian Economy ◽

Wide Range ◽

The Russian Federation

Monetary policy currently pursued by the Central Bank of the Russian Federation is a reflection of external market conditions. Regulatory approaches should, in particular, help reduce the dependence of monetary policy on external factors — such as oil prices, foreign loans, access to foreign markets, etc. This is not about completely isolating the monetary sphere of the Russian Federation from parameters and the external environment. It is required to refuse close, automatic communication with the given parameters. It is necessary to increase the stability of the monetary system of the Russian Federation and the economy as a whole in relation to external shocks. This can be done through more active use of a wide range of tools available to the regulator. These include monetary and regulatory mechanisms (interest rates, reserve requirements, foreign exchange positions, etc.), gold reserves, verbal interventions, etc., which can have a stimulating effect on economic growth. The high volatility of the ruble now observed makes it extremely difficult for enterprises to plan and forecast, thereby making it impossible for the normal course of investment processes and expanded reproduction. In order to use monetary mechanisms to stimulate economic growth and eliminate the negative effects of current monetary policy (in particular, implemented since autumn 2014), a departure from inflation targeting and free floating of the ruble exchange rate is necessary. At the same time, it is obviously necessary to abandon many components or closely related elements (for example, “monetary contraction”). In addition, steps will be needed to stabilize the foreign exchange market, which would have positive effects (falling volatility, lower inflation, etc.). Under current conditions, with limited access to external financial resources, it is important to use mechanisms for generating financial flows based on internal sources. In other words, the monetary base should be formed due to internal factors, and not depend on the dynamics of energy prices. In previous years, the main emphasis in the Russian economy was placed on the external sphere as a source of growth financing. Restricting access to external cheap financial resources (due to low oil prices, sanctions, etc.), as well as continuing geopolitical tensions with regard to Russia, reduce the possibilities for implementing longterm investment projects in the economy. This increases the relevance of national mechanisms and sources of formation of the resource base (including long) necessary to refinance previously taken loans, as well as to implement structural changes in the Russian economy.

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Inflation in an Open World

Remembering Inflation ◽

10.23943/princeton/9780691145402.003.0007 ◽

2013 ◽

Author(s):

Brigitte Granville

Keyword(s):

Monetary Policy ◽

International Trade ◽

Capacity Utilization ◽

Financial Openness ◽

Financial Flows ◽

Cross Border ◽

Open World ◽

External Conditions

This chapter argues that the principles underlying the problem of inflation and how to contain it have not been superseded by globalization, and that the notion that globalization calls for a complete rethinking of the ideas presented in the previous chapters is misconceived. The chapter examines the cases that various changes in external conditions—that is, the results of globalization—call for a changed understanding of the causes and cure of inflation. Three different aspects of globalization that have been held to bring about these changes to the inflation picture are considered in turn: the expansion of international trade, the effects of increased competition and productivity, in particular as regards capacity utilization constraints, and the implications of financial openness and integration (cross-border financial flows) for domestic monetary policy.

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Monetary Policy in the Digital Age

Regulating Blockchain ◽

10.1093/oso/9780198842187.003.0006 ◽

2019 ◽

pp. 99-111

Author(s):

Claus D. Zimmermann

Keyword(s):

Monetary Policy ◽

Lender Of Last Resort ◽

Virtual Currency ◽

Financial Flows ◽

Fiat Money ◽

Monetary Regimes ◽

International Borders ◽

Digital Money ◽

The Media ◽

Central Bankers

The potential of digital money to replace state-issued fiat money as the predominant means of payment for retail goods combined with its ability to flow freely across international borders is increasingly attracting attention among central bankers, the media, and scholars. The concern is that central banks could lose control over the monetary aggregates regulating the money supply for conducting monetary policy. This chapter examines important regulatory challenges that arise from the increasing use of virtual currency systems. Stable monetary regimes are expected to provide a level of resilience against three types of monetary stability risks: (i) structural ‘deflation’; (ii) lacking flexibility to respond to temporary shocks to money demand; and (iii) failing to fulfil the traditional key function of lender of last resort. It is against these three types of risks that the sustainability of virtual currency systems can be assessed. The chapter concludes that, as they attract increasing attention and account for increasing volumes of financial flows, virtual currency schemes may ultimately have to become subject to increasingly tight regulation on a global level.

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Impact of Economic Regulation through Monetary Policy: Impact Analysis of Monetary Policy Tools on Economic Stability in Uzbekistan

International Journal of Innovation and Economic Development ◽

10.18775/ijied.1849-7551-7020.2015.35.2005 ◽

2017 ◽

Vol 3 (1) ◽

pp. 65-69 ◽

Cited By ~ 2

Author(s):

Umidjon Duskobilov

Keyword(s):

Economic Growth ◽

Monetary Policy ◽

Exchange Rate ◽

Money Supply ◽

Impact Analysis ◽

Supply And Demand ◽

Economic Regulation ◽

Policy Tools ◽

Financial Flows ◽

The Impact

Monetary policy is an integral part of economic development strategy in any economy due to its significant impact on economic sustainability. It has been an effective tool for regulating the economy through several tools. Nowadays the use of monetary policy tools to manage economic growth processes is a common practice in all market economies by balancing money supply and demand in domestic markets, increasing the benefits from foreign trade by exchange rate and overall financial flows by monitoring inflation rate trends. However, most effective tools are refinancing rate, mandatory reserve requirements and sterilization operations, which have direct linkages to financial flows, money supply, inflation, and exchange rate. In this paper, the author examined the impact of monetary policy tools on economic regulation in Uzbekistan by analyzing the relationship between monetary policy tools and economic growth. Empiric analysis revealed that monetary policy tools influenced positively on economic growth with a long-term relationship.

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The Multiple Effects of Capital Controls

Comparative Economic Research ◽

10.18778/1508-2008.23.33 ◽

2020 ◽

Vol 23 (4) ◽

pp. 169-185

Author(s):

Chokri Zehri

Keyword(s):

Monetary Policy ◽

Exchange Rate ◽

Emerging Economies ◽

Financial Stability ◽

Capital Controls ◽

Policy Coordination ◽

Financial Flows ◽

Model Following ◽

The 2008 Financial Crisis ◽

Implicit Taxation

Capital controls are seen as a means to promote financial stability or improve macroeconomic adjustment in economies with nominal rigidities and suboptimal monetary policy. Such controls may take various forms, including explicit or implicit taxation of cross‑border financial flows and dual or multiple exchange rate systems. Using a quarter dataset on capital controls actions in 27 emerging economies from 2010 to 2018, the study analyzes the effectiveness of capital controls (CCs) along different angles. Since the 2008 financial crisis, strengthening capital controls has allowed more monetary policy autonomy and exchange rate stability, verifying the Mundell‑Fleming trilemma model. Following CCs, the results show that accumulating international reserves may compensate for the loss of inflows and lead to more effective policies. Tighter CCs on inflows cause significant spillovers, specifically in the conditions of liquidity abundance. These spillovers originate from the problem of policy coordination of emerging economies and are mainly caused by capital controls being used as an instrument to manage capital flows. For governments that have to manage the risks associated with inflow surges or disruptive outflows, capital controls need to play a key role.

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