scholarly journals Communication as an instrument for enhancing trust in a central bank: the case of Ukraine

2019 ◽  
Vol 14 (2) ◽  
pp. 106-119 ◽  
Author(s):  
Yuliia Shapoval ◽  
Kateryna Anufriieva ◽  
Svitlana Brus ◽  
Yevhen Bublyk
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Central Bank ◽  
Financial Services ◽  
Inflation Targeting ◽  
Banking System ◽  
Communication Strategy ◽  
Necessary Condition ◽  
Communication Policy ◽  
Market Participants

The relevance of trust in the central bank is determined by the rapid growth of the gap between the expectations of a regulator and market participants regardless of the reforms carried out by the NBU. Therefore, the need to use the “non-traditional” monetary policy instruments has enhanced the role of verbal interventions in the context of inflation targeting. The aim of the article is to ground that trust causes adequate rational behavior of the market participants in response to the central bank’s communication policy. The type of this research is an explanatory research method. As determined, trust is the necessary condition for the effectiveness of the central bank’s communication strategy and it favors the achievement of proclaimed objectives. It is established that although since 2014 the NBU activated verbal interventions as an additional instrument to anchor expectations, the increase of transparency does not prompt the trust because of the lack of confidence of citizens in the NBU and high level of stress in the domestic financial sector. It is emphasized that the pursuit of inflation targeting requires expanded communication to gather the expectations of economic agents. The NBU, in its communication policy concerning the economic climate, underlines devaluation expectations, the exchange rate and explanations on the discount rate. However, the deviation of expected enterprises’ exchange rate from the actual exchange rate, growing velocity of money circulation against the declining share of funds involved in the banking system, low monetization level and low penetration of financial services evidence the distrust in monetary policy.

The czech experience with inflation targeting in transition

2000 ◽  
Vol 9 (3) ◽  
Author(s):  
Kateřina Šmídková ◽  
Miroslav Hrnčíř
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Inflation Targeting ◽  
Central Banks ◽  
Communication Strategy ◽  
The Other ◽  
Short Term ◽  
Countries In Transition ◽  
The One

This paper argues that inflation targeting is a strategy that can be under certain conditions adopted by central banks in countries in transition even though their typical goal is to disinflate instead of stabilising low inflation. On the one hand, according to the Czech experience, inflation targeting offers several benefits, such as increasing control over expectations and short-term flexibility of monetary strategy, that are attractive for economy in transition. On the other hand, constraints imposed by period of transition as well as by openness of economy are present no matter which monetary strategy is chosen by the central bank. Implied costs should not be attributed to a particular monetary strategy. Inflation targeting has made various factors constraining monetary policy more visible and, as a result, requirements on the quality of decisions as well as on communication strategy have increased.

scholarly journals Monetary Policy Analysis in Serbia

2015 ◽  
Vol 4 (3) ◽  
pp. 147-180 ◽  
Author(s):  
Vesna Martin
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Central Bank ◽  
Inflation Targeting ◽  
Exchange Rate Regime ◽  
Policy Instruments ◽  
Exchange Rate Policy ◽  
Floating Exchange Rate ◽  
National Bank ◽  
Main Regulator

Abstract The paper focuses on analysing monetary policy in Serbia. The National Bank of Serbia chose inflation targeting, which sets price stability as the main objective of monetary policy. To achieve this goal, the central bank uses different monetary policy instruments which analysis can provide us with the understanding of the main directions of their actions but also of the limitations of its application. Only through improvement of both instruments and monetary policy the central bank will create a better foundation for achieving monetary stability. In addition, the implementation of exchange rate policy is entrusted to the National Bank of Serbia, as the main regulator of the financial system. A mere use of managed floating exchange rate, as the chosen exchange rate regime, is an appropriate solution in the current economic circumstances and in accordance with the desired objective of monetary policy.

scholarly journals Polityka pieniężna Narodowego Banku Polskiego od roku 1989

2015 ◽  
pp. 173-192
Author(s):  
Paweł Franka ◽  
Anna Wisz
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Exchange Rates ◽  
Inflation Targeting ◽  
Banking System ◽  
Policy Instruments ◽  
Open Market ◽  
The Past ◽  
National Bank

The article discusses the activities of National Bank of Poland during the past twenty-five year and more specifically in the years 1989–2013 with particular emphasis on monetary policy. During this time, the Polish central bank has undergone fundamental change, starting from the position of the so-called monobank, i.e. bank without autonomy in activities, characteristic of planned economy. The article describes the process of transformation of the National Bank of Poland to the role of a central bank operating in a market economy. The paper emphasizes all the important events in the transformation, including building of a two-tier banking system, the gradual replacement of the administrative measures by monetary policy instruments, currency denomination, constitutional guarantees of the role and independence of the National Bank of Poland, creation of the Monetary Policy Council – a departure from the single monetary policy-making in favor of collegiality, changing the monetary policy strategy to direct inflation targeting, bank exchange rates policy, open market operations.

scholarly journals Monetary policy under economic transformation in Ukraine

2019 ◽  
pp. 173-184
Author(s):  
Mykola Pasichnyi
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Central Bank ◽  
Financial Stability ◽  
Inflation Targeting ◽  
Economic Transformation ◽  
Policy Formation ◽  
Functional Improvement ◽  
Economic Transformations ◽  
Bank System

The research subject includes the theoretical basis and mechanisms of monetary policy formation and realization as an instrument of macroeconomic regulation. The aim of the study is to determine the features of domestic monetary policy and to systemize the policy’s stages under economic transformations. Methods. In order to achieve the appropriate tasks, we used a set of methods and approaches, that helped to ensure the conceptual unity of our investigation. The dialectical, systemic and structural approaches, methods of analysis and synthesis, comparison, generalization, scientific abstraction are applied. Results. The peculiarities of formation and realization of monetary policy of Ukraine under economic transformations are determined. The main stages of national monetary policy’s development are systemized. The dynamics of monetization, exchange rate and index of consumer price from 1992 to 2018 is investigated. Practical implications. Monetaryl policy and instruments of its implementation. Conclusions. Nowadays, the monetary policy has a formed institutional mechanism in order to reach the main goal and tasks. We identified the main phases of monetary policy of Ukraine. In the initial stage the main elements of monetary architectonics are established, also the powers and tasks of central bank are defined. The stage of functional improvement characterized by the restriction on central bank repayment of bonds on the primary market, decreasing the monetization of national economy, introducing the currency exchange corridor. At the steady development phase, we determined the exchange rate stability and gradual increasing of monetization level. Within the transitional stage of modification, the raising of monetization was continued, moreover, the combined using of methods on the currency market was carried out to stabilize it. Also, National bank defined the priority directions to enhance the bank system. The stage of institutional modernization is characterized by the monetary strategy formation, increasing the central bank institutional and financial independence, the adoption of inflation targeting regime, the improving of basic statements of currency transaction, the developing of macroprudential regulation to ensure financial stability.

The Effectiveness of Monetary Policy Anchors: Firm-Level Evidence

2010 ◽  
Vol 64 (4) ◽  
pp. 695-717 ◽  
Author(s):  
J. Lawrence Broz ◽  
Michael Plouffe
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Private Sector ◽  
Central Bank ◽  
Inflation Targeting ◽  
Substantial Reduction ◽  
Central Bank Independence ◽  
Inflation Expectations ◽  
Firm Level ◽  
Level Data

AbstractAnalyses of monetary policy posit that exchange-rate pegs, inflation targets, and central bank independence can help anchor private-sector inflation expectations. Yet there are few direct tests of this argument. We offer cross-national, micro-level evidence on the effectiveness of monetary anchors in controlling private-sector inflation concerns. Using firm-level data from eighty-one countries (approximately 10,000 firms), we find evidence that “international” anchors (exchange-rate commitments) correlate significantly with a substantial reduction in private-sector concerns about inflation while “domestic” anchors (inflation targeting and central bank independence) do not. Our conjecture is that private-sector inflation expectations are more responsive to exchange-rate anchors because they are more transparent, more constraining, and more costly than domestic anchoring arrangements.

scholarly journals Assessment of the Clarity of Bank of Russia Monetary Policy Communication by Neural Network Approach

2021 ◽  
Vol 80 (3) ◽  
pp. 3-33
Author(s):  
Alina Evstigneeva ◽  
◽  
Mark Sidorovskiy ◽  
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Inflation Targeting ◽  
Inflation Expectations ◽  
Plain Language ◽  
Neural Network Approach ◽  
Market Participants ◽  
Automated Evaluation ◽  
Policy Communication

Inflation targeting requires clear and transparent central bank’s communication. Analysts and market participants understand it as a broad list of information disclosed by the central bank. The general public understands it rather as the ability of a central bank to speak and explain its decisions in a plain language. In recent decades, monetary authorities in many countries have made significant progress in this direction. However, there has been no research on the quality of communication for the Bank of Russia. This paper aims to create a tool for automated evaluation of the readability of the Bank of Russia’s monetary policy communication, taking into account the available experience of linguistic and textual analysis, including machine learning methods, as well as to provide recommendations for its improvement. This can contribute to improving the effectiveness of the Bank of Russia communication on monetary policy, which is vital for its credibility, anchoring inflation expectations, and predictability of the regulator’s decisions.

scholarly journals Recent Monetary Policy in Turkey: Capital Flow, Reserves and Exchange Rate

2011 ◽  
Author(s):  
Şaziye Gazioğlu
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Central Bank ◽  
Capital Flows ◽  
Stock Prices ◽  
Financial Stability ◽  
Real Exchange Rates ◽  
Banking System ◽  
Capital Flow ◽  
Capital Inflows

In this paper, we investigate the recent monetary policies and development of Turkish banking system during the post 2001 financial and banking crisis. We explore the effects of capital inflows and outflows to real exchange rates and the real stock market prices, before and after the financial crisis. We investigate the relationship between real exchange rate, real stock prices and capital flows. We decompose the foreign flows into real assets and liabilities, in order to investigate the possible long-term effect of inflows and outflows. Reversal of capital flow seems to create a possibility of exchange rate crisis. The Turkish Central Bank by taking lessons from this experience they formulate their recent policies accordingly. Recent Monetary Policy mix in Turkey aims to have financial stability by increasing the reserve ratio in each component of capital flows in Turkey. The ratio increases shorter the period of the asset. The Central Bank work claims to have an effect similar to inflation targeting.

scholarly journals CENTRAL BANK COMMUNICATION DESIGN: TOWARDS TRANSPARENCY OF MONETARY POLICY

2021 ◽  
Vol 6 (2) ◽  
pp. 63-68
Author(s):  
Yuliia Shapoval
Keyword(s):  
Monetary Policy ◽  
Central Bank ◽  
Strategic Communication ◽  
Target Audience ◽  
Communication Policy ◽  
Central Bank Communication ◽  
Market Participants ◽  
Communication Design ◽  
Information Demand ◽  
Transparency Measurement

The object of the article is central bank communication design (particularly target audience, channels and instruments) and central banks’ transparency measurement. The purpose is to summarise the central bank communication policy's conceptual basics and clarify how transparent the NBU’s monetary policy is. Methodology. The paper applies the Dincer and Eichengreen (2014) and Al-Mashat et al. (2018) methods of transparency measurement, using the NBU’s published documents and website data as of 2021. Results. It has been emphasized that communication design should be based on central bank’s communication objectives, information demand from defined stakeholders and target groups, capabilities of application of channels and instruments. Ensuring confidence in monetary policy calls for simplified language and format that reflects the general public's interest. The shift to the growing role of the type of communication channel and interaction of central bank with the general public are marked out. The meaning of transparency, criteria, and indices (Eijffinger-Geraats, Dincer-Eichengreen, Crowe-Meade, Cournede-Minegishi, CBT-IT index) are under consideration. According to Dincer and Eichengreen, the NBU’s transparency index reaches almost a perfect score of 12 (out of 15), affirming NBU’s political and policy transparency improvements. The NBU’s CBT-IT transparency index scores 11.45 (out of 20), which points to the need to eliminate gaps of the FPAS designed to support full-fledged inflation- forecast-targeting (3.2 out of 9) in the light of improvements in the monetary policymaking process (5.75 out of 7) and transparency about monetary policy objectives (2.5 out of 3). Practical implications. The enhancement of the NBU’s transparency level reflects the development of its communication policy as transparency of monetary policy requires constant and coherent messages via diversified channels and instruments for a defined target audience, following a clear purpose of strategic communication. Value/originality. It has been highlighted that central bank communication design is the basis for financial market participants' trust, favouring monetary policy transparency.

scholarly journals Forward guidance jako instrument polityki pieniężnej – możliwości wykorzystania

2015 ◽  
Vol 1 (3) ◽  
pp. 51-60
Author(s):  
Ilona  Skibińska-Fabrowska
Keyword(s):  
Monetary Policy ◽  
Interest Rates ◽  
Inflation Targeting ◽  
Central Banks ◽  
Communication Policy ◽  
Market Participants ◽  
Forward Guidance ◽  
Monetary Authorities ◽  
Effective Instrument ◽  
Targeting Strategy

Communication policy of central banks in the framework of direct inflation targeting strategy and related strategies is important. Its tools include forward guidance as a method of influencing the expectations of market participants. Although forward guid a method of influencing the expectations of market participants. Although forward guidance was used before the outbreak of the financial crisis, it was not popular. After 2008, under conditions of zero interest rate, monetary authorities have begun to use the forward guidance as an unconventional and effective instrument allowing monetary policy to have impact on market interest rates. However, the risks when using forward guidance include the possibility of misinterpretation of the conditional nature of the declaration of the monetary authorities. 

On the Exchange Rate Policy

2010 ◽  
pp. 21-28
Author(s):  
K. Yudaeva
Keyword(s):  
Monetary Policy ◽  
Exchange Rate ◽  
Inflation Targeting ◽  
Exchange Rate Policy ◽  
Institutional Changes ◽  
Crisis Period ◽  
Local Currency ◽  
High Inflation ◽  
Rate Policy ◽  
The Exchange Rate

The level of trust in the local currency in Russia is very low largely because of relatively high inflation. As a result, Bank of Russia during crisis times can not afford monetary policy loosening and has to fight devaluation expectations. To change the situation in the post-crisis period Russia needs to live through a continuous period of low inflation. Modified inflation targeting can help achieve such a result. However, it should be amended with institutional changes, particularly development of hedging instruments.

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