Abstract
Abstract. The main goal of the research is to develop monetary policy tools and measures enabling to achieve macroeconomic goals of integration into the euro area in the immediate future. It is noted that until the introduction of the euro Lithuania does not have a monetary policy and applies the currency board regime pegging the litas invariably to the euro (hard peg regime). Therefore, it is not only difficult but also risky to try to achieve financial and economic stability in accordance with the relevant Maastricht criteria through fiscal policy measures alone. Monetary policy instruments are necessary to achieve price stability and the overall financial stability. Currently, Lithuania should address the problem of balancing the currency board regime and the Maastricht criteria as a macroeconomic objective through monetary policy tools and measures.The analysis of monetary policies of advanced economies and, first of all, of the euro area reveals the main features of transmission of the monetary policy to a real economy, which can contribute to the successful integration into the euro area. A systemic analysis of the monetary policy is based on monetary and economic theories, laws and patterns, scientific literature and empirical studies. The method used is the logical analysis and systemising of academic literature and modelling of the monetary policy. Such a methodological position enables the justification of the influence of the euro and monetary policy on the future development of the national economy.Key words: monetary policy, euro, exchange rate, inflation, indicators
Highlights
The analysis of the effect of the monetary policy on the real economy with view to establishing the interaction among monetary policy measures, direct targets and macroeconomic indicators is a subject for research when carrying out the monetary policy of today
The main task of the Bank of Lithuania and the Lithuanian Government is to achieve the necessary level of integration into the euro area so as to meet all the criteria of the Maastricht Treaty, the compliance with the criteria being reflected by macro-economic indicators of inflation, finance, exchange rate and long-term interest rate stability
Combining the methodological conditions of the monetary policy and the criteria of the Maastricht Treaty by using monetary policy measures developed by central banks worldwide can guarantee the balance between the core inflation and the real exchange rate and other financial stability criteria during the euro introduction in Lithuania. In this challenging environment of the global economy, the introduction of the euro for Lithuania means a relative stability achieved through the monetary policy of the European Central Bank
Summary
The analysis of the effect of the monetary policy on the real economy with view to establishing the interaction among monetary policy measures, direct targets and macroeconomic indicators is a subject for research when carrying out the monetary policy of today. By means of the monetary policy, central banks need to control money supply as a proximate target in regard with money demand because the main target of the monetary policy is the output close to potential and low inflation (Blanchard, 2010) In this respect, the main goal of this article is to develop the framework for monetary policy instruments and proximate targets in combination with macroeconomic indicators of macroeconomic stability according to the Maastricht Treaty before the introduction of the euro in Lithuania. The monetary policy framework created for the main goal of price stability, including the stability of the euro as a single currency, does not need any changes if monetary policy instruments, measures and tools would exert a direct influence on the main targets of the monetary system.
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