Monetary Sphere Research Articles

The world and Russia: Inflation is minimal, economic growth is slowing, risks are rising

Russian economy has reached the low level of inflation, but economic growth has not accelerated. Moreover, according to official forecasts, in the following years it will still be low. The article concludes that domestic demand, which is one of the main factors of growth, is significantly constrained by monetary, budgetary and fiscal spheres. The situation in the Russian economy is still hampered by the decline of the world economic growth. The prospects of financial markets are highly uncertain. This increases the possibility of crisis in the world. Leading countries widely use non-traditional measures to support their economies in the similar environment. In the world economy as well as in Russia a principally new combination of factors has emerged, which create specific features of economic growth. It requires special set of measures to stimulate such growth. The article proves that Russian regulators have large unused potential to stimulate growth. It includes monetization, long-money creation, budget and tax stimuli. It is important that the instruments, which will be used, should be based on domestic mechanisms. This will strengthen financial basis of the economy and may encourage economic growth. Some specific suggestions as to their use are made.

Currency Circulation as a Factor of State Economic Stability

Currency circulation has always acted as a way of formalizing and structuring relations between economic agents and has shown how necessary the involvement of the state as the leading regulator of commodity weight and services is. With the growth in the supply of goods with commodity weight and the rapid increase in the share of services in the state’s economy, the main task was to react as quickly as possible to changes the balance of monetary regulation in order to ensure the economic balance in the state. This particular aspect is the urgency of the research. The scientific novelty of the study is to identify the extent to which the issues of interconnection, mutual subordination and mutual consistency between the concepts of ‘monetary regulation’ and ‘monetary policy’ are one of the theoretical debatable issues. To distinguish between theoretical and applied aspects of these concepts application in the article, the authors turn to the understanding of the essence of ‘economic regulation’ and ‘economic policy’ in the general context without reference to the monetary sphere. The practical significance of the research is determined by the fact that each of the participants in the monetary regulation sees the task of this regulation in several different keys. Accordingly, it is necessary to clearly understand what measures should be taken in order to identify the most correct forms of matching the interests of the monetary and credit regulation sectors and relate them to the tasks of the enterprise’s economic security.

The impact of monetary policy on the development of the agricultural sector economic

The article deals with the problematic issues of creating a single monetary policy and a single electronic monetary sign on the territory of the countries of the Eurasian economic Union. The problems that complicate the transition to a single currency, including differences in macroeconomic indicators characterizing the economic development of the EAEU member States, are shown. The proposed currency integration should become an integral part of the common currency policy of the member States of currency integration, as well as in the functioning and interaction of interstate organizations engaged in interstate currency regulation Currency and, which will be an objective assessment for the formation of index systems using different single currencies is justified. In this economic situation, the Russian financial market is unstable and vulnerable, as is the Russian ruble. Therefore, we need a very careful approach to the creation of a single currency, to the development of the financial market, to the functioning of a single emission center, to a single coordinated financial policy to approach comprehensively, carefully and with a high degree of responsibility. Undoubtedly, in the territory of the EAEU, there is a need to form a unified, independent monetary policy and tighten cross-border capital flows. It is necessary to issue a single currency in the EAEU. But this decision requires a serious approach, legislation and technical resources. At the moment, the EAEU has not created conditions for monetary and financial integration, there are problems in the economic integration of the participating countries, different levels of development of their economies, instability of national currencies. The EAEU member States need a common strategy for the development of integration, a lending model, an economic development plan for the alignment of national economies, as well as a plan for coordination of activities in the monetary sphere. The article shows issues of the introduction of the single currency and its impact on the prospects of development of the agro-industrial complex of the EAEU countries are considered.

Inequality caused by macro-economic policies during overaccumulation crisis

ABSTRACTThe tendency of capital to ‘overaccumulate’ has on occasion been severe in post-apartheid South Africa, but has taken different forms. The neoliberal era since the early 1990s has witnessed overaccumulation-crisis displacement in a manner that exacerbates inequality. Such displacement includes financialisation (i.e. higher relative debt and share-portfolio ratios, as well as illicit financial flows), worsening uneven spatial development (within cities and between rural and urban livelihoods), and an amplification of environmentally-damaging extraction systems. Public policy accommodated, accentuated and displaced the crisis, rather than ameliorated, reversed or resolved these symptoms of overaccumulation, to the detriment of the poorest South Africans. Although government has made efforts to address social distress through fiscal policy (e.g. social grants and education), most macro-economic policies – especially in the monetary, financial and international spheres – are amplifiers of inequality. But the most important constraint is a deeper problem than public policy typically admits: capital's tendency to overaccumulation.

Credit and banking Component of the Market Economy Phenomenon: Methdological Approach Transformation to the Development of Digitalization and Capital Fictivization

The article is based on the results of the 7th International Scientific and Practical Conference on Economics “The Market Economy Phenomenon: From the Origins into Our Days” held from March 27 to March 31, 2019 in the cities of Sochi and Sukhumi. The theoretical approaches of domestic and foreign researchers to understanding the market economy phenomenon, the specifics of its financial and credit sphere functioning in the context of the digital economy were generalized. The problems of the monetary economy in terms of the sanction confrontation were outlined. The authors analyzed and evaluated the processes and the phenomena observed in the post-Soviet economic space related to the transplantation of market economy mechanisms into the system of social reproductive relations, including its financial component based on their digitalization. The dialectic approach, system analysis, methods of economic and statistical and interdisciplinary analytical tools were used. The article revealed the key components of the market economy phenomenon appearing in the post-Soviet economic space and having a direct impact on the social reproduction results. The relationship was shown between the transformation of the evolutionary and methodological content of the money economy, its institutional and behavioral paradigm, the digitalization of the financial segment of the economic space with the scale of innovation, the penetration of cognitive psychology and neurophysiology into financial and credit relations, and their technological re-equipment. The results of the influence of instability factors on the budget and monetary sphere were presented. The authors described complex interdependencies of the processes and phenomena within the framework of the market economy phenomenon appearing in the post-Soviet economic space. The triune structure of the modern market doctrine was disclosed including psychological and behavioral, institutional and functional and reproduction and product aspects. The authors showed the transformational dynamics of the financial and credit sphere of modern society. Its specific features are: the increasingly important role of innovation, outsourcing, revising pricing methods, digitalization of business processes, penetration into managing neuromarketing technologies, and virtualization of the financial sector of the economy.

Impact of politically generated shocks on monetary performance: a cross-country comparison

During the post-Great Recession period, macroeconomic stability had more often been threatened by socioeconomic shocks due to the rising of public discontent with the high unemployment rate and poverty, the activation of radical parties and movements, and the aggravation of the geopolitical confrontation in the world. Depending on the type and depth of such shocks, they become politically generated shocks and, in particular, affect the monetary sphere. The article investigates three types of politically generated shocks and their impact on the monetary sphere. It has been found out that the shocks generated by political populism are characterized by fiscal domination in the economy, the use of monetary measures in the budget deficit financing. Shocks arising after the use of international sanctions against certain countries have an external origin and primarily cause the increase in national exchange markets volatility. On the whole, macroeconomic and, especially, monetary instability is the result of the great shocks for the economy, the depth and duration of which are determined by the nature of the crisis, particularly, when country participates in the military conflict. The aforementioned types of politically generated shocks are analyzed based on the experience of countries such as Argentina, Turkey, and Ukraine, which at one time introduced the regime of inflation targeting in monetary policy, but were forced to modify it influenced by political and economic instability.

De-dollarization Process in the EAEU Member States as an Element of the Monetary Policy

Economic integration in the EEU region naturally captures the area of cooperation in the monetary sphere, which is a more high-level stage of integration in its classical understanding. The imbalances in macroeconomic development and a number of problems in the monetary systems of the EEU member-countries are an obstacle to the intensification of cooperation in the monetary sphere. One of the significant problems, common to all the EEU member-states is the dollarization of their economies, which imposes restrictions on the ability of monetary bodies to regulate macroeconomic processes in the country. Replacing national currencies in settlements, payments and savings with «hard currencies» reduces the efficiency of transmission channels, worsens volatility indicators of national currencies and strengthens the spiral of formation of negative expectations regarding inflation levels. An increase in the debt load denominated in foreign currency, in particular for individuals, creates additional risks to the monetary systems of countries. This article is devoted to the study of the problems of dollarization of the economies of the EEU member-states, of the required de-dollarization measures, as well as to the analysis of the prospects for the de-dollarization process spreading at the regional grouping level.

КЕЙНСІАНСТВО І МОНЕТАРИЗМ ЯК ТЕОРЕТИКО-МЕТОДОЛОГІЧНІ КОНСТРУКЦІЇ ФІНАНСОВО-КРЕДИТНОЇ СИСТЕМИ

Досліджується незаперечна єдність і долається асиметричність таких понять як фінансова система і фінансово-кредитна система на основі двох основних інструментів – фінансів і кредиту. Обґрунтовується положення, що грошовий механізм разом з механізмом оподаткування і державних видатків, механізм кредитування, заощадження та інвестування визначають основні компоненти фінансово-кредитної системи і забезпечують фінансову активність суспільства. Головна увага приділяється дослідженню теоретико-методологічної основи фінансово-кредитної системи, які формують дві потужні наукові конструкції – кейнсіанство і монетаризм. Вони відрізняються між собою не так за суттю, як за засобами державного впливу на формування фінансово-кредитної системи. Зокрема теорія Дж. М. Кейнса передбачала найбільш дієвим інструментом державного регулювання економіки монетарні і фіскальні механізми з переважанням бюджетної політики. Передусім це прямі державні видатки на стимулювання ефективного попиту, а також вилучення державних заощаджень за допомогою системи податків і позик. Позиція ж монетаристів передбачала, що грошова сфера і прозиція грошей були основним предметом державного регулювання, згідно чого, інфляція – це грошовий феномен, а її основною причиною є форсована емісія грошей. Через це грошові інструменти вважалися головними у своєму впливові на національну економіку.Отже, кожна з цих теорій – кейнсіанство чи монетаризм – не могли довести свою перевагу у формуванні фінансово-кредитної системи та форм державного впливу на національну економіку. Дискусійні питання між ними дозволяє розв’язати теорія «великого неокласичного синтезу», яка узагальнила теоретичні і практичні досягнення різних наукових концепцій та усунула протистояння між кейнсіанством і монетаризмом. В результаті була подолана невідповідність в розумінні таких понять як «фінансово-кредитна система» і «фінансова система». Підтвердженням цього слугують різні моделі фінансових систем США, Японії та європейських країн, а також України.

Theoretical foundations of regional monetary integration and the practice of forming its prerequisites in the EAEU

The article discusses the historical, political and fundamental economic prerequisites for the transition to monetary integration within the framework of the EAEU at the present stage of its development. The purpose of the study is to identify the readiness degree of the EAEU member countries transition to integration in the monetary sphere in modern conditions. The study makes it possible to substantiate the idea that a currency union in the framework of regional economic integration should be viewed as a natural result of significant volumes of goods, services and investments movement between member countries. The necessity and possibility of creating a currency union are determined and evaluated from the standpoint of the trade intensity and investment flows between the member countries of the Eurasian Economic Union. The methodology of the study is based on the key ideas of the “optimum currency areas” theory. The statistical data on foreign investments in the EAEU countries, on the share of gross volumes of mutual trade in the total volume of foreign trade in the EAEU as a whole and in the EAEU member states, are given. Analysis of mutual trade and investment indicators showed an insufficient level of economic convergence in the EAEU, assessed from the standpoint of the mutual trade intensity and mutual foreign direct investment intensity. At the moment, the volumes and dynamics of trade and investment flow between the EAEU member states do not cause an objective need for a transition to monetary cooperation at the level of a currency union. This research allows us to consider the problem of transition to monetary integration between the countries participating in the EAEU from the importance standpoint of economic prerequisites. The practical significance of the work lies in the substantiation of the objective prerequisites for the formation and creation of a monetary union in the course of regional integration processes development. Key words: Currency union, optimal currency area, mutual trade intensity, mutual investment intensity, customs union.

Russia’s Damage from International Sanctions: Rethinking the Facts

The article formulates a methodological principle for the analysis of the scale of economic damage caused to the Russian economy by international sanctions imposed in 2014. The proposed principle of qualitative transformation allows to fix the principal change in the situation, if the changes in economic indicators reach multiple (more than 2 times) differences. On the example of foreign trade, including with countries that supported international sanctions, it is shown that theRussiafor several years was in a completely different economic dimension. A similar situation occurred in the monetary sphere (on current exchange rate), domestic price formation (price of gasoline), attraction of direct investments. In addition, there are examples when the actions of foreign market participants involved in the sanctions war, blocked many positive Russian initiatives-integration into world science, the output of high-tech equipment to foreign markets, etc. It is shown that the gradual weakening of the country by means of international sanctions led, if not to the complete, then partial collapse of the model of the social state, which put a heavy burden on the population of the country. It is proved that in such conditions it is necessary to revise the economic policy in the direction of strengthening its creative beginning.

On the Guidelines for the Single State Monetary Policy for 2019 and the Period of 2020 to 2021: Expert Opinion of Financial University

The paper presents the opinion of the FinancialUniversityexperts on the problems of the single state monetary policy for the upcoming three-year period (2019–2021).The relevanceof paper stems from the increasing role of the monetary sphere and the monetary policy in achieving financial stability and ensuring Russia’s economic growth in the modern context of the economy financialization.The subject of the researchis the current monetary policy of Russia set out in the program document of the Bank of Russia for the medium term.The purpose of the researchwas to identify the pros and cons of the single state monetary policy. In the course of the research, the Guidelines for the Single State Monetary Policy for 2019 and the Period of 2020 to 2021 adopted by the Bank of Russia were analyzed. Based on the research findings,it is concludedthat the state monetary policy should pay more attention to the credit channel of the transmission mechanism in the context of its interaction with the interest rate channel to achieve the operational goal of the monetary policy and for further use of special refinancing instruments in view of the fact that financial sanctions against the Russian economy will continue over the whole forecast horizon. Along with that, measures should be taken to develop incentive regulation of the banking sector in order to support the creation of favorable conditions for boosting investment and economic activities. In general, as a result of the research, it was established that the monetary policy guidelines developed by the Bank of Russia in cooperation with the Russian Federation Government for the next three years meet modern requirements but have to be supplemented and refined with account for new phenomena and circumstances emerging in the recent time.

Сучасний стан криптовалюти на глобальній економічній арені та її перспективи розвитку в Україні та світі.

The article explores innovations in the monetary sphere, namely the emergence of a modern form of money - digital currency. Forms of this currency, such as electronic and virtual money, are defined. The dynamics of development of the first and the most expensive cryptocurrency now - Bitcoin is analyzed. The general state of the cryptocurrency usage in the world is indicated. The advantages and disadvantages of using digital currency are also highlighted. The Top-10 cryptocurrencies in the world for 2019 are highlighted with the largest market capitalization of Bitcoin, Ethereum, Ripple. The dependence of the economic development level of the country and the degree of cryptocurrency implementation is revealed. The world legislative experience in the field of regulation of the cryptocurrency is researched. The possibility of its application in the Ukrainian legislation by the cryptocurrency legalization and minimization of risks in the process of use are studied. Prospects for the spread and further development of cryptocurrencies in Ukraine and in the world are considered. It is noted that providing the improvement of monetary technology, its proper regulation and improvement of infrastructure, this financial instrument will occupy an important place in people's daily life.

Uloga Evropskog fiskalnog odbora u fiskalnom sistemu Evropske unije

The financial crisis, which culminated in the course of 2008, revealed all the shortcomings of the institutional framework of the European Economic and Monetary Union. The only exception are institutional solutions in the monetary sphere (the single currency, the legal status and tasks of the European Central Bank), which proved to be functional during the crisis. However, other elements of the institutional infrastructure, important for the functioning of the economic and monetary union, have demonstrated significant weaknesses, which affected the onset and depth of the crisis in the European Union. Certainly, fiscal institutions are the weakest link of the economic and monetary union. Attempts at monetary unification, while retaining the fiscal autonomy of the member states, failed. Contrary to expectations, member states failed to preserve fiscal discipline, nor did the institutions of the Union succeed in ensuring compliance with established fiscal rules (above all, the rule of prohibiting the takeover of debts by member states, that is, compliance with the rules related to the level of indebtedness and the level of the budget deficit). The distorted credibility of fiscal institutions pointed to the necessity of developing common fiscal governance framework in the European Union. Initiated by signing of the Treaty on Stabilization, Coordination and Governance Agreement in the Economic and Monetary Union in 2012, this process led to the creation of the European Fiscal Board, as an independent advisory body aimed at assisting the European Commission in coordinating member states' fiscal policies. Taking into account the need for fiscal integration, as a prerequisite for the functioning economic and monetary union, the paper analyzes the position of the European Fiscal Board and its role in the fiscal system of the European Union.

Европейский экономический и валютный союз: 20 лет спустя

The authors identify structural and institutional problems of the European EMU that significantly aggravated after the global financial and economic crisis of 2008–2009, evaluate new approaches to the reform of EMU, reveal the main directions of action by the EU authorities to overcome its systemic crisis. The proposed classification of anticrisis measures in the post-2015 period includes: a) updated conceptual approaches of the ECB’s leadership to the strategy of a single monetary policy with an assessment of the results of its implementation; b) conceptual approaches and practical measures for structural reforms in EMU for the period from 2015 to 2025; and b) an action plan to strengthen the international role of the euro. Despite the EU’s ambitious goals, the euro could not outcompete the US dollar in the global monetary system. The stagnation of the international position of the euro is due to the dominant role of the US dollar in commodity markets, as well as its key role in the international lending and foreign exchange markets. Although London is part of the EU, its globally oriented financial markets are more closely linked to New York than to Frankfurt and Paris. A UK exit from the EU could negatively affect the Eurozone’s global competitiveness and significantly narrow the EU’s ability to attract financial resources on international capital markets. The risks of EU destabilization are also magnified by huge euro-denominated financial obligations cleared through London. In December 2018 the European Commission pushed a number of initiatives to strengthen the international role of the euro, including the completion of the Banking Union and the EU Capital Markets Union. However, as the experience of previous years shows, the EU countries do not demonstrate the necessary coherence to achieve their goals. The deterioration of the EU’s relations with the United States and Brexit are additional factors for the uncertainty of the further development of European integration processes in the monetary and financial sphere. The conclusion is made about the strategic and practical significance of the concept of a renewed consolidated EMU, implemented in order to level the accumulated internal and external imbalances in the euro area, and the transition to a model of sustainable economic growth in the region. The prospects of the European Union largely depend on the efficiency and adequacy of the measures taken by the EU authorities to neutralize new challenges and risks, resolve problems of economic integration, put into practice structural and institutional reform programs. Acknowledgements. The study was supported by the Russian Foundation for Basic Research, project № 17-02-00347-OGN (“Development of a model for rational monetary and financial regulation in Russia in the context of increased instability of global finance”).

The Russian Rouble in the Regional and Global Dynamics

The article deals with the issues of Eurasian monetary integration. The topic is especially time-relevant today, for the deepening of the integration in Eurasia is really dependent upon the development of European Economic Union regarding a potential currency union. These regional economic relations require a common monetary market. The prospects of the future regional monetary market of the EEU member states have been proven in the article by an identified link between the mutual trade flows and the currency pair trading at the Moscow Exchange. The author strongly believes that the Eurasian monetary market is going to be an additional and transitional step on the path to achieving the integration in banking, financial and monetary spheres of the EEU member states in the unified economic environment. The author founded his conclusions on the hypothesis that this integration stage can be accomplished through the trading of the national currencies of the EEU member states at the Moscow Exchange.

The Current State of the Monetary Sphere of Kazakhstan, Kyrgyzstan, Tajikistan within the Framework of Changes in the Legislation

The article discusses the current state of the monetary – credit sphere in the former states of the Soviet Union. The authors note that, the collapse of the Soviet Union in 1991, which led to the defragmentation of the monetary system, is an important event in the formation of the financial sector in Central Asia. The single monetary and financial system, which was adapted to the conditions of the planned economy, had started rapidly falling apart. The result was a break of the traditionally existing economic ties.
 It is important to note that the monetary policy has a direct impact on the major macro-economic indicators such as GDP, employment and the level of prices. It is thus important to have a solid legal base. The accelerated formation of national monetary systems in Central Asian states has required the creation of genuinely independent emission center as the Central Banks of Central Asia. Since 1994, Central Asian governments have begun to carry out macroeconomic regulation, mutual settlement in the economy and emission activity.
 The next step was a reform of the banking system in Central Asia. At the beginning of the independence of the Central Asian states a legal framework was created and a transition was made to a two-tier banking system. According to the adopted laws in the countries of Central Asia, a two-tier banking system was formed, where the upper level was represented by the State Bank of the region (with emission rights), and the bottom were - commercial and government specialized. Creating second tier banks was a response to the needs of the Central Asian countries.

Weights of Money, Credibility and Sphere of the Money Circuit: Observations Through a Monetary Evolution in West Africa

This paper focuses on the monetary evolution in West Africa. However, the purpose of this paper is not to present the peculiarities of the West African monetary system, but to reconsider why multiple monetary circuits coexist in an economic sphere. West Africa is one of the few regions in the world to accept different types of currencies over the last century, including commodities, colonial, national and common to digital currencies, and the monetary spheres are also transforming along with the monies. Through this monetary evolution, this paper especially focuses on two factors to determine the dimensions of the money circuit: the physical weight and the credibility of money. From this monetary evolution, we also easily understand that human beings are always seeking more appropriate currencies for their purpose. This also causes the phenomenon of multiple monies.

Niestandardowe instrumenty polityki pieniężnej – doświadczenia Narodowego Banku Węgier

The crisis that broke out in September 2008 has caused disturbances in the functioning of many economies. In response to the crisis, both governments and central banks have taken many steps. In the early stages they did not usually go beyond conventional tools. However, over time, the instruments started to become more and more unconventional. In the case of Hungary, the crisis has caused many unfavorable phenomena, both in the real and in monetary sphere. The National Bank of Hungary has developed non-standard monetary policy instruments that, on the one hand, improve the stability of the national financial system and, on the other, support the government’s program. This article will attempt to answer a question on the effectiveness of the central bank’s tools.

ВИЗНАЧЕННЯ ПРІОРИТЕТІВ ІНВАЙРОНМЕНТАЛЬНОЇ БЕЗПЕКИ УКРАЇНИ

It is proved that nowadays there is a constant development of production and growth of economic activity during which a person uses an increasing amount of natural resources. This causes a disturbance of the equilibrium in the natural environment. The main priorities of environmental safety are identified. Priority national economic interest of Ukraine should be its energy independence, which can be achieved by creating an alternative current energy security model. Priority of national economic interests in financial, banking and monetary spheres. State support of the banking sector, based solely on national economic interests. The development of domestic enterprises, national small and medium businesses, private property. An important national interest is the implementation of HR policy. It means that in the government, at enterprises only highly educated specialists mast take the key positions. Recognition of the Western vector as a priority in foreign economic policy. In particular, to improve the quality of education and health care systems, to improve the targeting of social protection systems for the poor and economically vulnerable categories of the population.

CHINESE 2017 BRICS PRESIDENCY: EXPANDING COOPERATION HORIZONS

The research aims to analyze the Chinese BRICS presidency in 2017 from the standpoint of promoting adenga’s continuity, developing new initiatives and providing a balance of national and partner countries’ interests in the context of existing and new global challenges. To carry out the research the author applied historical and comparative analysis methods. The author comes to a conclusion that China was able to effectively organize its presidency’s agenda to promote its own initiatives while supplying partners’ demand hereby laying a basis for further cooperation development in the BRICS, first of all in the framework of the South African presidency in 2018. In the economic sphere a number of sectoral documents were approved to exchange experience between the participating countries, in particular the Framework on Strengthening the Economic and Technical Cooperation for BRICS Countries aimed at providing CNY500 million to boost practical cooperation. In the financial sphere, with an objective to promote the Chinese national currency at the international financial markets, China implemented steps aimed at developing cooperation in the monetary sphere that, obviously, in the interests of other BRICS member countries. Chinese national financial institutions broadened their engagement with the BRICS New Development Bank. China faces a wide range of social goals in line with the Sustainable Development Agenda. The Xiamen Declaration affirmed the BRICS members’ commitment to fully implement the Agenda 2030. Being interested in new technologies transfer China promoted an adoption of a long-term cooperation instrument in this sphere (BRICS Action Plan for Innovation Cooperation (2017-2020)). To expand its influence at the international scene China actively uses soft power mechanisms. Its BRICS presidency was not an exception. A wide number of events were organized to promote Chinese culture and language. For the first time the BRICS Sport games took place. In such a way the Chinese 2017 presidency reaffirmed the BRICS mission, adopted new decisions, in particular aimed at cooperation institutionalization, in the interest of China and partner countries.