Monetary policy is aimed at the implementation of measures undertaken by the government in the field of monetary and credit relations in order to regulate economic processes. The coordinator of its implementation is the central bank. The policy itself is implemented in two stages. The first stage - the central bank affects the parameters of the monetary sphere. The second stage - the adjusted parameters are transferred to the manufacturing sector. The effective execution of these stages will result in a steady economic growth rate, a fairly low percentage of unemployment, a stable price level and a characteristic balance of the state balance. The priority in improving the economic condition of any state is the stability of the price level.
The main instruments of monetary policy should affect all financial processes in the state as both direct (or administrative) and indirect (or economic) levers. This should be manifested in the state control of such a basic financial indicator as the country's balance of payments.
Monetary policy administrative instruments are in the form of instructions, directives and instructions, which should come from the Central Bank and regulate limits on both interest rates and the issuance of loans. The interest rate limit is controlled by determining the limit value of the loan interest, as well as the deposit interest rate and the rate on savings deposits.
Limiting the volume of operations on loans provides for the establishment of an upper limit value for credit emissions. This concept is also known under the name - "credit ceiling". In other words, the total amount of loans provided by the banking sector determines this credit ceiling. The same restrictions on the volume and growth rate of loans are set for all commercial banks. Sometimes credit restrictions are set only for certain sectors of the economy and are called selective credit control. This method of regulation includes limiting the limits on the accounting of bills and credit restriction on consumption.
Direct monetary policy instruments are quite effective during the crisis of the credit system, as well as in the underdeveloped domestic financial market. Their main disadvantage is the facilitation of the outflow of funds in the "shadow" and abroad.
Indirect instruments of monetary policy include: changes in the discount rate, setting the volume of required reserves, as well as operations on the open market.
One of the first methods involved in the regulation of monetary relations is considered to be a change in the discount rate. Its essence is to influence the central bank on the liquidity of other banks and the overall monetary base. At the same time, by liquidity it is necessary to understand the ability of banks of various forms of ownership to repay all their financial obligations in a timely manner.
The main tools of monetary policy to control bank liquidity include determining the amount of required reserves. These reserves are necessary to guarantee the payment of deposits to customers in the event of bank bankruptcy. The Central Bank establishes a certain number of standards for required reserves. For example, to increase the savings of the population, the central bank sets lower rates for deposits with a short deposit term and higher ones for demand deposits.
The described indirect monetary policy instruments have a significant impact on the scale and structure of credit operations. Their advantage is the effective impact on the regulatory object, the absence of imbalances in their economic processes under their influence.
Based on the foregoing, we can conclude that all instruments of monetary policy should serve as levers of economic impact in order to achieve a positive macroeconomic effect.
