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Wartime Monetary Policy Instruments
Kuzan O. O.

Kuzan, Oleksandr O. (2024) “Wartime Monetary Policy Instruments.” Business Inform 1:304–310.
https://doi.org/10.32983/2222-4459-2024-1-304-310

Section: Finance, Money Circulation and Credit

UDC 336.74

Abstract:
Wartime poses numerous challenges at the micro and macro levels. One of the key challenges in this context is macro-financial stability. The answer to this challenge can be provided by an effective transmission mechanism of the State’s monetary policy. The aim of the article is to analyze the features of a set of measures taken by the NBU in the period of 2022–2023 in response to the intensification of russian armed aggression in the plane of the transmission mechanism of monetary policy. The article analyzes the challenges of monetary policy in wartime, including financing military needs, ensuring the stability of the banking system, managing international reserves, and exchange rate flexibility. The key measures on the part of the NBU, such as the purchase of government bonds, ensuring the liquidity of the banking system and stimulating economic growth, are highlighted. A significant increase in international reserves, which has become an important factor in macro-economic stability in wartime, is indicated. The specifics of monetary policy in the conditions of wartime, its impact on investment, consumption, and inflationary pressure are considered; the need for close cooperation between the Central Bank and the Government in this area is underlined. Particular attention is paid to the financing of military expenditures and their impact on monetary policy. The measures taken by the NBU to prevent a liquidity crisis and maintain the solvency of banks are analyzed. The contradiction between the financing of the budget deficit and the stability of the national currency is considered. The need to maintain macro-financial stability through a high discount rate and exchange rate adjustment is indicated. The importance of maintaining the stability of the financial system in wartime conditions is emphasized. The proposed study can be useful for researchers and analysts of monetary policy, central banks, governments, and international financial organizations. Prospects for further research are proposed in the direction of integration of Ukraine’s monetary policy in the context of development of the national economy at the post-wartime stage of development.

Keywords: transmission mechanism, monetary policy, wartime, economic stability, inflationary processes.

Fig.: 1. Tabl.: 1. Bibl.: 12.

Kuzan Oleksandr O. – Postgraduate Student, Department of Economic Theory, Ivan Franko National University of Lviv (1 Unіversytetska Str., Lvіv, 79001, Ukraine)
Email: [email protected]

List of references in article

Danylyshyn, B., and Bohdan, I. “Monetary Policy During the Wartime: How to Ensure Macroeconomic Stability“. Investment Management & Financial Innovations, vol. 19, no. 2 (2022): 344-359. DOI: http://dx.doi.org/10.21511/imfi.19(2).2022.30
Korobilis, D. “Assessing the Transmission of Monetary Policy Using Time Varying Parameter Dynamic Factor Models“. Oxford Bulletin of Economics and Statistics, vol. 75, no. 3 (2012): 157-179. DOI: https://doi.org/10.1111/j.1468-0084.2011.00687.x
Carbonari, L. “Transmission Mechanism of Monetary Policy“. Bankpedia Review, vol. 4, no. 1 (2014): 25-29. DOI: 10.14612/CARBONARI_1_2014
Sterk, V., and Tenreyro, S. “The transmission of monetary policy through redistributions and durable purchases“. Journal of Monetary Economics, vol. 99 (2018): 124-137. DOI: https://doi.org/10.1016/j.jmoneco.2018.07.003
Degasperi, R., Hong, S. S., and Ricco, G. “The Global Transmission of U. S. Monetary Policy“. HAL Open Science. 2023. https://shs.hal.science/halshs-03948534/document
Endut, N., Morley, J., and Tien, P.-L. “The changing transmission mechanism of US monetary policy“. Empirical Economics, vol. 54 (2017): 959-967. DOI: https://doi.org/10.1007/s00181-017-1240-7
Kalinovskyi, R. “Transmisiinyi mekhanizm ta alternatyvni rezhymy hroshovo-kredytnoi polityky viiskovoho chasu“ [The Transmission Mechanism of Monetary Policy in Ukraine: Essence and Ways of Improvement]. Hlobalni ta natsionalni problemy ekonomiky. 2016. http://global-national.in.ua/archive/13-2016/6.pdf
Seheda, L. “Transmisiinyi mekhanizm hroshovo-kredytnoi polityky yak osnova vplyvu tsentralnoho banku na perebih ekonomichnykh protsesiv“ [Transmission Mechanism of Money-Credit Policy as the Basis of the Influence of the Central Bank on the Circumstances of Economic Processes]. Vcheni zapysky TNU imeni V. I. Vernadskoho. Seriia «Ekonomika i upravlinnia». 2018. https://www.econ.vernadskyjournals.in.ua/journals/2018/29_68_3/34.pdf
Brychka, B. “Valiutnyi kanal transmisiinoho mekhanizmu hroshovo-kredytnoi polityky“ [Exchange Rate Channel of Transmission Mechanism of the NBU's Monetary Policy]. Visnyk Lvivskoho natsionalnoho universytetu imeni Ivana Franka. Seriia Ekonomichna, no. 57 (2019): 200-208. DOI: http://dx.doi.org/10.30970/ves.2019.57.0.4022
“Zvit pro finansovu stabilnist, hruden 2023 roku“ [Financial Stability Report, December 2023]. NBU. https://bank.gov.ua/ua/news/all/zvit-pro-finansovu-stabilnist-gruden-2023-roku
“Makroekonomichnyi ta monetarnyi ohliad, sichen 2024 roku“ [Macroeconomic and Monetary Review, January 2024]. NBU. https://bank.gov.ua/ua/news/all/makroekonomichniy-ta-monetarniy-oglyad-sichen-2024-roku
“Statystyka finansovoho sektoru“ [Statistics of the Financial Sector]. NBU. 2024. https://bank.gov.ua/ua/statistic/sector-financial

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