As part of the cheap money policy, the Central Bank initiates a set of measures: it buys government bonds, influences the discount rate, and reduces the reserve ratio.

With the help of cheap money, the standard of living of the population is maintained in conditions of rising unemployment and the emergence of an economic recession. These measures increase the domestic supply of money, reduce the cost of loans so that as many borrowers as possible have access to them. Thus, employment increases and the level of GDP increases.

Specifics of policy implementation

The cheap money strategy includes the following steps:

• intensive purchase of government bonds. The Central Bank carries out transactions with securities on the open market in such a way as to maximally replenish the reserves of commercial banks;
• reducing the discount rate is one of the fundamental measures. This step encourages commercial banks to obtain loans from the Central Bank, which also leads to an increase in their reserves;
• The reduction of the reserve norm by the main regulator of the country causes the transfer of obligatory monetary volumes into surplus ones, due to which the level of the money multiplier increases.

The most striking effect is manifested from transactions with securities. The key advantage of this method of influence is the flexibility of the mechanisms - the Central Bank buys and sells bonds in the required volumes, and here the result (increase in reserves) is noticeable immediately.

Fluctuations in the discount rate do not lead to rapid changes in the economic situation, since the influence of the internal policies of commercial banks is great. Working with the reserve norm is an obvious auxiliary measure that can only adjust the total profit of financial institutions.

The systematic influence of cheap money

This policy causes GDP growth and increased investment demand. The above measures have a positive effect on production processes, stimulate domestic demand, support the expansion of exports, and act as an effective means of combating unemployment. Stages of the impact of cheap money on the economy:

• The country's leadership decides on the need to increase the reserves of commercial banking structures.
• Regulation of reserves has a positive effect on the intensity of money supply.
• As a result, the reserve ratio and interest rate are noticeably reduced.
• A decrease in the interest rate entails a corresponding fluctuation in incoming investment, which affects aggregate demand.
• As a result, domestic pricing policy and the level of GDP change.

When cheap money policies fail to support the economy

Not in all conditions such a strategy leads to the expected effect. For example, the Central Bank is starting to replenish commercial reserves so that the population can obtain more loans from private banks. Banks, in turn, are not obliged to issue loans more actively in such conditions. Often they use the situation to solve their own problems, so the money supply does not change.

Another scenario cannot be ruled out: the economy is recovering and unemployment is decreasing. In conditions of employment growth, total expenditures increase and production volumes increase. High demand for money causes interest rates to rise. The government is faced with the task of stabilizing the latter. In this case, a convenient tool is the cheap money policy.

With such initial data, the measures taken cause an increase in total expenses, which are already high. Attempts to curb interest rates will only undermine the country's economy: consumers will have access to the loans they want, financial institutions will benefit from high inflation, and exporters will be happy to see the national currency become cheaper.

Used during periods of economic downturn and unemployment. SDA - increases the excess reserves of commercial banks and thereby increases the supply of money in the economy. Its objectives include making credit cheaper and facilitating access to it in order to increase aggregate demand and employment.

The traffic rules involve the following activities:

1. Purchase of securities. By purchasing securities, the Central Bank increases the reserves of commercial banks.

2. Reducing the reserve norm. By reducing the pH, the Central Bank automatically converts required reserves into excess reserves and the value of the money multiplier increases.

3. Reducing the discount rate. The Central Bank, by lowering the discount rate, encourages commercial banks to expand their reserves by borrowing from the Central Bank.

Dear money policy.

It is used during periods of increased inflation, that is, when the “economy is overheated.” Its goal is to limit the money supply in order to reduce spending and contain inflation.

Includes the following activities:

1. Sale of securities. Central Bank selling government securities on the open market reduces the company's reserves. banks.

2. Increasing the reserve norm. An increase in pH automatically deprives commercial banks of excess reserves and reduces the value of the money multiplier.

3. Raising the discount rate. An increase in the reserve ratio reduces the interest of commercial banks in increasing their reserves by borrowing from the Central Bank.

Among the three methods of monetary control, the most important regulatory mechanism is open market operations. This mechanism has an important advantage - flexibility: state. securities can be sold or purchased in larger or smaller quantities. Its application affects the bank's reserves without delay.

The discount rate plays a less important role for two interrelated reasons..

a) The amount of reserves of commercial banks obtained through loans from the Central Bank is usually very small (2-3%). It is open market operations (the sale of securities of the Central Bank) that encourage commercial banks to take loans from the Central Bank, because this leads to a temporary shortage of reserves at commercial banks and vice versa.

b) The effective impact of the discount rate depends on the initiative of commercial banks, and not on the Central Bank. If the LRR is lowered at a time when very few banks are seeking to borrow from the central bank, then the reduction will have little or no effect on bank reserves and money supply.

The reserve ratio is used by the Central Bank only as an auxiliary measure during open market operations. Decrease and increase in pH can have a significant impact on bank profits.

However, some economists note that changes in the discount rate and reserve ratio have an important “information effect”, that is, they can serve as a clear and understandable way of alerting financiers and the economy as a whole about the intended course.

Such a policy is proposed by Keynesians inclined to dirigisme and consists of flexible maneuvering of society's monetary resources. Namely: the supply of these resources then increases (policy cheap money, or credit expansion), then contracts (policy expensive money, or credit restriction). In this case, different chains of events are built and different ultimate goals are pursued. So, reduction in price money stimulates an increase in loans, aggregate spending and investment in the economy and is aimed at “boosting” production and increasing employment. While rise in price money, on the contrary, helps to reduce loans, expenses and investments, thereby reducing excessive commodity demand and suppressing inflation (Table 7.3).

Table 7.3

Comparative characteristics of the policy of cheap and expensive money

As can be seen from the table, increase in money supply achieved through: (1) purchase by the state from banks, other enterprises and the population of government bonds (as a result, “extra” money comes into circulation); (2) a decrease in the established norm of cash reserves of commercial banks (as a result, their credit resources increase); (3) a reduction in the discount rate at which the central bank lends to commercial banks (as a result, the latter take more cheaper loans from the central bank and give them more and cheaper to firms and the population).

In its turn reduction in money supply is ensured by opposite measures: (1) the state sells its bonds ("tying up" free money), (2) increases the bank reserve ratio and (3) raises the discount rate. Thus, the lending capacity of banks decreases, the interest rate on loans increases, their availability decreases, investments and total expenses in society decrease, the total demand for goods and services falls, prices and inflation go down.

"Monetary rule" of monetarists

Discussed above Keynesian The policy of cheap and expensive money presupposes, as we see, active monetary regulation of the economy by the state. Modern neoclassicists hold a different position, in particular monetarists ("moneymen"). They are represented primarily by the so-called Chicago school, led by the American liberal economist Milton Friedman (born 1912), formed at the University of Chicago in the 1950s. Monetarists rely more on the well-known market SELF-tuning and consider active government intervention in the economy to be ineffective. The essence of their reasoning can be summarized as follows (Fig. 7.15)

Firstly, in the economic sphere there are sometimes months-long time lags , which separate in time the moment the state takes regulatory measures and the moment they begin to actually take effect. As a result, these measures may be too late and may not work

Rice. 7.15.

already in a new economic situation, when they are either unnecessary or even harmful.

Secondly, the factor of the so-called rational expectations market subjects. This means that in the modern information society, consumers, businessmen and workers are able to “calculate” in advance the course of development of market conditions and government policies. Based on this and their own interests, they can change their economic behavior and thereby disrupt the activities of the state. For example, inflation expectations The population is encouraged to “flee from money”, to buy goods in reserve, which increases current demand and increases inflation.

Thirdly, another neoclassical argument in favor of limiting government intervention in economic life is theory of "supply economics" . She develops the idea of ​​the French economist Say about the primacy of the market offers (i.e. production) in the system of economic processes.

In the chain “production – exchange – distribution – consumption” known to us, the starting and main point is production (supply). It is this, on the one hand, that creates a lot of different goods, and on the other hand, an amount equivalent to their value income (salary, rent, interest, profit). These incomes simply have nowhere to go except to be spent on the purchase of the produced commodity mass. From here "Say's law" is that supply automatically generates its own demand.

Thus, the market is a self-balancing system, and free market supply (production) is the main spring for the successful development of the economy and the rise in the well-being of society. Therefore, the state should not interfere with the self-adjustment of the market. Its task is to stimulate the economic activity of people: (A) reduce taxes, promoting economic growth and (b) reduce social benefits, encouraging the unemployed to look for work, and the employed to seek high earnings through effective work. An economy thrives when everyone works hard, earns well, and spends a lot on purchases.

Finally, fourthly, stagflation conditions (recession and unemployment + inflation) make a policy of cheap money (against recession and unemployment) or a policy of expensive money (against inflation) unacceptable, since this can “shock” the economy even more. Hence, according to monetarists, macroregulation should be limited to compliance "monetary right-hander." According to it, the mass of money in circulation (money supply) should systematically and regardless of the current state of the economy increase at an annual rate corresponding to the average (over a long period) growth rate of GNP (3–5% per year).

The problem of optimally filling the national economy with money is very relevant for Russia. According to a number of experts, in the second half of the 1990s, artificial shortage of money because the Central Bank pursued an overly tight monetary policy.

Level of monetization of the economy (percentage of money supply to GDP) generally barely exceeded 20%, while in the most developed G7 countries it varies between 55–100%, and in developing countries – between 40 and 60%. This made it difficult to fulfill the state budget of the Russian Federation and disrupted the current financing of production and the investment process. As a result, non-payments (especially for wages) were rampant, economic growth was hampered and crisis phenomena were stimulated.

Be that as it may, the ongoing theoretical discussions between Keynesians and neoclassicals confirm the extreme complexity of macroeconomic processes. That is why most practical economists strive not to be “captured” by individual theories and advocate a balanced and flexible application of all the valuable recommendations of scientists in accordance with the specific conditions of a particular period of time and their country.

• Restriction(from Latin restrictio - restriction) - restriction of certain economic processes (production, lending, sales).
• Lag(from English, lag - delay, lag) - a time gap between interrelated phenomena or processes (for example, between investments in production and obtaining the effect from them - term return on investment).
• "Supply-side economics" from the English term supply-side economics– (literally) economics from the supply side.
• "Big Seven"(English: "The Great Seven", or "G-7") - a group of seven advanced and most influential world powers: Great Britain, Italy, Canada, USA, Germany, France, Japan. Annual meetings at the highest level, as well as at the level of heads of ministries and other institutions of these countries, have been held since 1975 (the first meeting without Canada, which joined in 1976). They discuss pressing economic and political problems, on which agreed solutions are developed. Since the late 1990s, many of these meetings have been attended by Russia("Big Eight").

2. The policy of expensive and cheap money.

1. Monetary policy is formed and implemented by the country’s central bank. It is a set of measures aimed at regulating the money supply in circulation, the level of interest rates and other economic indicators of money circulation in the country.

The main goals of monetary policy are economic growth, full employment, price stability, and a stable balance of payments. To achieve these goals, the central bank regulates the supply of money by influencing the money supply, as well as the money multiplier.

The instruments used by the central bank are divided into instruments of direct and indirect regulation. The first include lending limits and direct regulation of interest rates. The gradual construction of a market system leads to the weakening of direct regulatory instruments, and then their displacement by indirect regulatory instruments.

Instruments for indirect regulation of monetary policy include: open market operations, changes in the reserve ratio, changes in the discount rate.

By purchasing securities on the open market, the central bank increases the reserves of commercial banks, which leads to an increase in the money supply. The sale of securities by the central bank leads to a decrease in the reserves of commercial banks and, consequently, to a decrease in the money supply. Open market operations are the most important instrument through which the money supply of a country is regulated.

Currently, there is a mandatory reserve requirement set by the central bank. Established reserves serve as a means by which the country's money supply can be influenced.

The establishment of an increased norm of required reserves leads to a decrease in funds for active operations of commercial banks and a reduction in the money supply. Conversely, a decrease in the required reserve ratio increases the money supply. In Russia, the requirements for reserve ratios range from 15% to 20%, depending on the term of the deposit.

When issuing a loan, commercial banks set a price for the use of money - a discount rate, which depends on the discount rate (refinancing rate) of the central bank. When the discount rate increases, the possibility of providing credit to firms and the population is reduced, which can lead to a decrease in business activity and the money supply. Raising the discount rate is also a technique to combat inflation. A reduction in the discount rate works in the opposite direction.

Manipulation of the discount rate by the central bank is a traditional lever of monetary policy. It is necessary to keep in mind the presence of a subjective factor influencing decision-making in matters of lending by commercial banks. Much depends on the economic situation and forecasts.

2. Depending on the economic situation, the central bank pursues a policy of expensive and cheap money.

The policy of dear money aims to reduce the money supply. It is usually carried out during periods of increased inflation. Credit becomes expensive and difficult to access.

The reduction in money supply is facilitated by the sale of securities by the central bank on the open market, an increase in primary requirements and the discount rate.

The cheap money policy is carried out when there is underutilization of production capacity and unemployment in the economy. The implementation of a cheap money policy is most typical during periods of recession. In this case, credit becomes cheap and easily accessible. An increase in money supply is facilitated by the purchase of securities by the central bank on the open market, a decrease in the reserve ratio, and a decrease in the discount rate. An increase in money supply causes an increase in investment and an increase in business activity, but can intensify inflationary processes.

The policy of the central bank has a direct impact on the state of finances in the country. The role of the central bank is especially great in preventing crises in the activities of commercial banks. (On the main directions of monetary policy and its features in the Russian Federation, see M.K. Bunkin. National Economy. Chapter 10.)

Basic terms

Monetary policy objectives, monetary policy instruments, reserve requirements, open market operations, change in discount rate, change in reserve requirement ratio, central bank discount rate (refinancing rate), high money policy, cheap money policy.

Literature

1. Dolan E. Macroeconomics / E. Dolan, D. Lindsay. - St. Petersburg: Nauka, 1994. -- Ch. 8-10.

2. McConnell K. Economics: principles, problems and politics. T.1/K.McConnell., S. Bru. - M.: Republic, 1992. - Ch. 17, 18.

3. Fischer S. Economics / S. Fischer, R. Dornbusch, R Shmalenzi.-M.: Moscow State University Publishing House, 1997.-- Ch. 26,

4. Agapova T. A. Macroeconomics / T. A. Agapova, S. F. Seregina. - M.: Business and Service, 1999. -

5. Lifshits A. Introduction to market economics./Ed. A. Lifshits, I. Nikulina. - M.: Higher. school, 1995.- Ch. 7-8.

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Introduction………………………………………………………………………………… 3-4

What is meant by money……………………………………4-

The main functions of money…………………………………………………………………

The politics of “expensive” and “cheap” money

2.1. Practical part

Conclusion

Bibliography

Introduction

Monetary policy occupies an important place in the life of society, aimed only at ensuring economic turnover with a sufficient and necessary money supply. In essence, we can say that monetary policy appears to be “swimming against the wind.” Its main purpose is to stimulate business activity in conditions of business activity and suppress it when the economic situation overheats. Monetary policy is designed to ensure economic growth in the economy.

Monetary policy, in essence, by changing the money supply in the country, affects the aggregate demand in the country. Therefore, it is important to trace the mechanism of influence of monetary policy on product output in the country.

However, for countries with economies in transition (to which our country belongs), regulating the economy through monetary policy takes on a special meaning. Such a policy creates the necessary conditions and prerequisites for the implementation of the strategic goal of any transition economy - a reproductive structure, an adequately formed social model.

The main topic of this work is commodity-money relations, which include consideration of the issues of “The policy of expensive and cheap money, the mechanism of its impact on the economy.”

Money is an integral element of our daily life. Money is the most important attribute of the economy. The stability of the country's economic development largely depends on how the monetary system functions. Studying the nature and basic functions of money, the process of evolution of the monetary system, the organization and development of monetary circulation, the causes, consequences and methods of combating inflation is necessary to understand the peculiarities of the functioning of the entire financial system.

In the modern economy, money is a regulator of economic activity; by increasing or decreasing its quantity in circulation, the state thereby solves the assigned tasks. The life of a modern person is unthinkable without money; all the aspirations of people in the economic sphere are aimed at obtaining as much of it as possible, while we receive satisfaction from using it, exchanging it for other goods, giving it away.

During the study of the problem, the following tasks were set:

1. Study what is meant by money.

2. Consider the mechanism of influence of monetary policy on the country’s economy.

Chapter 1.

1.1.What is meant by money.

Money is an equivalent of wages artificially invented by humanity, a unit for measuring commodity-money turnover. Money appeared as a replacement for barter exchange of natural products. In different countries, money has different names and different quotes. Money is issued, as a rule, in paper or metal form.

The entire history of economic development is simultaneously the history of the development of commodity production and commodity consumption, where producers and consumers communicate with each other through the exchange of one product for another. The mediator in such an exchange is money.

Money is an integral component of commodity production and develops along with it. The evolution of money and its history are an integral part of the evolution and history of commodity production, or market economy.

Money exists and operates where economic life is carried out through the movement of goods.

In the modern economy, money is a regulator of economic activity; by increasing or decreasing its quantity in circulation, the state thereby solves the assigned tasks. The life of a modern person is unthinkable without money.

1.2.Main functions of money

In a modern economy, money performs five functions:

A measure of value (consists in the fact that in money we express the value of all other goods);

Means of exchange (with the help of money we exchange one product for another, the exchange of goods carried out with the help of money is called commodity circulation);

Storage medium;

A means of payment, settlement (money performs this function when payment for goods and services is not made immediately - lending and wages);

Money as a measure of value. This function of money plays a vital role in the organization and operation of the entire social economy, since it is thanks to a single measure of measurement that we are able to quantitatively compare the relative values ​​of various goods and services. Everyone knows that in order to measure distance, weight or volume, you need to select the appropriate unit or scale - meter, kilogram or liter. They do exactly the same thing in economics: governments of different countries set their own currency or price scale. The chosen unit measures the relative value of all goods and services sold. Such a common unit greatly facilitates the quantitative comparison of goods and the establishment of equivalent relationships between them.

Money as a medium of exchange. Under money circulation refers to the process of continuous movement of money in cash and non-cash forms, serving the processes of circulation of goods and services, and capital movements. The circulation of banknotes involves their constant transfer from one legal entity or individual to another.

To more clearly imagine the advantage of money circulation over the exchange of one product for another (what is called barter), it is enough to note that for barter you need to find a buyer for your product, and that this buyer has the product you need. For example, if you have grain and want to buy vegetables, then you must find a grower who needs the grain. Consequently, the act of selling and buying here is not separated in time. They occur simultaneously, and this inevitably entails inconvenience, not to mention certain handling costs associated with the loss of time and money.

Money circulation eliminates the disadvantages of barter exchange:

1) The act of selling and buying for money can be distant from each other. You can sell your product, get money for it, and then buy the product you need for it at a time and place convenient for you.

2) Money makes it possible to make an incomparably greater choice of goods and partners in trade transactions.

3) Their most important advantage is that they act as a universal equivalent of value, and that is why they have universal purchasing power, and therefore serve as a universal means of exchange.

Money as a store of value. Money serves as a store of value because after the sale of goods and services, it gives its owner the opportunity to purchase goods in the future. In other words, money provides its owner with future purchasing power. Other things can serve as a store of value, such as jewelry, real estate, works of art, not to mention stocks and bonds. In the economic literature there is a general term for them - assets: they have a certain liquidity, i.e. ability to act as a means of payment.

Unlike other assets, money has the highest liquidity, since it serves as a measure of value and thereby retains its nominal value. Other assets have less liquidity. So, in order to use real estate as a means of payment, you must first find a buyer, incur certain costs of sale, and besides, real estate prices can vary depending on the location, time of year, and also over time. Government securities are closest to money in terms of liquidity. They can easily be sold on the financial market, and their value fluctuates very little. Shares and bonds issued by enterprises, firms and corporations have less liquidity.

World money. Foreign trade relations, international loans, and the provision of services to an external partner gave rise to the emergence of world money. They function as a universal means of payment, a universal means of purchasing and a universal materialization of social wealth.

During the period of the gold standard, the practice of final balancing of the balance of payments using gold prevailed in the world, although credit instruments of circulation were mainly used in international circulation.

In the twentieth century, the intensification of world relations expanded the introduction of credit instruments of circulation (bills, checks, etc.) into international circulation. However, the peculiarity of the use of credit instruments of circulation in international circulation is that they do not serve as a final means of payment, such as gold.

Therefore, in order to reduce fluctuations in exchange rates and streamline the functioning of the world's leading currencies (dollar, pound sterling) as world money, international agreements and currency blocks were used. Examples are the Special Drawing Rights (SDR) of the International Monetary Fund, the ECU - the monetary unit of the member countries of the European Monetary System.

All five functions of money are a manifestation of the single essence of money as a universal equivalent of goods and services. They are in close relationship and unity. Logically, historically, each subsequent function presupposes a certain development of the previous ones.

Thanks to the performance of the above functions, money plays a key role in the development of production. The social role of money in the economic system is that it is a connecting link between independent commodity producers.

1.3. The politics of “expensive” and “cheap” money.

In modern conditions, the classical implementation of the policy of “expensive” or “cheap” money leads rather to negative consequences. It is obvious that, given the current structure of the Russian economy, structural problems, as well as the deterioration of the global environment, the use of purely market mechanisms is inevitably accompanied by costs, losses and new threats. The choice of one of the directions of interest rate policy is complicated by comparisons of “pro” and “contra” in its implementation - in fact, there is a choice of one of the available “bad” solutions. Improving solution options is only possible through administrative regulation (since we are talking about the distribution of public savings) and active work of the state at the micro level with business representatives.

Thus, it is necessary to search for some kind of combined option: either a tight monetary policy together with selective subsidies of interest rates, tax breaks, direct government financing; or large-scale support for the real sector, accompanied by increased foreign exchange regulation and control over the use of public funds.

The policy of dear money aims to reduce the money supply. It is usually carried out during periods of increased inflation. Credit becomes expensive and difficult to access.

The reduction in money supply is facilitated by the sale of securities by the central bank on the open market, an increase in primary requirements and the discount rate.

The cheap money policy is carried out when there is underutilization of production capacity and unemployment in the economy. The implementation of a cheap money policy is most typical during periods of recession. In this case, credit becomes cheap and easily accessible. An increase in money supply is facilitated by the purchase of securities by the central bank on the open market, a decrease in the reserve ratio, and a decrease in the discount rate. An increase in money supply causes an increase in investment and an increase in business activity, but can intensify inflationary processes.

The policy of the central bank has a direct impact on the state of finances in the country. The role of the central bank is especially great in preventing crises in the activities of commercial banks.

The quantity theory of money equation states

M*V= P*Y (1) ,

Where M is the amount of money,

V is the velocity of money circulation,

P - price level,

Y - physical volume of GNP (quantity of goods and services).

Money circulation is the circulation of money as a means of circulation and payment, as well as the movement of funds as an integral part of commodity-money, financial-credit, currency, and settlement operations.

Monetary policy has a number of features, and its implementation in reality faces a number of difficulties, which primarily include:

1. Cyclical asymmetry, that is, if the policy of “expensive money” is pursued, a point will be reached at which banks will be forced to limit the volume of loans, which means limiting the supply of money. While the “cheap money policy” can provide commercial banks with the necessary reserves, that is, the ability to provide loans, it is not able to guarantee that the latter will actually issue loans and the supply of money will increase. The population can also thwart the intentions of the Central Bank by buying bonds from the population; the population can use existing loans.

By limiting the volume and increasing interest rates on loans provided, i.e. By implementing the “dear money” policy, the central bank forces commercial banks to limit the volume of their operations, as a result of which new means of payment are created. And vice versa, by pursuing a liberal policy of “cheap money”, it allows banks to expand lending and thereby accelerate the issuance of means of payment

This cyclical asymmetry is only a serious constraint on monetary policy during times of deep depression. In normal periods, an increase in excess reserves leads to the provision of additional credit and thereby to an increase in the money supply.

2. Change in the velocity of money circulation. Thus, from the point of view of monetary circulation, total spending can be considered as the money supply multiplied by the velocity of money. In this regard, some Keynesians believe that the velocity of money tends to change in the opposite direction to the money supply, thereby eliminating changes in the latter caused by monetary policy. In other words, during inflation, when the supply of money is limited by the policy of the Central Bank, the velocity of money tends to increase. Conversely, when policy measures are taken to increase the money supply during a recession, the velocity of circulation is likely to fall.

3. The impact of investment, that is, the action of monetary policy, may be complicated and even temporarily slowed down as a result of unfavorable changes in the location of the demand curve for investment. For example, a bank tightening policy aimed at raising interest rates may have little effect on investment spending if, at the same time, demand for investment increases due to business optimism, technological progress, or expectations of future higher capital prices. In such an environment, to effectively reduce aggregate spending, monetary policy must raise interest rates extremely high. Conversely, a severe downturn could undermine confidence in business, thereby undoing the entire cheap money policy.

Thus, the monetary policy pursued by the central bank, as an instrument of state regulation of the economy, has its strengths and weaknesses. The latter, for example, includes the dilemma of the goals of credit policy, which arises as a result of the inability of governing institutions to stabilize both the money supply and the interest rate at the same time. The above allows us to conclude that the correct use of these levers to improve the economic situation in the country is realistic only with accurate planning and forecasting of the impact of the credit policy of the country’s main bank on domestic business activity.

Interest rate management is a relatively new tool of monetary policy. In recent history, Russian monetary authorities pursued an active interest rate policy only in 2002–2003, rapidly expanding the government borrowing market. Then, despite the increase in modern conditions, the implementation in the classical form of a policy of “expensive” or “cheap” money leads rather to negative consequences.

Savings of the population and declining inflation all ended in a systemic financial crisis. In modern conditions, the classical implementation of the policy of “expensive” or “cheap” money leads rather to negative consequences.

In this century, the monetary authorities have actually withdrawn from the implementation of interest rate policy, concentrating in the most liberal style on the fight against excess liquidity. Low interest rates and a significant amount of available financial resources were ensured by the receipt of oil revenues and the attraction of external loans with minimal restrictive actions of the state. As a result, production, income and consumption of the population grew, but imports and external debt increased faster, which worsened Russia's position in the context of the global financial crisis. Ultimately, the “safe haven” turned out to be more susceptible to the “global storm” than other “victims” of the global crisis.

Today, while apparently defending a liberal economic model, the Bank of Russia is trying to solve very contradictory problems with its interest rate policy. On the one hand, the goals of stabilizing the ruble exchange rate and reducing inflation are met by a tight monetary policy, which implies positive real interest rates and restrictive growth in the money supply. On the other hand, supporting the real sector of the national economy requires large-scale financial assistance, including the attraction of affordable loans with relatively low interest rates. At the moment, there are a significant number of enterprises (of strategic interest, systemically important ones, those carrying out modernization, those associated with imports in their production cycle, and others) that are experiencing a production shock caused by a drop in demand, rising prices for components, and the unavailability of bank credit. The result of such a “shock” was not long in coming - in January of this year, manufacturing output decreased by a quarter.

The devaluation of the ruble (since August 2008, the ruble exchange rate has decreased by 40% against the bi-currency basket) is already a fait accompli. Despite all the discussed pros and cons of the depreciation of the ruble, it has already fundamentally changed the currency of savings of the population and enterprises, caused an increase in prices in the domestic market and keeps devaluation and inflation expectations at a high level. All the efforts of the Russian monetary authorities to give the ruble the functions of a currency of payments, savings and investments, undertaken over the course of five years, were ultimately canceled out by a two-month devaluation. The possibility of a return to the previous situation will largely be determined by the interest rate policy of the Bank of Russia, the implementation of which is significantly complicated by the financial crisis and the decline in the economy. The policy of “cheap” money should be accompanied by strengthening foreign exchange controls and control over the expenditure of government resources.

In the most general form, interest rate policy is divided into restrictive (implying limiting the supply of money and increasing the cost of financial resources) and expansionary (aimed at expanding the money supply and implying low interest rates). Conventionally, the policy of “cheap” or “expensive” money depends on the level of interest rates and inflation, as well as on expectations of the level of inflation in the future. There is no clear definition of these types of monetary policy. We believe that for the Russian economy, the development of which in the last twenty years has been characterized by high inflation, a conditional division into “expensive” and “cheap” money can be made on the basis of real interest rates.

The macroeconomic tasks currently facing the Russian government and the Central Bank are the following:

Overcoming the economic downturn;

Keeping inflation within acceptable limits (less than 15%);

Stabilization of the ruble exchange rate and balance of payments;

Supporting the standard of living of the population;

Limiting unemployment;

Stabilization of the banking system;

Support for a minimum level of lending to the real sector.

The listed tasks seem quite contradictory from the point of view of developing monetary and economic policy in general. Additional factors influencing the choice of certain optimal proportions are:

A) In monetary policy - the change in tools that has occurred in recent months. For several years preceding the financial crisis, the Central Bank of the Russian Federation practically did not refinance the banking system, and the Ministry of Finance placed its securities in limited quantities. Now the situation has fundamentally changed: the Bank of Russia actually determines the cost of money in the economy with its refinancing rates.

B) In economic policy - the aggravation of the “personnel crisis”. Any decision-making on the selection of enterprises and projects for financing, subsidies, issuance of guarantees, etc. is associated both with a lack of qualified personnel and with the “human factor”. As part of this problem, a search is underway for universal market mechanisms that allow for adjustments to economic policies and the behavior of business entities.

Therefore, purely market mechanisms are inevitably accompanied by costs, losses and new threats. That is why choosing one of the directions of interest rate policy is actually choosing one of the “bad” decisions.

The policy of “expensive” money

Restrictive (aimed at limiting the expansion of money supply) policy of “expensive” money implies a high level of interest rates and is traditionally considered as a means of suppressing inflation.

Today, the choice of such a policy may be determined by the following objectives:

Supporting a stable ruble exchange rate and reducing demand for foreign currency;

Maintaining and reducing inflation. The choice of one of the directions of interest rate policy is actually a choice of one of the available “bad” decisions.

The implementation of the policy of “expensive” money includes increasing (or not decreasing) the level of interest rates on financial resources provided by the Bank of Russia and the government, as well as restrictions on the expansion of money supply. The consequences of implementing this policy will vary.

Positive consequences:

Stimulating savings in the non-financial sector (due to rising interest rates on deposits and stabilization of inflation and devaluation expectations);

Selection of enterprises by efficiency (expensive bank loans will only be able to attract enterprises that are effective today).

Negative consequences:

Reduction in lending volumes and worsening economic downturn;

Increasing costs associated with rising costs of servicing bank loans and provoking cost inflation;

Reduced stability of the banking system;

Worsening situation with “bad” debts.

Expected results this year:

Stabilization of the ruble exchange rate;

Increase in savings of the population;

Declining lending growth rates;

Maintaining the inflation level due to devaluation, inflation expectations, risk premiums (inflation will not increase, but will not decrease either);

Increase in the number of defaults on domestic and foreign loans;

Reduced demand and reduced production volumes;

Decline in investment activity;

An increase in the number of bankruptcies of enterprises and banks.

In general, the policy of “expensive” money will make it possible in 2009 to maintain the ruble exchange rate within the announced corridor and keep inflation within 20%. In addition, it will provide an opportunity to reduce the gap between loans and savings in the non-financial sector.

The real sector of the economy, in the context of the policy of “expensive” money, will experience a growing credit hunger. Only a small part of efficient enterprises today will be able to take advantage of a bank loan, which can be explained by the declining profitability of industrial production. New levels of profitability indicate a decline in the ability to survive and a deterioration in the prospects for industrial production during the period of the policy of “expensive” money, as well as the real sector of the economy in the context of the policy of “expensive” money will experience a growing credit hunger.

The policy of “expensive” money as a market selection mechanism works effectively and strategically in a stable economy, moderately dependent on external risks, with stable growth rates, in conditions of a progressive (without sudden surges) expansion of investments. It will be possible to improve the structurally unbalanced Russian industry and revive its growth during the period of “expensive” money policy only with the use of targeted government programs.

In particular, there is a deterioration in the financial and dynamic indicators of the mechanical engineering complex - the actual locomotive of industrial growth in Russia in recent years, developing on innovation and stimulating the innovative development of related industries. The obvious problems of the machine-building complex, which is the most important from the point of view of the future landscape of Russian industry, make it extremely important for the state to form and implement an active policy of supporting enterprise investments and current production activities - both with credit resources and the formation of demand.

Cheap money policy

Expansionary (aimed at increasing the overall supply of money in the economy) “cheap” money policies, relying on low interest rates, are traditionally used to reduce (or limit the growth of) unemployment in a recession.

Today, the choice of a “cheap” money policy may be determined by the following tasks:

Stimulating domestic demand and production (including supporting employment levels);

Ensuring the stability of the banking system.

Positive consequences:

Minimizing production decline;

Employment level support;

Stability (partly temporary and visible) of the banking system.

Negative consequences:

The continued threat of further devaluation of the ruble;

High risks of accelerating inflation;

Conservation of structural imbalances.

Possible results this year:

Expanding demand will reduce the rate of decline in production;

The solution to the problem of “bad” debts will be postponed to subsequent years;

High inflation will remain;

The ruble exchange rate will continue to depreciate;

There will be a sharp reduction in government resources;

The problem of low efficiency and competitiveness of Russian enterprises and banks will continue.

Additionally, we note that the key issue in pursuing a policy of “cheap” money is its source. There is every reason to expect that government reserves will quickly deplete. Then the main sources of money supply will be emission refinancing of the banking system and money emission for the issue of government securities, which poses high risks for financial stability.

2. Practical part

Budget expenditure analysis

Let us conduct a comparative analysis of the federal budget expenditures for 2009 and for the planning period of 2010 and 2011. Let's look at table No. 1.

Table No. 1 - Federal budget expenditures for 2009 and for the planning period of 2010 and 2011

The largest share in the classification of expenses is occupied by interbudgetary transfers. In 2009, the share of expenditure of these funds is 29.38%. If we talk about the dynamics of this indicator, then next year (2010) it decreases by 0.8%. But in monetary terms it increases by 630.46 billion rubles. In the medium term, an absolute increase in interbudgetary transfers is envisaged by 2011 to 3,994.42 billion rubles, which is 1,007.31 billion rubles. more compared to 2009. In diagrams 1 and 2, you can clearly see how this indicator changes.

Diagram 1. Dynamics of interbudgetary transfers in absolute terms

Diagram 2. Dynamics of interbudgetary transfers in relative terms

This indicates the financing of the budgets of the constituent entities of the Russian Federation.

The second section, which accounts for 11.24% of the total expenses, is national issues. Over time, we see that this figure is decreasing as a percentage. It is predicted that in 2011 the amount of expenses will be 1,135.45 billion rubles, which will decrease by 7.83 billion rubles compared to what was planned in 2009. . The main subsections include budgetary allocations for the judicial system, ensuring the activities of financial, tax and customs authorities and supervisory authorities, servicing state and municipal debt and other national issues. Directly increasing the salaries of civil servants (deputies and their assistants, judges, increasing compensation for jurors and arbitration assessors, assistant judges of arbitration courts, secretaries of court sessions of arbitration courts, etc.), carrying out major repairs of administrative buildings, ensuring the activities of the Accounts Chamber of the Russian Federation . And there are a lot of such allocations in each subsection, which indicates the growth of this indicator as a whole.

The national economy ranks third in the distribution of budget funds. It is predicted that in 2009 the amount will be 1,063.31 billion rubles, in 2011 it will increase to 1,371.49 billion rubles. which is significantly noticeable in percentage terms at 28.98%.

This section includes powers to regulate and support economic activities, including issues of environmental management, infrastructure development and natural resource potential, state support for certain sectors of the economy are mainly within the jurisdiction of the Russian Federation.

The main place in their structure is occupied by budgetary allocations for transport, reproduction of the mineral resource base, agriculture and fishing, communications and computer science, and other issues in the field of the national economy.

According to the forecast, this indicator is now in 3rd place, but in 2011 it will take second place.

In 4th place on the list of budget expenditures is national security and law enforcement, and in 5th place is national defense.

Both of these sections are increasing funding. Let's look at diagrams 3, 4 and 5. We see that such an indicator as national defense has growth dynamics; from 2009 to 2011, an increase of 94.36 billion rubles is predicted. And the forecast for the section national security and law enforcement will increase by 131.19 billion rubles. As a percentage, this figure is falling. The “national defense” indicator first falls significantly (by 1.2%), and then increases slightly (by 0.3%).

Diagram 3. Share of Federal Budget expenditures for 2009

Diagram 4. Share of Federal Budget expenditures for 2010

Diagram 5. Share of Federal Budget expenditures for 2011

The next section, the share of which is decreasing in total expenditures, is education, in 2009 it will amount to 4.04%. In dynamics, this figure is falling; by 2011 it will decrease by 0.67%. In monetary terms, this figure is increasing. This is due to the implementation of the national project “Education”, as well as an increase in teachers’ salaries. Allocations are being made for advanced training and retraining of employees of federal budgetary institutions, the implementation of social protection measures for orphans and children without parental care studying in these institutions, allocations will ensure the provision of secondary vocational education to students, higher education, namely an increase in budget places .

Health care and sports are one of the most important indicators, because the financing of this section depends on the ability of the country's population to participate in all areas of production. Those. with the help of labor resources, all the assigned tasks of the state, small organizations, factories, factories, etc. are carried out.

It is predicted that in 2009 the volume of expenses in this section will amount to 349.87 billion rubles, in 2010 there will be an increase of 4.55%, and in 2011 by 5.05%.

The social policy section is of no small importance, but its financing takes up a small share of the total federal budget expenditures. This indicator first increases and then decreases. It is predicted that in 2009, revenues from the federal budget will amount to 310.26 billion rubles; by 2011, this amount will decrease by 2.38 billion rubles. Financing is provided through subventions from the Compensation Fund (section “Interbudgetary transfers”).

Less funded sections of the federal budget, the share of which ranges from 0.14-1.12% of total expenditures, are occupied by: 1. culture, cinematography and the media; 2. housing and communal services; 3. environmental protection.

According to changes in budget legislation, a new item of conditionally approved expenses will appear in the structure of expenses in 2010 and 2011. That is, a certain amount of funds that is not distributed among sections and articles, which will make it possible to plan for new emerging obligations. In accordance with Article 199 of the Budget Code of the Russian Federation, these expenses must amount to at least 2.5% of the total federal budget expenses for the first year of the planning period and at least 5% of the total federal budget expenses for the second year of the planning period.

The last section of federal budget expenditures is classified items. If we talk about the content of this indicator, then these are items that are not disclosed, and there is no access to this information, as well as funds that are not allocated to items, in connection with amendments to the federal law "On the federal budget for 2009 and the planning period 2010 and 2011".

Conclusion

Monetary policy plays a large role in government policy. One of the most important ministries of the state is the Ministry of Finance, which conducts monetary policy in accordance with the tasks and goals of the development of the state and society. It is not surprising that the Ministry of Finance controls quite a lot of different structures, for example, such as the Central Bank. A lot of bodies (ministries, departments, committees, departments) pursue state policies in various areas, directly or indirectly related to the economy.

In a market system, the state is not a magical source of funds, but only a mechanism designed to ensure that some citizens (with higher income) pay through taxes to others (with lower income). In the new conditions, the main factors of an individual’s well-being are his initiative, the desire for personal activity, and the willingness to choose economic solutions himself.

The conclusion is to choose between two evils.

In modern conditions, the implementation of a policy of “expensive” or “cheap” money in the classical form will most likely lead to negative results. The main objectives of economic policy are to overcome the financial crisis and solve accumulated structural problems, which are complicated by the lack of effective state institutions and their employees capable of effectively managing during a crisis period (taking into account the fact that the state has free financial resources). In general, the policy of “expensive” money will make it possible in 2009 to maintain the ruble exchange rate within the announced corridor and keep inflation within 20%.

The policy of “expensive” money involves maintaining financial stability and selecting enterprises based on efficiency criteria. However, there is a significant part of enterprises (of strategic interest, systemically important, modernizing, associated with imports in their production cycle) for which a bank loan will not be available. Therefore, such a policy should be accompanied by selective subsidies of interest rates, tax breaks, and direct government financing. Meanwhile, it is the choice of areas of support.

The policy of “cheap” money includes expanding demand and increasing production activity, but provokes inflation and devaluation. The implementation of this policy assumes the growth of all sectors of the economy without selecting their efficiency (as was observed in 2006–2007), which preserves the problems and imbalances that have accumulated over the years of intensive economic growth. The policy of “cheap” money should be accompanied by strengthening foreign exchange controls and control over the expenditure of government resources. The most important threat in its implementation is the limited state reserves. After they are exhausted, the policy of “cheap” money will be implemented through money emission and external borrowing. Additionally, in order to avoid inflationary “overheating”, it is necessary to develop the market for government securities that allow sterilization. It will be possible to improve a structurally unbalanced industry with a policy of “expensive” money only through the use of targeted government programs. excess liquidity. It will be possible to improve a structurally unbalanced industry with a policy of “expensive” money only through the use of targeted government programs.

Interest rate policy will be a key component of fiscal policy and the anti-crisis package in the coming months. A key component of financial policy - because it determines the cost of money provided to the banking system and available to Russian enterprises. And if the banking system, in creating demand for public money, is largely focused on the return on investment, margin (the difference between attracted and allocated funds) and risks, then the real sector is ultimately focused on business profitability, and the population is focused on inflation. Different reference points in the value of money for institutional agents represent the most important contradiction in interest rate policy.

The progressing crisis (financial and in the real sector) leaves an extremely short period of time for choosing and clarifying the main directions of financial policy. The liberal version of the policy of high interest rates currently being implemented will soon face obvious consequences - the expansion of the use of “money surrogates” in settlements between enterprises (the spread of bills of exchange, barter, as well as an increase in non-payments). The real sector has not yet responded to this policy on a large scale by increasing “bad” debts, since expectations of financial assistance from the state are still in effect. If such assistance does not follow, and interest rates remain at the current high level, then the increase in overdue debt, as well as the lack of working capital, will intensify the already significant decline in production recorded in January 2009.

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