Monetary Policy Essay

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Monetary policy - a key method of state regulation of social reproduction in order to ensure the most favorable conditions for development of a market economy. By regulating the money supply, the state may affect prices, investments and consumption of the population, the volume of national production, inflation and economic growth. The right regulated monetary policy – guarantee of well economy status of the country. In our country National Bank of Kazakhstan is the only body that determines and carries out public monetary policy of the Republic of Kazakhstan. The National Bank’s monetary policy for more than a half of its 15-year-long tenge history has been conducted in conditions of financial instability. This essay features the National Bank’s monetary policy conducted in conditions of financial instability. My aim is to analyze monetary policy, find main problems and add some international experiences in order to suggest some subjects, what we need to change. Also, of course, I want to get excellent mark. Let me first give a definition to the term financial instability. Financial stability probably means complete fulfillment by the financial system of its direct tasks, i.e. successfully carrying out investment projects and efficiently evening jumps in the consumption of resources. From this point of view, beginning from the introduction of the tenge, the periods of financial instability were the periods between November 1993 and 1999 and between August 2007 and the present moment. Let me describe and analyze the monetary policy in each of these periods. November 1993 – 1995 (period of fighting with hyper inflation). By the introduction of the tenge, Kazakhstan’s economy had been in very difficult situation. In 1993 inflation rate totaled 2,265 percent and the production output decreased by nearly 50 percent in 1991 – 1995. In order to stop the

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