Monetary policies in the developing countries

Essay by boberUniversity, Bachelor'sB-, March 2006

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Monetary policy in Uzbekistan

Issues of monetary policy in Uzbekistan

Monetary policy in Kazakhstan

Issues of monetary policy in Kazakhstan



Monetary policy is designed to control the circulation of money in the economy aimed towards various macroeconomic goals such as full employment, low inflation and steady economic growth. The main component of this economic policy is the rate of interest, which is supposed to influence the economy quickly and smoothly through the cost of money.

There is another policy, known as fiscal policy, which involves the control of taxation and government spending. Both policies belong to the demand-side category. On the other hand there are supply-side policies, designed to affect aggregate supply by means of altering costs or productivity (Sloman, 2003).

According to monetarist economists, the monetary policy is a better device than fiscal policy in controlling inflation. Indeed, it is probably the best method of influencing aggregate demand so as to provide most favourable conditions for the development of market economy.

However, there are some drawbacks, such as time lags, which depend on the interest elasticity of demand, e.g. demand for goods bought on credit or demand for investment from private companies. The other disadvantage is that some industries and regions of the economy are differently affected and exposed to change in policy (

Money has existed for centuries. Central Banks have begun to operate more recently, and the modern model of Central Banks has started to function even later, when paper money and commercial banks have appeared.

Today any country, even the smallest country of the world, has its own Central Bank. It has two tasks. Firstly, it must guarantee stability in the functioning of banking and financial systems, which involves foreseeing the emergence of financial panic, which can easily occur in the...