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EFFECT OF MONETARY STABILITY ON THE ECONOMY
Bazarbaeva Gùlbanu Niyetbay qızı
Karakalpak State University named after Berdak.
Master of Law Faculty
https://doi.org/10.5281/zenodo.10429111
Abstract.
This article examines the impact of monetary stability on economic growth, the
financial depth of the economy and the improvement of the transmission control mechanism of
monetary policy channels.
Key words:
money circulation, economic growth, monetization of the economy, financial
depth of the economy, channels of the monetary policy transmission mechanism, inflation.
ВЛИЯНИЕ МОНЕТАРНОЙ СТАБИЛЬНОСТИ НА ЭКОНОМИКУ
Аннотация.
В данной статье рассматривается влияние денежно-кредитной
стабильности на
экономический
рост, финансовую
глубину
экономики
и
совершенствование трансмиссионного механизма управления каналами денежно-
кредитной политики.
Ключевые слова:
денежное обращение, экономический рост, монетизация
экономики, финансовая глубина экономики, каналы трансмиссионного механизма
денежно-кредитной политики, инфляция.
In the modern conditions of economic development, the study of the mechanisms of the
influence of money circulation on the support and stimulation of economic growth is of great
practical importance, because the continuity and stability of money circulation determines both
the state of the money market and the nature of the reproduction processes in the economy. defines
[1]. Today, the main problems that stop the stimulating effect of money circulation on economic
growth are as follows:
- imbalance of financial markets and their low liquidity;
- composition and uneven development of the financial sector;
− imperfection of working mechanisms and low efficiency of using transmission mechanism
channels;
- decrease in credit activity of commercial banks.
The analysis of monetary policy tools allows us to determine that money transfers play a key
role in the mechanism of influencing economic growth, which is the effect of changes in the
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methods and tools of the central bank's monetary policy on the state of the money market, then
and it is understood by changing its conjuncture.
Changes in the methods and tools of monetary policy lead to changes in the size and structure
of monetary aggregates, interest rates, exchange rates, credit conditions, asset prices, as well as
the expected results of market subjects, and therefore affect the activity of the money market. .
Then, changes in the volume of savings, investments, consumption, exports and imports in the
money market directly or indirectly affect the real sector, resulting in changes in the volume of
production, employment and price dynamics. makes a secret.
According to modern approaches, money, credit, interest and currency (exchange rate)
channels in the money transfer mechanism are directly influenced or controlled by central banks,
as well as waiting for changes in asset prices, which are practically not controlled by central banks.
channel is separated. From the point of view of evaluating the impact of money circulation on
economic growth, the most important are money, credit, interest and currency channels. However,
the role and level of use of these channels may differ significantly in different periods of the
country's economic development. In the pre-crisis period, the main role in the transmission
mechanism was played by the currency and credit channels, as well as the asset price channel.
Today, the greatest impact on the real sector of the economy is provided through money-credit
channels.
Long-term research by researchers has shown that money circulation mainly affects the
stimulation of economic growth based on the regulation of money supply and demand, interest
rates and exchange rates. In addition, the main method of this influence is to increase the financial
depth of the economy, and the main tool is to control the channels of the transmission mechanism.
The concept of the financial depth of the economy is relatively new for the local scientific
circulation. Often, this term refers to the degree of monetization of the economy, the ratio of the
volume of securities in circulation to GDP (the volume of capitalization of the stock market) and
other indicators [2]. The most accurate definition of this concept, Ya.M. According to Mirkin, the
financial depth of the "Economy" is the penetration of financial relations, the saturation of money,
financial instruments and institutions, the size of the financial sector compared to the production
base. The more developed and rapidly developing the country is, the greater the financial depth.
In turn, the more it is, the more important the ability of the financial sector to redistribute funds
for investment purposes, and the higher and more stable the rate of economic growth will be.
Indicators of financial depth are money / GDP, financial assets / GDP, capitalization of the stock
market / GDP, etc.»
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Thus, the financial depth of the economy should be considered as a comprehensive
assessment of the money saturation of the economy, which describes the level of development of
the money market, the financial sector, and the involvement of various institutions, financial
intermediaries, and economic entities in the monetary system. In accordance with the concept of
"financial depth of the economy", the more the economy is saturated with financial and monetary
resources and the more diversified the structure of the financial and credit system is, the more
stable the rate of economic growth will be. The concept of financial depth was originally
developed by R. Goldsmith, who established a direct connection between the level of economic
and financial development, and also that the growth rate of the financial sector in certain periods
is real found that the growth rates of the sector can be significantly exceeded. Later, this regularity
was called the theory of "rapid growth" of the financial sector. According to this theory, which
fully meets the requirements of modern monetarism, the financial sector is the basis of economic
development, therefore, the increase in the volume of financial markets and the increase in the
financial depth of the economy contribute to economic growth.
Thus, during the global financial crisis, based on these recommendations, central banks and
governments of most countries tried to support financial institutions and financial markets. In the
USA and Germany, these measures included measures to stimulate demand, protect against
unemployment, and provide social support, while in Canada, Japan, and China, they were mainly
aimed at stimulating the economy and reducing taxes.
However, it should be noted that in the modern world economic system, the financial sector
has already become its independent element. The role and importance of the financial sector, which
is related to the object of our research, is that due to the development and complexity of its
institutional and functional structures, the channels of transmission of the mechanism of monetary
impulses to the economy through the system of financial markets and institutions are expanding,
which is necessary for the development of other sectors of the economy. creates additional
motivational factors.
The conducted research made it possible to determine that the financial depth of the economy
is constantly growing, but the indicators of economic efficiency, calculated on the basis of the
profitability of financial sector assets and monetary indicators, have unstable dynamics. Thus, in
2018, compared to 2010, the ratio of financial sector assets to GDP increased from 62.4% to
85.2%, and the ratio to money supply increased from 1,226 to 1,541. At the same time, the
profitability of investments increased by 32.9%, the profitability of financial sector assets
decreased by 36.2%. In our opinion, this is explained by the fact that there is a tendency for the
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financial sector to develop rapidly compared to real development, as well as the insufficient
development of the financial sector itself and, above all, the lack of improvement of its structure.
In addition, the calculation results allow us to conclude that the rapid growth of loans had a
negative impact on the development of the financial sector compared to the growth rates of
deposits and investments in fixed capital. This situation can be explained by the imperfect structure
of bank loans, in particular, the expansion of the volume of consumer loans in 2010-2018 and the
insufficient volume of long-term investments in the real sector of the economy.
So, according to the results of calculations, the main monetary factors affecting economic
growth are the degree of monetization of the economy, the structure of the money supply, the
assets and liabilities of banks, as well as indicators of investment activity. Therefore, increasing
the financial depth of the economy by improving the composition of the financial sector and
increasing the use of channels of the transmission mechanism controlled by the central bank is an
important direction of the stimulating effect of money circulation on economic growth.
Thus, in order to ensure the successful regulation and stability of monetary circulation,
the transmission controlled by the central bank in order to increase the financial depth of the
economy, stimulate economic growth and create suitable monetary conditions to ensure the low
level of inflation and the stability of the banking system. it is necessary to improve the efficiency
of using the mechanism.
REFERENCES
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Mirkin Y. M. Rossiya moliya sektorining inqirozdan keyingi rivojlanish strategiyasi. URL:
http://journal.econorus. org/jsub.phtml?id=24
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Goldsmith R. Financial structure and development // Vale University Press. New Haven,
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