Monetary system of Ukraine

Автор: Пользователь скрыл имя, 09 Октября 2011 в 12:16, курсовая работа

Краткое описание

The formation of the stable relations concerning the purchase and sale of foreign currency and their legal consolidation historically led to the formation of the first national and then the international monetary systems. Although monetary relations brought to life primarily by the development of the international trade (through the movement of goods and services overseas), as well as the international capital movements, they have relative independence, which in the global economy has a tendency to increase. Currency relations’ impact on the production becomes more perceptible. To a large extent, this is the result of the further economic life internationalization, the deepening of integration trends in different regions of the world, significantly increasing role of external factors in the national reproductive process of industrial production, a huge increase in world currency trading, and the emergence and rapid spread of new financial instruments.
So, nowadays, in the era of the globalization and growing interdepence of nations it is very important to know not only how monetary system of every single country is carried out, but also how the international monetary system works.
The research project on a theme “The international monetary system and its evolution” is devoted to the problems of the international monetary system and its particular elements functioning showed through its gradual development.
The object of research of the work is the international monetary system. The subject of the research project is functioning of the international monetary system and its evolution stages. The purpose of this research project is the analysis of its object.
For achieving the purpose of the project it is necessary to fulfill such tasks, as:
• The analysis of the theoretical bases of the international monetary system functioning;
• The analysis of the stages of development of the international monetary system, as well as the leading organization of the modern international monetary system – International Monetary Fund (IMF).
• The research of functioning of the international monetary system's key elements;
• An overview of the international monetary system problems and prospect.
Methods for achieving the tasks of the research project are as follows: analytical, comparative, observant, statistical and research.
As a result of this research project modern consisting and functioning of the international monetary system and its elements through the process of its evolution must be clear.

Оглавление

Chapter I

The essence of monetary system
The notion of money, its types, categories and functions………………..…...4
Main features of monetary system……………………………………...........11
Monetary policy and Central banks………………………………………….15

Chapter II

Monetary system of Ukraine and other countries

2.1. History of Ukrainian monetary system and its nature…………………….….18

2.2. The USA monetary system…………………………………………….……..25

2.3. Monetary system of European Union……………………………………...…29

Chapter III

Modern tendencies in monetary system of Ukraine

3.1. Current situation in monetary system of Ukraine………………….…………34

3.2. Problems in monetary system of Ukraine and ways of their solving…….…..43

Literature…………………………………………………………………….…………50

Файлы: 1 файл

Monetary system of Ukraine.doc

— 445.00 Кб (Скачать)

      The ruble was not a means of exchange in the state sector. It was not freely convertible to goods, except for goods allocated in the plan for each enterprise. For households, money was the basic means of exchange, but only goods produced according to plan were legally available (with the relatively small exception of the kolkhoz markets). Because of the frequent shortages, households did not rely on money as the only means of exchange but also used such allocation mechanisms as barter, queuing, and bribery.

      As a store of value, money was useless to enterprises, but it was important for households because few other assets were available. In addition to gold and precious stones, one could invest in state bonds, but these were used to mop up excess liquidity. People had little confidence about keeping their wealth in rubles because of the recurring periods of very high inflation - during the civil war, in the early 1930s, during World War II, and afterwards - and also because of the frequent confiscatory money reforms. As foreign currencies were almost unavailable, and possessing them was a serious crime, households used any other store of value, and lacking them, cut down their efforts to earn money. The limited convertibility of the ruble into commodities, together with periods of very high inflation and monetary reform, made money a defective measure of value.

      The Soviet Union had a monobank system consisting of a single state bank (Gosbank) that combined the functions of a central bank, a commercial bank, and a savings bank. Gosbank was not autonomous; it was a financial-control agency under the Council of Ministers. Acting as a central bank, it created narrow money (cash in circulation outside the state sector) by authorizing companies to pay wages according to accepted wage plans. Acting as a commercial bank, it issued short-term credit to companies, in accordance with the plan, for working capital. More important, it kept close track of transfers between enterprises to make sure that only transactions sanctioned by an accepted plan took place. Originally, there was a formally separate savings bank, but it was incorporated into Gosbank in 1963. It used the savings of the population to finance budget deficits. A couple of other banks existed for a short time, but like the savings bank were not independent.

      The banking system and the budget system were the two pillars of the monetary system. The budget system had three layers - central, regional, and municipal - but, like the Soviet state, it too was unitary. Tax revenue mostly consisted of commodity-specific taxes separating retail and wholesale prices, company-specific profit taxation, usually confiscating any "excessive" revenue companies might have, and foreign trade taxes, used to separate domestic and foreign prices. As state revenue was thus based on fees specifically tailored for commodities, companies, and foreign markets, the system should perhaps not be called taxation at all. Wages were, in principle, set by the state, but there was little use for income taxation.

      State revenue was used to pay state-sector wages and for investment, subsidies, and other public expenditure, including the military. To hide the extent of military expenditure and cover up the deficiencies of social services, state finances were always among the best-kept secrets of the Soviet state. This was especially so toward the end of the period, when there was much justified suspicion that the state, unable to cover expenditure by revenue, was actually engaged in the monetization of budget deficits. This created a monetary overhang with several undesired consequences, among them a popular withdrawal of work effort.

      During the war communism of 1918 to 1921, Soviet Russia went through a hyperinflation that destroyed the ability of money to fulfill any of its functions. To what degree this came about by design so as to reach full communism immediately, to what degree by default due to inability to control the monetary system during a civil war, is still debated. Along with the partial rehabilitation of markets in the early 1920s, a successful money reform was made by introducing a parallel currency. The establishment of the centrally managed economy again drove the monetary system into turmoil, but in a few years it had found its new contours. World War II intervened before there had been sufficient time for monetary and financial policy to establish themselves. By the mid-1950s the situation had stabilized, but at the same time the need to reform the economic system was increasingly recognized. The reform proposals, based on the idea of indirect centralization, had little room for monetary or other macroeconomic questions. Not unexpectedly, the partial implementation of such thinking during the late 1980s left post-Soviet Russia in a situation of near hyperinflation with a financial system almost in collapse.

      Following the disintegration of the USSR, officially declared in December 1991, as a result of uncontrolled currency issue (monetary over emission) of the former republics the ruble zone disintegrated. In April 1991, within the range of reforms carried out by Egor Gaidar, copying the reforms in Poland, prices were liberated, and later on a model of mass (voucher) privatization was chosen. The banking sector was liberalized very quickly and 1400 new banks were registered in only in 1991. In 1992 Jeffrey Sacks than adviser of Russian government proposed to fixed exchange rate of the ruble via stabilization fund of 6 billion dollars, but the international institutions declined to provide such funds. In 1995/1996 the ruble totally lost its functions and the economy created numerous barter and “virtual money” schemes, which even today are an object of researchers’ interest. This increase of non-formal economic practices coincided with the formation of the new social structure of the post-Soviet society, and the so-called oligarchs came into existence in this period. They had to play the role of new capitalists and of those who later got the whole economy going. Most of them were former party and nomenclature people who managed to convert their power positions into financial and equity capital. These practices were supported by an increase of money supply by the Central Bank. Things went so far that the Duma made an attempt to restrict, though unsuccessfully, the extremely expansionist policy of the Central Bank. At that time it was led by Viktor Gerashchenko, an old Soviet nomenclature and contradictory figure declared by some Western bankers as the worst central banker of all times (the principle that Gerashchenko followed was “The higher the

currency issue – the higher the economic growth!”). These, of course, are subjective judgments, but the facts remain. The ruble credit and the ruble money supply were out of control as far as the republic started issued rubles. In July 1993 the Bank of Russia started to print new ruble without the face of Lenin and declared old rubles not legal tender. At the end of 1993 new ruble zone was proposed and new principle of sharing seigniorage but was not realized and the news independents states started to issue their own currency following the period of intermediate stages. Later on, in August 1998, Russia experienced a debt collapse when servicing of the internal debt stopped, the foreign reserves declined to critical lows, inflation and depreciation of the ruble reaching record values.

      With Vladimir Putin coming to power a number of changes in Russia’s monetary regime started. A fixed exchange rate regime was chosen and in 2001 a flat income tax was introduced. In principle, Putin introduced a number of elements of power centralization, which led to restoring the functions of the ruble.

Favorably, Putin’s time coincided with a money supply increase as a result of revenues from petrol and gas, and the Central Bank formed a substantial amount of foreign reserves. Later, several state funds were set up to sterilize the inflow of capitals. The capital inflows however led to increase in investments, which was supported by the low interest rates. Today (2008), Russia is experiencing the difficulties of the global financial crisis and the low petrol prices. Its external and internal corporate debt is extremely large; its foreign reserves are quickly diminishing and the ruble is depreciating smoothly. Since 2007 the ruble is tied up to a euro/USD basket, and today a regime of inflation targeting is officially discussed.

      Of importance to us from the short and incomplete history presented above are two things: first, Russia maintained a floating exchange rate until the crisis in 1998 and a fixed one after that, and second, the period of a floating exchange rate was the time of initial capital accumulation, the emergence of oligarchs and in general a period associated with banditism and forceful appropriation and redistribution of wealth and resources. The developments in Ukraine are similar to those in Russia, but Russia is still much more highly developed than Ukraine.

      Monetary system of Ukraine functions in accordance with a law by the National Bank of Ukraine. An official monetary item (currency) is hryvnya. Correlation between hryvnya and gold is not set by the law. The official course of hryvnya to the foreign monetary items is determined by NBU and published in the press. The fixed scale of prices is absent. The types of money which have legal pay force are paper currencies and metal coins which are provided by all assets of the National bank. The absolute title of emission of cash and organization and their rotation and exception is owned by NBU. The National Bank of Ukraine has such duties: prognostication and organization of production, transportation and saving of paper money and coins, and also creation of systems of reserve fonds; setting of rules of saving, transportation and collection of cash for credit organizations; determination of signs of solvency and order of replacement and destroying of damaged money; development of order of cash operations conducting for credit organizations; determination of rules, form, terms and standards of realization of non-cash settlements; licensing of the calculation systems of credit establishments.

      With the purpose of adjusting of economy NBU uses such instruments: rates of discount percent; norms of obligatory backlogs of credit establishments; operations on open-market; it carries out regulation of economic norms for the grounds of credits. On the territory of Ukraine calculation-cash centers are created at territorial main administrations of NBU for realization of cash maintenance of grounds of credits. These centers form a circulating cashdesk for reception and delivery of cash, and also reserve fonds of circulating notes of paper money and coins. The systems of reserve fonds show are the supplies of not issued and outstanding of paper money and coins in the depositories of NBU and have an important value for organization and centralized adjusting of cash resources.

      The remaining of cash in a circulating cashdesk is limited and at exceeding of limit surpluses of money are passed from a circulating cashdesk to the systems of accruals. An objective necessity in the systems of reserve fonds is conditioned by need to satisfact of economy necessities in a cash; proceeding in the amount of money in circulation in connection with the damage of separate banknotes; a cutback of spending on transportation and saving of signs of money. Cash is produced on the basis of emission permission - document which gives NBU's right to support a circulating cashdesk due to the systems of reserve fonds of paper money and coins. 
 
 
 
 
 
 
 
 
 
 
 

      
    1. The USA Monetary system

      The monetary system of the United States was based on bimetallism during most of the 19th century. A full gold standard was in effect from 1900 to 1933, providing for free coinage of gold and full convertibility of currency into gold coin; the volume of money in circulation was closely related to the gold supply. The passage of the Gold Reserve Act of 1934, which put the country on a modified gold standard, presaged the end of the gold-based monetary system in domestic exchange. Under this system, the dollar was legally defined as having a certain, fixed value in gold. While gold was still thought to be important for maintenance of confidence in the dollar, its connection with the actual use of money was at best vague. The 1934 act stipulated that gold could not be used as a medium of domestic exchange. More recently, a number of measures have de-emphasized the dollar's dependence on gold; since the early 1970s, practically all U.S. currency, paper or coin, is essentially fiat money.

      Under the Legal Tender Act of 1933, all American coin and paper money in circulation is now legal tender, i.e., under the law it must be accepted at face value by creditors in payment of any debt, public or private. Most of the currency circulating in the United States consists of Federal Reserve notes, which are issued in denominations ranging from $1 to $100 by the Federal Reserve System, are guaranteed by the U.S. government, and are secured by government securities and eligible commercial paper. A small fraction of the currency supply is made up of the various types of coin, none of which has a commodity value equal to its face value. Finally, an even smaller part of the circulating currency is composed of bills that are no longer issued, such as silver certificates, which were redeemable in silver until 1967, and bills in denominations between $500 and $100,000, which have not been issued since 1969. Today, currency and coin are less widely used as a means of payment than checks, debit cards, and credit cards; demand deposits (checking accounts) are, therefore, generally considered part of the money supply. Starting in 1996, the Federal Reserve undertook the redesign of all paper bills, chiefly to determine a new wave of counterfeiting that uses computer technology; further changes, including colors in addition to green, were introduced in 2003. Certain assets, sometimes called near-monies, are similar to money in that they can usually be readily converted into cash without loss; they include, for example, time deposits and very short-term obligations of the federal government. Funds that are frequently transferred from country to country for maximum advantage are called hot monies.

      Let us now consider the Federal Reserve System. The Federal Reserve Act created 12 regional Federal Reserve banks, supervised by a Federal Reserve Board. Each reserve bank is the central bank for its district. The boundary lines of the districts were drawn in accordance with broad geographic patterns of business, and the banks were placed in Boston, New York City, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco. In addition some of the regional banks have one or more branch banks attached to them.

      All national banks must belong to the system, and state banks may if they meet certain requirements. Member banks hold the bulk of the deposits of all commercial banks in the country. Each member bank is required to own stock in the Federal Reserve bank of its district and must maintain legal reserves on deposit with the district reserve bank. The required reserves are proportionate to the member bank's own deposits, the proportion varying according to the location of the member bank and the character of its deposits.

      Each reserve bank is managed by a board of nine directors (three appointed by the Federal Reserve Board, six by the local member banks). The Federal Reserve System's Board of Governors designates one of the federally appointed directors as chairman and Federal Reserve agent; it is the chairman's duty to report to the Board. The board of directors appoints the bank's president and other officers and employees. The operations of the Federal Reserve banks, although not conducted primarily for profit, yield an income that is ordinarily sufficient to cover expenses, to pay a 6% cumulative dividend annually on the stock held by member banks, to make additions to surplus, and to provide the U.S. Treasury with over $1 billion a year in revenue.

      The most important duties of the Federal Reserve authorities relate primarily to the maintenance of monetary and credit conditions favorable to sound business activity in all fields—agricultural, industrial, and commercial. Among those duties are lending to member banks, open-market operations, fixing reserve requirements, establishing discount rates, and issuing regulations concerning those and other functions. In a sense, each Federal Reserve bank is best understood as a bankers' bank. Member banks use their reserve accounts with the reserve banks in much the same way that a bank depositor uses his checking account. They may deposit in the reserve accounts the checks on other banks and surplus currency received from their customers, and they may draw on the reserve for various purposes, especially to obtain currency and to pay checks drawn upon them (see clearing).

      More importantly, the required reserves also enable the Federal Reserve authorities to influence the lending activities of banks. So long as a bank has reserves in excess of requirements, it can enlarge its extensions of credit; otherwise it cannot increase its extensions of credit and may be impelled to borrow additional funds. Inasmuch as the Federal Reserve authorities have power to increase or decrease the supply of excess funds, they are able to exercise considerable influence over the amount of credit that banks may extend. By controlling the credit market, the Federal Reserve System exerts a powerful influence on the nation's economic life. Federal Reserve activities designed to expand bank credit may lead to an upswing in the business cycle, which tends to lead toward inflation; conversely, a restriction of credit generally results in decreased business growth and deflation.

      The principal means through which the Federal Reserve authorities influence bank reserves are open-market operations, discounts, and control over reserve requirements. Open-market purchases of securities by Federal Reserve authorities supply banks with additional reserve funds, and sales of securities diminish such funds. Through the power to discount and make advances, the Federal Reserve authorities are able to supply individual banks with additional reserve funds. They may make the funds more or less expensive for member banks by raising or lowering the discount rate. Discounts usually expand only when member banks need to borrow. Raising or lowering requirements—within the limits imposed by law on the Board of Governors—concerning the reserves that member banks maintain on deposit with the reserve banks has the effect of diminishing or enlarging the volume of funds that member banks have available for lending. Such powers directly affect the volume of member bank funds but have no immediate effect in the use of those funds.

      In the field of stock market speculation the Federal Reserve authorities have a direct means of control over the use of funds, namely, through the establishment of margin requirements. Another of the important functions of the Federal Reserve System is furnishing Federal Reserve notes (now the chief element in the nation's currency) for circulation. Most economists and bankers agree that the Federal Reserve System has achieved marked improvements in American monetary and banking institutions. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

    2.3                European monetary system

    The European Monetary System (EMS) was the forerunner of Economic and Monetary Union (EMU), which led to the establishment of the Euro. It was a way of creating an area of currency stability throughout the European Community by encouraging countries to co-ordinate their monetary policies. It used an Exchange Rate Mechanism (ERM) to create stable exchange rates in order to improve trade between EU member states and thus help the development of the single market. Stable money had been a key part of international economic calculations since World War II. However by the 1980s, opinion about it was much more divided. As a result, not all countries took part in the EMS straight away - setting the basis for deeper splits in the years to come over the role of the EU in setting monetary policy as EMS was replaced by the Euro.

    The EMS was launched in 1979 as a bridge to help lead to the ultimate goal of EMU that had been set out in the Werner Report (1970). Since World War II, attempts had been made to maintain currency stability amongst major currencies through a system of fixed exchange rates called the Bretton Woods System, which collapsed in the early 1970s. However, European leaders were keen to maintain the principle of stable exchange rates rather than moving to the policy of floating exchange rates that was gaining popularity in the USA. This led them to create the EMS. Yet it was not an entirely successful move because it posed many technical difficulties in setting the correct rate for all member states and because some members were less committed to it than others. Britain didn't join the ERM until 1990 and was forced to leave it in 1992 because it could not keep within the exchange rate limits. However the project continued: under the Maastricht Treaty (1992), EMS became part of the wider project for EMU that was developed during the 1990s. When the Euro came into being in 1999, EMS was effectively wound up, although the ERM remained in operation.

    The most important part of EMS was the Exchange Rate Mechanism. This committed all member governments to keep their currencies' exchange rates within bands. This meant that no country's exchange rate could fluctuate more than 2.25 percent from a central point. This was designed to help create stable commerce without the fear that sudden changes in the values of currencies would dampen trade and encourage the development of trading barriers between member states.

    It also created a European Currency Unit (ECU) to be used as a unit of account. Although not a real currency, the ECU became the basis for the idea of creating a single currency - an idea that was realized with the launching of the Euro in 1999.

    Here are some facts from the history of ECU:

  • Britain entered the ERM in 1990 at a rate of 2.95 Deutschmarks to one Pound Sterling. Many feel this rate was too high and caused Britain's rapid departure from the system.
  • Britain dramatically left the ERM on 16 September 1992 (a day that became known as Black Wednesday) because it was no longer possible to keep the pound within the bands of the ERM.

Информация о работе Monetary system of Ukraine