Monetary policy of Kazakhstan

Topics: Monetary policy, Central bank, Federal Reserve System Pages: 9 (3162 words) Published: September 24, 2013


Paper Work
Economic Theory
Monetary Policy of Kazakhstan

Monetary policy is the process by which the monetary authority of a country controls the supply of money, often targeting a rate of interest for the purpose of promoting economic growth and stability. The official goals usually include relatively stable prices and low unemployment. Monetary theory provides insight into how to craft optimal monetary policy. It is referred to as either being expansionary or contractionary, where an expansionary policy increases the total supply of money in the economy more rapidly than usual, and contractionary policy expands the money supply more slowly than usual or even shrinks it. Expansionary policy is traditionally used to try to combat unemployment in a recession by lowering interest rates in the hope that easy credit will entice businesses into expanding. Contractionary policy is intended to slow inflation in order to avoid the resulting distortions and deterioration of asset values. Monetary policy differs from fiscal policy, which refers to taxation, government spending, and associated borrowing. Monetary policy rests on the relationship between the rates of interest in an economy, that is the price at which money can be borrowed, and the total supply of money. Monetary policy uses a variety of tools to control one or both of these, to influence outcomes like economic growth, inflation, exchange rates with other currencies and unemployment. Where currency is under a monopoly of issuance, or where there is a regulated system of issuing currency through banks which are tied to a central bank, the monetary authority has the ability to alter the money supply and thus influence the interest rate. - The supply of money;

- Availability of money;
- Cost of money or rate of interest to attain a set of objectives oriented towards the growth and stability of the economy.

Monetary Policy in Kazakhstan:
During the years of independence Kazakhstan has undertaken reforms aimed at the development of market relations. Such as privatization, reform of public finances and the financial sector, pension reform, public administration reform at alias. One has to admit that over the years changes have been achieved positive economic results, consisting in the achievement of high economic growth, reducing inflation and inflation expectations, price stability and exchange rate of tenge, improving the investment climate. Largely due to the monetary policy of the National Bank of Kazakhstan, the country managed to achieve financial stability. Monetary policy gradually acquired a characteristic features of central bank policies like in countries which economies developing in the market laws. Currently, however, can not be said that the Republic of Kazakhstan has been shaped appropriate mechanism, that includes the central bank with established features, that are capable to use the tools of monetary policy to provide for the economic development of the country. Therefore, the study and analysis of the monetary policy of the National Bank is a hot topic for research.

Monetary Transmission Mechanism:
Monetary transmission mechanism describes how policy-induced changes in the nominal money stock or the short-term nominal interest rate impact real variables such as aggregate output and employment.

Kazakhstan National Bank:
The National Bank of Kazakhstan represents within the limits of its authority, the interests of Kazakhstan republic in the relations with the central banks, with banks of other countries, with international banks and other financial-credit organizations. Kazakhstan National Bank should not be guided by the aim of gaining profit in performing its tasks. Kazakhstan National Bank is accountable to the President of the Republic of Kazakhstan, but within the limits of authority granted by the legislation, is independent in its activity. Kazakhstan National Bank coordinates its activity with...
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