Төв банкны бодлогын хэрэгслүүд-HW

6-р баг:

Л.Бүжинлхам
Б.Номин
Б.Отгонбаяр
Н.Пүрэвцэцэг

The central bank must be able to influence inflation using its policy tools and have a clear
understanding of the connection between monetary policy and inflation. /The central bank must
have a potential to impact on inflation by using its policy tools and should obtain a clear
understanding about the relationship between monetary policy and inflation./
Comparing money transfer mechanisms in developed countries and developing countries are
different from each other./Developed countries and developing countries have different money
transfer mechanisms./Developed countries have different money transfer mechanisms
compared to developing countries./
Inflation targeting was first introduced by developed countries and their money transfer
mechanism was well defined, financial markets were well developed, and policy of exchange
rate was flexible.
Since the late 1990s, the rapid restructuring of the economy had not been completed in
developing countries which were interested in inflation targeting, the money transfer mechanism
had not been fully established, the development of financial markets was relatively weak, and
there was no focus on exchange rate stability.
The main instrument of/used for/ inflation targeting is the interest rate, and the Central Bank
influences the interest rates of market and commercial banks, furthermore the total demand and
inflation, by changing its policy rates.
However, in undeveloped countries, the impact of policy rates on other interest rates and
inflation is low due to/because of/ the weak interest rates
In most countries(especially with high dollarization) that aim/which aim/ to use policy rates as
the main instrument, the exchange rate channel remains strong, making the process of
transition difficult/complicated/.

Names: Munkhtuya.D, Tselmuun.D, E.Gerelchuluun, A.Nandinerdene

The central bank have to influence inflation through instruments and it has a clear comprehension of
relationship between monetary policy and inflation. Money transfer mechanisms of developed countries
are different from developing countries.

In developed countries, which first introduced inflation targeting, the money transfer mechanism,
financial markets were well defined and developed, exchange rate policy was flexible. Rapid economic
restructuring in developing countries, which have become more interested in inflation targeting since
the late 1990s has not been completed, the money transfer mechanism is incomplete, financial markets
are relatively underdeveloped, and exchange rate stability is much more important.

The interest rate is the main tool of inflation targeting, and the central bank influences the interest rates
of the market and commercial banks, and hence aggregate demand and inflation, by changing the policy
of interest. However, in less developed countries, the impact of the policy rate that influences inflation
is low, because the interest rate channel is weak.

The high dollarization most countries are which have a policy rate target, the exchange rate channel
remains strong, making the transition difficult.

Ariunbolor Gurjav

Bilgun Gantumur

Munkhbilguun Gankhuyag

Khaliut Boldbaatar
Policy tools of Central Bank

The central bank should influence inflation by using its policy tools. Also, a specific concept
about the relationship between monetary policy and inflation is required to be known.
Comparing developed countries to developing countries, the money transfer mechanism is
different. In developed countries which have propagated inflation target policy first, its money
transfer mechanism was defined specifically, financial markets were developed properly and
exchange-rate policy was flexible. In developing countries which were greatly interested in
inflation target from the late ’90s, a rapid change of the economic structure was not finished yet,
money transfer mechanism was unexecuted completely, development of the financial markets
was relatively weak, and attention on the stability of exchange rate was relatively better. The
main tool of inflation targeting is the interest rate also by changing the policy rate of the Central
bank, it affects to the interest rate of the market and commercial banks, further, aggregate
demand and inflation are affected. But in the undeveloped country, interest rates channel has a
weak effect on the interest rates and inflation. In most countries which intend to make policy
rates the main tool (especially with high dollarization), the exchange rate channel remains strong,
making the transition difficult.

4-р баг
М.Дэлгэрмаа
Б.Халиунаа
Б.Эрдэнэсувд
О.Эрдэнэцэцэг
Central bank policy instrument
Central bank should be able to influence inflation through its instrument and have a detailed
knowledge of the relationship between monetary policy and inflation. Money transfer
mechanisms in developed countries are different compared to developing countries. In developed
countries that first introduced inflation targeting policy, the money transfer mechanism was
precisely defined, financial markets were well developed and the exchange policy was flexible.
While , in developing countries, which have become more interested in inflation targeting since
the late 1990s, rapid economic structural change was not finished, the money transfer mechanism
was incomplete, financial markets were relatively underdeveloped and there was much more
focus on exchange rate stability. The main instrument of inflation targeting is the interest rate.
The central bank influences the interest rates of market and commercial bank, and consequently
affects demand and inflation by changing its policy rate. However, in underdeveloped countries,
the impact of policy rates on other interest rates and inflation is minimal because of loose interest
rate channel. In most countries that aim to make policy rates their main instrument (particularly
with high dollarization), the exchange rate channel remains strong, which is making the
transition difficult.

2-р баг: Номин, Төрмөнх, Лхам-Янжин, Нансалмаа

Policy instruments of the Central banks

Central banks are supposed to be capable of influencing inflation through policy instruments and
have a detailed concept of the relationship between monetary policy and inflation. Compared to
the developing countries, the monetary transmission mechanism held by the developed countries
is distinctive. In the developed countries, which introduced the inflation targeting policy, the
monetary transmission mechanisms were precisely identified, the financial markets were highly
prosperous, and their exchange rate policy was flexible. In the developing countries, accelerating
economic restructuring was still lasting, the monetary transmission mechanism was incomplete,
the development of the financial markets was relatively low, concerns for the stability of
exchange rate were rather high when they started to have interest in inflation targeting policy by
the end of the 1990s. The main instrument of the inflation targeting policy is the interest rate, and
by modifying the policy rates, the central bank affects the interest of the market and commercial
banks, subsequently affects total demand, as well as inflation. Nevertheless, in the least
developed countries, policy interest rates are less effective on other interest rates and inflation
due to weak interest rate channels. In most countries (especially with high dollarization),
intending to turn policy interest rate to the main instrument, the transmission is getting
problematic because the exchange rate channel remains strong

3-р баг

1. Х. Жанболат
 2. С. Дөлгөөн
3. Б. Ундармаа
4. Х. Нинжцэцэн

Monetary policy instruments

The central bank must be capable of influencing inflation by using their monetary instruments
and have an advanced understanding of the relationship between inflation and monetary policy.
Compared to the developing countries, the monetary transmission mechanism is different in the
developed countries.

In developed countries that pioneered inflation targeting, the monetary transmission mechanism
was well defined, financial markets were well developed, and exchange rate policies were
flexible.

With regard to the developing countries, which were more interested in inflation targeting policy
since the late 1990s, the rapid economic restructuring has not been completed, the money
transmission mechanism is incomplete, financial markets are relatively underdeveloped, and
exchange rate stability is much more considered.

The main instrument of inflation targeting is the interest rate. By adjusting the policy interest
rate, the Central Bank influences the interest rates of the market and commercial banks, as well
as aggregate demand and inflation. 

However, in less developed countries, due to the weak interest rate channel, the policy interest
rate has less influence on other interest rates and inflation. Many countries with a high degree of
dollarization where try to use policy interest rates as a key instrument,  keep their interest rate
channel strong. As a result, their transition remains difficult.