Currency Policy: General Aspects

Foreign economic policy plays a special role in the structure of foreign economic policy of any country, including a set of measures to maintain the stability of the state monetary unit and ensure foreign trade economic relations, which are aimed at achieving the planned macroeconomic guidelines for development. Currency policy is also seen as an integral part of the global macroeconomic system of the state, along with such important components as fiscal, monetary and structural investment systems. Let us consider this concept in more detail.

Currency policy is a mechanism of currency regulation and foreign economic strategic planning, which determines the official position of the country with regard to control over the circulation of currency assets and certain exchange restrictions, as well as the exchange rate regime. The main instruments of monetary policy are subsidization, intervention and parity. Legally, this type of state policy is fixed by currency legislation, which regulates the procedure for the implementation of gold and currency transactions throughout the country.

Currency policy includes such important components as the regulation of exchange rates, the management of the convertibility of the national currency and the policy of monitoring the state's gold and foreign exchange reserves . With the help of two polar opposite systems of exchange rate regulation , the state determines one or another form of monetary policy. There are fixed and floating exchange rates. In the range between these options, many different combinations are possible, which gives particular flexibility to the monetary policy.

The choice of the monetary policy regime pursued by the government of the country most radically affects the level of prices of consumer goods sold both on the domestic and foreign markets. Currency policy is an extremely dynamic structure, its form and elements can be modified under the influence of various factors in the evolution of the world financial economy, the economic situation of the country, the volume of industrial production, the alignment of forces in the world political arena and other equally important conditions.

The most effective method of currency policy is a motto that provides for the regulation of the national currency rate through the purchase and sale of foreign money. Such a system can take many forms. For example, currency restrictions and intervention, diversification of gold and foreign exchange reserves and others.

More than a dozen different monetary policy regimes are now read in the world. Some states, resorting to large-scale economic reforms, resort to the strategy of the dual currency market, which implies the separation of a single system into two parts: the official sector used for commercial operations and the market sector, where various financial and exchange transactions are conducted.

But the traditional methods of monetary policy still remain devaluation (lowering the rate of its own monetary unit relative to the dollar) and revaluation - raising this rate.