Market and state currency regulation complement each other: in conditions of crisis shocks, wars, post-war devastation, state currency regulation prevails; when the monetary and economic situation improves, currency transactions are liberalized, market competition in this area is encouraged, but the state always maintains currency control for regulatory purposes and supervision of foreign exchange relations.

In the system of regulation of a market economy, an important place is occupied by monetary policy– a set of activities carried out in the field of international monetary and other economic relations in accordance with the current and strategic goals of the country.

Monetary policy, depending on the goals and forms, is divided into the following types:

Structural monetary policy– a set of long-term measures aimed at implementing structural changes in the world monetary system, which is implemented in the form of currency reforms carried out in order to improve its principles in the interests of all countries, and is accompanied by a struggle for privileges for individual currencies.

Current monetary policy– a set of short-term measures aimed at everyday, operational regulation of the exchange rate, foreign exchange transactions, activities of the foreign exchange market and the gold market.

Monetary policy is aimed at achieving the main goals of economic policy within the framework of the “magic polygon”: ensuring the sustainability of economic growth, curbing the growth of unemployment and inflation, maintaining balance of payments equilibrium.

At different historical stages, specific objectives of monetary policy come to the fore: overcoming the currency crisis and ensuring currency stabilization, currency restrictions, the transition to currency convertibility, liberalization of foreign exchange transactions, and others.

The direction and forms of monetary policy are determined by the monetary and economic situation of the country, the evolution of the world economy and the balance of power on the world stage.

Monetary policy combines two opposing trends: coordination of actions and the search for joint ways to solve currency problems, on the one hand, and disagreements due to the desire of each country to gain advantages at the expense of others, to impose its will on them, on the other. In this regard, currency wars periodically arise between countries over markets, areas for investment of capital, sources of raw materials through various forms of monetary policy.

Legally, foreign exchange policy is formalized by foreign exchange legislation - a set of legal norms regulating the procedure for carrying out transactions with foreign currency values ​​in the country and abroad, as well as foreign exchange agreements (bilateral and multilateral) between states on currency issues.

Forms of monetary policy

Discount policy;

Monetary policy and foreign exchange intervention;

Diversification of foreign exchange reserves;

Currency regulation;

Currency restrictions.

Discount (accounting) policy

Discount (accounting) policy is a form of foreign exchange policy based on changing the discount rate of the central bank in order to regulate the exchange rate and balance of payments by influencing international capital flows, on the one hand, and the dynamics of domestic loans, money supply, prices, aggregate demand– with another.

In modern conditions, the effectiveness of the discount policy has decreased, since in the context of lowering interest rates in order to revive the market situation, there is an outflow of capital, which negatively affects the balance of payments.

Motto policy

The motto policy is a form of foreign exchange policy in which the exchange rate of the national currency is set under the influence of the purchase and sale of foreign currency (mottos) by government agencies.

The monetary policy is carried out primarily in the form of foreign exchange intervention, that is, the intervention of the central bank in operations on the foreign exchange market in order to influence the exchange rate of the national currency through the purchase and sale of foreign currency at the expense of official gold and foreign exchange reserves or short-term mutual loans from central banks in national currencies under interbank agreements." swap".

Foreign exchange policy directly affects the exchange rate, but temporarily and to a limited extent.

Diversification of foreign exchange reserves

Diversification of foreign exchange reserves is a form of foreign exchange policy of the state, banks and TNCs, aimed at regulating the structure of foreign exchange reserves by including different currencies in their composition in order to ensure international payments, conduct foreign exchange intervention and protect against foreign exchange losses.

Diversification of foreign exchange reserves is carried out by selling unstable currencies and purchasing more stable ones, as well as currencies necessary for international payments.

Currency regulation– state regulation of the conditions of international payments and the procedure for conducting foreign exchange transactions.

Currency regulation happens direct– the effect of legislative acts and executive power, and indirect– monetary and credit methods of influencing the behavior of economic agents of the market, and contains several levels:

National level;

Regional level;

Interstate level.

The national level includes private enterprises, national and international banks, corporations that have enormous foreign exchange resources and are actively involved in foreign exchange transactions, and the state (Ministry of Finance, Central Bank, foreign exchange control authorities).

Interstate currency regulation (IMF, G7) regulates the structural principles of the world monetary system, coordinates the monetary policy of individual countries, harmonizes the foreign exchange policies of the leading countries of the world and implements joint measures to overcome the currency crisis.

The main reasons for interstate regulation are the increased interdependence of national economies, a change in the relationship between market and state regulation in the context of liberalization of economic relations, a change in the balance of power on the world stage and the formation of three centers: the USA, Western Europe, Japan, an increase in the scale of world currency, credit and financial markets .

Regional currency regulation is carried out within the framework of economic integration associations, for example in the EU.

The main object of foreign exchange regulation as a form of foreign exchange policy is the regime of exchange parities and exchange rates. There are about a dozen exchange rate regimes in the world, since the amended IMF Charter (1978) gave member countries the freedom to choose them.

At the end of the 90s, 51 currencies “floated” independently (USA, UK, Switzerland, Japan, Canada and others), 49 countries practiced regulated “floating” of the exchange rate (Brazil, Hungary, China, Russia and a number of CIS countries), 20 currencies – pegged to the US dollar, 12 currencies – to the EURO, 18 currencies – to various currency baskets.

As part of currency regulation, they may apply devaluation and revaluation–traditional forms of monetary policy.

Devaluation– depreciation of the national currency against foreign currencies or international currency units, and previously against gold. Revaluation– an increase in the exchange rate of the national currency in relation to foreign currencies or international monetary units of account, and previously to gold.

Currency restrictions– a form of foreign exchange policy, including legislative or administrative prohibition, limitation and regulation of transactions of residents and non-residents with currency and other currency values.

The purposes of introducing currency restrictions:

Balance of payments alignment;

Maintaining the exchange rate;

Concentration of currency values ​​in the hands of the state to solve current and strategic problems.

The main instruments of currency restrictions:

Regulation of international payments and capital transfers, repatriation of export earnings, profits, movement of gold, banknotes and securities;

Prohibition of free purchase and sale of foreign currency;

Concentration in the hands of the state of foreign currency and other currency values, including payment documents (checks, bills, letters of credit, etc.), securities, precious metals

Areas of application of currency restrictions:

Current balance of payments transactions:

blocking the proceeds of foreign exporters from the sale of goods in a given country, limiting their ability to manage these funds;

mandatory sale of foreign exchange earnings of exporters in whole or in part to central and authorized (devis) banks that have a foreign exchange license from the central bank within a specified time frame (for example, within 30 days);

limited sale of foreign currency to importers (only with permission from the currency control authority);

restrictions on forward purchases by foreign currency importers;

prohibition of the sale of goods abroad in national currency;

prohibition of payment for the import of certain goods in foreign currency;

multiple exchange rates (differentiated exchange rate ratios of currencies for various types of transactions, product groups and regions).

Financial transactions of the balance of payments:

Active balance of payments:

depositing new foreign obligations of banks and organizations into an interest-free account (deposit) with the central bank;

a ban on investments by non-residents and sales of national securities to foreigners;

mandatory conversion of foreign currency loans at the national central bank;

a ban on the payment of interest on time deposits of foreigners in national currency;

the introduction of a negative interest rate on deposits of non-residents in national currency, which are paid either by the depositor to the bank, or by the bank itself to the state foreign exchange institution;

restrictions on forward sales of national currency to foreigners.

Passive balance of payments:

limiting the export of national and foreign currency, gold, securities, and the provision of loans;

control over the activities of the credit and financial markets, in which transactions are carried out only with the permission of the Ministry of Finance and upon provision of information on the amount of loans issued and direct investments abroad, attraction of foreign loans subject to the prior permission of the exchange control authorities;

limiting the participation of national banks in providing international loans in foreign currency;

forced withdrawal of foreign securities owned by residents and their sale for foreign currency;

complete or partial cessation of repayment of external debt or permission to pay it in national currency without the right to transfer it abroad.

Principles of currency restrictions:

Centralization of foreign exchange transactions in the central and authorized (motto) banks;

Licensing of foreign exchange transactions;

Complete or partial blocking of foreign currency accounts;

Limiting the convertibility of currencies and introducing various categories of currency convertibility: freely convertible, domestic (in national currency with use within the country), under bilateral government agreements, clearing, blocked and others.

Currency restrictions are discriminatory in nature, as they contribute to the redistribution of currency values ​​in favor of the state and large enterprises at the expense of small and medium-sized entrepreneurs, making it difficult for them to access foreign currency. Foreign exchange restrictions are usually part of policies of protectionism and discrimination against trading partners.

Thus, foreign exchange restrictions are an integral part of general economic and monetary policy. When moving to currency convertibility, most countries preferred the option that ensures its stabilization rather than a rapid depreciation.

The number of countries that have acceded to Article VIII of the Charter of the International Monetary Fund, which contains an orientation towards the market mechanism of competition and regulation of foreign exchange relations, is gradually expanding; deregulation of foreign exchange transactions is combined with the preservation of foreign exchange control for supervision and accounting and statistical functions: in 1965 - 27, in 1978 – 46 (1/3 of IMF member countries), in 1985 – 60 (40%), in 1994 – 88 (49%), in 1999 – 147 (80%), including the Russian Federation since June 1996.

Currency control– a system of measures aimed at ensuring compliance with currency legislation through inspections of foreign exchange transactions of residents and non-residents.

In the process of foreign exchange control, the availability of licenses and permits, compliance by residents with requirements for the sale of foreign currency on the national foreign exchange market, the validity of payments in foreign currency, and the quality of accounting and reporting on foreign exchange transactions are checked.

The functions of currency control are traditionally assigned to the central bank, although in a number of countries special bodies are created.

In Russia authorities currency control are the Government and the Bank of Russia, agents currency control - Federal Service of Russia for Currency and Export Control (VEK), State Customs Committee (SCC), federal tax police authorities and others, direct executors currency control - authorized commercial banks reporting to the Bank of Russia.

Currency control authorities strictly monitor compliance with relevant legislation, prices, accounts, and apply fines and sanctions for violations.

Discount (accounting) foreign exchange policy

Discount (accounting) policy is a change in the discount rate of the central bank, aimed at regulating the exchange rate and balance of payments by influencing international capital flows, on the one hand, and the dynamics of domestic loans, money supply, prices, aggregate demand, on the other.

A country's balance of payments is the ratio of cash payments coming into the country from abroad and all its payments abroad during a certain period of time (year, quarter, month).

All foreign economic transactions of the country are expressed in value in the balance of payments. In most countries of the world, the balance of payments is compiled in the form recommended by the International Monetary Fund. There are: foreign trade balance, balance of services and non-commercial payments, balance of capital and credit movements. At the same time, the active balance of payments is the balance in which receipts exceed payments. A positive balance of payments helps strengthen the economic situation of the country. Passive balance of payments is a balance in which payments exceed receipts. The usual balance of payments deficit is covered by the use of its foreign exchange reserves or with the help of foreign loans and credits or the import of capital.

For example, with a passive balance of payments in conditions of relatively free movement of capital, an increase in the discount rate can stimulate the inflow of capital from countries with lower interest rates and restrain the outflow of national capital, which helps improve the balance of payments and increase the exchange rate. By lowering the official rate, the central bank is counting on the outflow of national and foreign capital in order to reduce the active balance of the balance of payments and depreciate the exchange rate of its currency.

In modern conditions, the effectiveness of discount policy has decreased. This is explained, first of all, by the contradiction of its internal and external goals. If interest rates are reduced in order to revive the market situation, this will negatively affect the balance of payments if it causes an outflow of capital. Raising the discount rate to improve the balance of payments has a negative effect on the economy if it is in a state of stagnation. The effectiveness of the discount policy depends on the influx of foreign capital into the country, but in conditions of instability, interest rates do not always determine the movement of capital. Regulation of international capital and credit movements also weakens the impact of accounting policies on the balance of payments. This results in the short duration and relatively low efficiency of the discount policy. The discount policy of leading countries, primarily the United States, has a negative impact on competitors, who are forced to raise or lower interest rates contrary to national interests. As a result, interest rate wars periodically flare up.

The policy of credit restriction (expensive money) is used, as a rule, in conditions of a rapid industrial boom and growth of economic activity. Its goal is to stop the process of active use of credit by business entities and the industrial boom, which often leads to overheating of the “economy”.

The policy of credit expansion (cheap money) is aimed at stimulating credit operations in the hope that more attractive lending conditions will contribute to economic activity, production growth and attracting foreign capital.

An increase in the discount rate stimulates capital inflows with a passive balance of payments, restrains the outflow of national capital, and increases the exchange rate.

In modern conditions, the effectiveness of discount policy is reduced due to the contradiction between foreign economic and internal economic goals. An increase in the discount rate has a negative impact on an economy that is in a state of stagnation. This is a rather short-term measure.

Accounting (discount) policy

Accounting policy, being an integral part of the state interest rate policy, is an important instrument of monetary regulation, the main directions of which are developed and implemented by the Central Bank. The accounting policy is carried out by the Central Bank through the establishment and revision of the official (base) interest rate of two main types: the rediscounting rate (rediscounting securities) and the refinancing rate (lending to banking institutions).

The refinancing rate, or the level of payment for credit resources provided by the Central Bank to other banks, is slightly higher than the discount rate (by 0.5-2 percentage points), since lending operations of banks (lombard, blank, contract and other types of loans) are more more expensive than trading commissions (purchase of securities). Therefore, commercial banks resort to obtaining interbank loans after all opportunities for rediscounting securities have been used.

Central banks set several official discount rates depending on the term, reliability, “class”, etc., as well as several rates for a pawn loan, based on the type of collateral, terms and other conditions.

By regulating the level of refinancing and rediscounting rates, the Central Bank influences the size of the money supply in the country and helps to increase or decrease the demand of commercial banks for credit. An increase in official rates makes it difficult for commercial banks to obtain credit resources, and as a result, the ability to expand the scale of operations with clients. Official interest rates have an indirect impact on market interest rates, which are set by commercial banks independently in accordance with the conditions of the credit market and are not under the direct control of the Central Bank.

The Central Bank's interest rates do not necessarily change in accordance with the dynamics of market interest rates of commercial banks. She may deviate from it in one direction or another. However, the establishment and announcement by the Central Bank of the level of official interest rates is for commercial banks one of the main indicators that characterize the main directions of the Central Bank's policy in the field of control over the dynamics of the money supply.

By changing the level of official rates, depending on the priorities of economic development, the Central Bank influences supply and demand in the credit market by:

• 1. changes in the cost of loans provided;
• 2. regulates the level of liquidity of commercial banks, their lending activity and the volume of money supply in the country;
• 3. provides emergency financial assistance to credit institutions;
• 4. maintains the liquidity of the banking system as a whole.

During the period of strict restriction policy, the Central Bank indexes the value of official rates:

• 1. establishes a “premium” to their usual level;
• 2. tightens the conditions for accounting and rediscounting of bills of exchange:
  • - increases the requirements for the quality of bills;
  • - establishes restrictions on rediscounting counterparties;
  • - introduces rediscounting limits (for example, prohibiting the accounting of bills of exchange from unpromising industries), etc.

Stimulating the market situation is achieved through reverse measures.

When implementing established areas of accounting policy, the Central Bank can use both indirect and direct methods of regulating the activities of banks. This is done by establishing both basic interest rates (for accounting transactions, for pawn and bank loans) and quantitative restrictions on the size and types of securities accepted for re-discounting by the Central Bank and against which it can provide loans to commercial banks.

For example, the Central Bank carries out its accounting policy either by establishing an official rate for rediscounting securities (indirect method), or by changing the conditions for their rediscounting (direct method) - allocation, quotas, etc. The Central Bank's refinancing policy for commercial banks may include regulation of interest rates and bank liquidity by establishing a base rate for centralized loans (indirect method), as well as direct restrictions for individual banks (groups of them) regarding their size, types, terms and other conditions of their provision (direct method).

In carrying out public policy, the Central Bank also uses not only economic instruments (changes in the level of official rates), but also administrative ones - direct control over market rates of commercial banks, directive determination of the credit margin (the difference between average interest rates on active and passive operations), the establishment the upper limit of interest rates for certain types of loans or their fixed ratio to official rates, etc.

Providing discount and pawn loans. Discount (discount) credit is provided for a period of up to three months. Moreover, in this case, the discount (accounting) policy affects not only the dynamics of interest rates on short-term loans, but also medium-term and long-term ones. The maximum period for granting a pawn loan also in most cases does not exceed three to six months. In addition, a minimum amount of coverage is established when providing a pawnshop loan. For example, in relation to treasury bills, a pawn loan may be provided for an amount equal to 90% of the face value of these securities.

Only securities whose “quality” is beyond doubt can be accepted for re-discounting, as well as as collateral when providing a pawn loan. In the practice of foreign countries, such securities are used as negotiable government securities, first-class trade bills and bankers' acceptances (their value must be expressed in national currency, and the maturity period must not exceed 3 months), as well as some other types of debt obligations , determined by central banks.

In order to regulate the size of the monetary expansion of commercial banks, the Central Bank, both for the banking sector as a whole and for each commercial bank separately, establishes certain quotas for the rediscounting of government securities, as well as the conditions for providing a pawn loan, which may vary depending on directions of monetary policy at a specific historical stage and the situation in the country’s money market.

Domestic experience in implementing accounting policies.

In our country, with the transition to a two-tier banking system (1988), the Central Banks of the USSR and Russia used the establishment of an official refinancing rate, the provision of loans to commercial banks secured by securities, as well as a contract loan under a reserve correspondent bank as an economic instrument for regulating banking activities. counting was not practiced. This is due, on the one hand, to the lack of reserve correspondent accounts with a clearing mode of operation, on the other hand, to a full-fledged securities market and the underdevelopment of bill circulation. In these conditions, as these operations develop, only government securities or government-guaranteed securities can be used as securities accepted for re-discounting at the Central Bank in the near future. These purposes are best met by short-term treasury bills issued in the form of entries in accounts, which should constitute one of the important elements in the most liquid assets of commercial banks.

As for the practice of providing blank loans from the Central Bank, from the late 80s to 1990, interest rates on refinancing were set differentially for different groups of banking institutions; for commercial banks, limits on centralized blank loans were established in the amount of 50 to 75% of the authorized capital or own funds.

In relation to commercial banks, the Central Bank used mainly indirect methods of regulating interest levels, and to state special banks - mainly direct ones. Thus, if during 1988-1989 the interest rate on centralized resources was differentiated for commercial banks, based on many factors, and ranged from 5 to 7%, then for special banks the rates were strictly fixed regardless of the class of the specific user of the loan, the term of the loan and the state of the monetary market. The level of interest rates on active operations of special banks is set by directive, while commercial banks determined it independently.

As a result, at the end of the 80s, the prevailing form of movement of credit resources among state banks remained the system of their departmental distribution with administrative control of the level of refinancing rates. The market for credit resources was formed only by commercial banking structures. Special banks were also funded with credit resources at sharply differentiated rates.

Since 1990, a transition has been made from sectoral (departmental) planning to the territorial distribution of credit resources through regional institutions of the Central Bank. The refinancing rate for both transformed special banks and newly created commercial banks was in 1990. 6%, in the first half of 1991 - 8, in the second - 12%. As the composition of institutional participants in the credit market expanded (including all second-tier banking institutions), the share of centralized loans in the total volume of interbank loans (from 93 to 46%) used by commercial banks decreased relatively, which weakened the influence of official rates on the formation of market interest prices, which were formed under the influence of high levels of demand for interbank credit and reached in the second half of 1991. 17-20%.

In 1992, the Central Bank of Russia introduced a uniform rate for refinancing all second-tier banking institutions in the amount of 20% per annum, and then increased to 80%. The 25 percent limit on interest rates of commercial banks on active credit operations, which was in force in 1991, has been abolished.

Among the regulation of the monetary sphere Central banks place a special place on the discount rate, which is an operational instrument of government influence on the loan capital market (and, depending on its condition, may change throughout the year). In conditions of market relations, centralized regulation of the level of the discount rate gives a certain direction to the movement of credit horizontally (borrower bank) and vertically (Central Bank - commercial bank). The official discount rate serves as a benchmark for market interest rates; its change in loans provided by the Central Bank, increasing or decreasing the supply of credit resources, thereby regulates the demand for them.

The discount rate determines the rates charged by commercial banks on their loans and the interest paid to depositors on deposits and other accounts. Increasing (for anti-inflationary purposes) the discount rate, i.e. The “dear money” policy limits the ability of commercial banks to obtain a loan from the central bank and at the same time increases the price of money lent by commercial banks. As a result, credit investments in the economy are reduced and, consequently, further production growth is inhibited. The policy of lowering the discount rate, the policy of “cheap money”, on the contrary, acts as a factor in expanding credit operations and accelerating the pace of economic development.

And there is a direct connection between the economy and their mutual influence. Therefore, the regulation of currency relations should be considered in the economic management system. And since the decisive role in managing the economy as a single integrated system belongs to the state, then in the sphere of currency relations the regulatory functions are also carried out by the state.

One of the instruments of regulation in the system of foreign exchange relations is the country’s foreign exchange policy.

Within the framework of the general goal of the state's monetary policy, its specific tasks at different stages of historical development are determined by the monetary and economic situation of the country, the processes occurring in the world economic system, and the balance of power on the world stage. Depending on these factors, each country determines the directions and forms of monetary policy. For example, at one stage it is necessary to focus efforts on overcoming the consequences of the currency crisis, at another - to direct the main efforts to stabilize and strengthen the national currency. And at some stage it becomes possible to liberalize the country’s currency relations. But in the context of economic globalization and integration processes taking place in the world economy, there cannot be an absolutely independent monetary policy in a single country. When establishing the principles of relations between countries, discrimination against weaker states is inevitable. And this factor also affects the regulation of currency relations between countries.

State monetary policy and methods of its implementation

Monetary policy is a set of legal, organizational and other measures in the field of currency relations carried out by the state within the country and in international monetary relations in accordance with the current and strategic goals of the country.

Market and state regulation of currency relations is carried out in parallel, complementing each other. Market regulation is based on the law on the relationship between supply and demand of currencies in the foreign exchange market. Depending on this, their exchange rate ratio is established. But significant fluctuations in exchange rates negatively affect both the national and global economies and lead to serious social consequences. Government regulation is designed to eliminate these negative consequences.

Monetary policy is an integral part of the country's overall economic policy and serves as a tool for expanding foreign economic activity and world economic relations. Depending on the goals, current and long-term (structural) policies are distinguished.

Task current monetary policy consists in ensuring the normal functioning of national and international currency mechanisms, in the operational regulation of the exchange rate, foreign exchange transactions, and the foreign exchange market.

Long-term (structural) monetary policy covers a fairly long period of time and represents a set of measures aimed at implementing consistent changes in such key elements of the monetary system as the procedure for conducting international payments, the regime of exchange rates and parities, the use of gold and reserve currencies, and international means of payment.

Objective factors for the implementation of long-term monetary policy are the strengthening of economic interdependence of national economies and changes in their role in the world economy. The main methods of its implementation are interstate negotiations and agreements, currency reforms.

Forms of monetary policy

The main forms of the state's foreign exchange policy are: discount, motto policy and its variations - foreign exchange intervention, foreign exchange restrictions, regulation of currency convertibility, exchange rate regimes, devaluation, revaluation, diversification of foreign exchange reserves.

Discount foreign exchange policy

Discount foreign exchange policy as an element of the state's current monetary policy is to use the discount interest rate to regulate the movement of investments, balance payment obligations, and adjust the exchange rate. Through a system of economic and legal measures used for these purposes, discount policy affects the domestic economy and the sphere of international economic relations - the state of money demand, the dynamics and level of prices, and the migration of investments.

Motto monetary policy

Motto monetary policy consists of regulation through the purchase and sale of foreign currency using foreign exchange intervention, as well as the application of foreign exchange restrictions. Currency intervention is a method of government agencies influencing the exchange rate of the national currency: in order to increase it, the Central Bank sells foreign currency in exchange for national currency, and to reduce it buys foreign currency, thus influencing the relationship between supply and demand.

Currency intervention

To cover foreign currency expenses when conducting interventions official gold and foreign exchange reserves or mutual loans from central banks under interbank agreements are used. In some countries, special stabilization funds are created for this purpose. And since the mid-70s, collective foreign exchange intervention has been practiced by the central banks of a number of countries to regulate the exchange rate of leading currencies.

The disadvantage of foreign exchange intervention as a tool for influencing the exchange rate is the huge costs, which are not always justified. They give a temporary result, but may not overcome the influence of market factors in exchange rate formation and may not lead to the stabilization of exchange rates.

A traditional element of the state's foreign exchange policy is the regulation of exchange rate regimes and currency convertibility. These issues are the subject of both national and interstate regulation. The body of interstate currency regulation is the IMF. In 1978, after changes were made to the Charter, the Fund gave member countries the freedom to choose their exchange rate regime. Now each country independently decides issues related to establishing the exchange rate regime for the national currency and the degree of its convertibility.

Devaluation and revaluation

Devaluation And revaluation are used as a method of monetary policy in the case when the exchange rate of the national currency in relation to foreign currencies or international units of account is overestimated or underestimated in comparison with the market one. Devaluation is a decrease in the exchange rate of a national currency, and revaluation is an increase in its exchange rate.

The content of the concepts of devaluation and revaluation has changed in connection with changes occurring in the monetary and foreign exchange systems. During the period of the gold standard, devaluation meant a reduction by the state of the official gold content of a monetary unit, and revaluation meant an increase in its gold content. World economic crisis of 1929-1933. led to the collapse of the gold standard. After this and until the abolition of gold parities in 1976-1978. devaluation and revaluation meant a change not only in the gold content, but also in the exchange rate of national currencies in relation to foreign currencies.

Changes in the exchange rates of national currencies in relation to foreign ones are officially fixed in law only periodically. Under the conditions of a floating exchange rate regime, their changes occur constantly, therefore, over a relatively long period of time, there may be a significant decrease in the market rate of the national currency. Such a long-term and significant depreciation of the national currency in relation to foreign currencies, occurring spontaneously, is also called devaluation in the modern sense of the term.