Instruments the National Bank of the United Kingdom

Instruments of
Monetary Policy of the Republic of Kazakhstan

Official refinancing rates. The National Bank of
Kazakhstan sets an official refinancing rate depending on the overall state of
the money market, the demand and supply of loans, inflation and inflation
expectations. The official refinancing rate is a benchmark for remuneration
rates for major monetary policy operations. The official refinancing rate for
the 16 January 2018 is 9,75%. The official refinancing rate decreased (compared
to the year 2017). As the level of inflation rate became lower to the end of
2017, the National Bank decided to reduce the official refinancing rate.

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Minimum reserve requirements. To ensure the
balance of the money market and regulate the liquidity of banks, the norm of
banks’ mandatory reserves was reduced from 10 to 8% of the total deposit
liabilities of the bank to non-bank legal and natural persons. Reducing the
minimum reserve requirements did not lead to a weakening of the protection of
the interests of depositors and creditors of banks, but, on the contrary,
allowed banks to more effectively manage the funds raised and increase lending
to the real sector of the economy.

Open market operations. In order to regulate
liquidity in the banking system and sterilize the money supply in 2017, the
National Bank carried out the transactions in the open market for the purchase
and sale of securities, to repurchase and reverse repurchase transactions.

Loans of the National Bank. In 2017, Banks of
Kazakhstan provided loans for KZT 12 705 352. Also, the National Bank of the Republic of Kazakhstan provides deposit
operations. And the main goal of this operations is to attract funds to
deposits and their placement in interbank loans.

Monetary aggregates

The behavior of monetary aggregates during the reporting period was due to
the nature of past trends.
The monetary base. The increase in the national currency of the National Bank of the United
Kingdom by 37.6% to $ 2,093.9 million. However, the monetary base expanded only
5.7% to 134.0 billion tenge. This was due to the fact that, starting from the
second half of the year, the National Bank intensified operations to sterilize
excess liquidity. The growth in net international reserves of the National Bank
was neutralized by an increase in the volume of short-term notes in circulation
by 7.9 times (or by 43.0 billion tenge) and by an increase in the Government’s
deposits by 2.3 times (or by 26.8 billion tenge).

Money supply. The dynamics of the assets of the banking system was positive. Thus, net
external assets of the banking system grew by 15.9% (or by $ 294.9 million),
while internal assets of the banking system increased by more than 5.2 times
(or by 71.3 billion tenge). The growth of domestic assets of the banking system
was due to a significant increase in demand for other sectors of the economy by
more than 1.8 times (or by KZT 137 billion) (despite a decrease in net claims
to the Government of the banking system 26.9% and net other of the assets of
the banking system – by 30%). All these factors contributed to an increase the
amount of money supply by 45.9% to KZT 399.5 billion.