Page 109 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE

the economy, the exacerbation of social discontent and increasing volumes

of currency speculations.
Significant restrictions on banks’ foreign currency operations, as part of

anti-crisis measures, were established by the National Bank of Ukraine in the

period of recession in October 2008 (NBU Decree N319). The greatest social
and business response was triggered by prohibition of early deposits withdrawal

by banks’ clients, as well as a ban on foreign currency lending to counterparties
that do not have foreign currency earnings. The moratorium on early withdrawal

of deposits was introduced in Ukraine twice so far, but these actions are still a
subject for debates among policy regulators. All restrictions were lifted soon

after the stabilization of the banking system. However, evidenced risk of

possible restrictive measures from banks’ side continues to affect significantly
the behavior of depositors and borrowers, and hinders the process of restoring

confidence in the banking system.

2. Price stability.
The European Central Bank defines inflation targeting as acceptable

monetary policy regime for emerging markets and developed countries, as it
effectively promotes controlled price dynamics and minimizes variations in the

inflation forecasts from the announced inflation target (Andersson . and
Hofmann , 2009).

Along with this, experience of various countries in introducing inflation

targeting also points on the challenges faced by countries in case of shift in
monetary regime. In particular, gradual reduction of the central bank’s capacity

to affect the monetary system in terms of additional money supply creation was
noticed among the disadvantages of inflation targeting. The role of foreign

currency interventions in the maintenance of price stability gradually reduces,
while the risk of significant exchange rate fluctuations increases. In case there is

no specific exchange rate target, the foreign currency interventions became to be

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