Monetary policy and financial stability in Belarus: current statе, challenges and prospects

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This work is devoted to the current state of monetary policy and banking sector of Belarus. The paper shows that in the 4th quarter of 2016 - 1 quarter of  2017 significant changes in the monetary environment took place, the most important of which is the convergence of inflation expectations with actual inflation. Along with this favourable trend, a number of problems of the banking sector continue growing and threatening financial stability.  Among them are bad debts and a systemic excess of liquidity in the banking system. In this situation direction and intensity of the use of monetary policy instruments become particularly important. Also, the paper shows that the problem of bad debts has deep structural roots and is not determined by tough/soft monetary policy. This problem should be solved separately from monetary policy issues. In order to effectively solve it, the initial reasons for the formation of such debts should be eliminated, and a transparent mechanism for cleaning the balance sheets of banks should be developed.

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Last updated 22.05.2017
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