STABILIZATION MECHANISMS OF EU MONETARY POLICY IN THE CONTEXT OF INTERACTION WITH THE FINANCIAL SPHERE OF UKRAINE

Authors

DOI:

https://doi.org/10.35774/jee2024.03.395

Keywords:

EU monetary policy, inflation, privatization, stabilization mechanisms, Ukraine Facility, Multi-Agency Donor Coordination Platform.

Abstract

Existing classic methods of analysing the monetary policy of the central bank, such as the aggregate response function, explain the behavior of the ECB in a rather simplified way. This is the result of the fact that classical methods do not consider the regional features of the members of the European Monetary Un ion and the structure of the system of central banks. The study of monetary policy with the involvement of macroeconomic theories of organization, theories of teams and coalition behavior, which are new for a macroeconomic subject, can make a significant contribution to the research process of European monetary integration.

Since European integration is declared as a strategic direction of Ukraine’s economic development, the analysis and generalization of the problem of the modern European economy in the context of the impact of Russia’s war against Ukraine from 2022 is relevant. Therefore, in order to understand the problems and prospects of modernization of the functioning of the monetary and credit system in the EU, it is important to research and scientifically substantiate the stabilization mechanisms for Ukraine.

The article investigates some stabilization mechanisms that are Ukraine Facility and Multi-Agency Donor Coordination Platform. Funding by Ukraine Facility is analysed through its pillars, components and implementation of main conditions for receiving benefits on the way of Ukrainian economy recovery. MultiAgency Donor Coordination Platform for Ukraine, as innovative instrument for coordinating activities of its members, is researched on the base of its existing funding mechanisms: the G7 Finance Track, the G7+ Coordination Group on energy infrastructure and the International Financial Institutions (IFIs) Coordination Group.

JEL: D21, E23, F400, G310.

Author Biographies

Olena BORZENKO, National Academy of Sciences of Ukraine», Kyiv

Doctor of Economics, Professor, Head of Sector of international financial research SI «Institute for economics and forecasting. Principal Investigator of the project «Ukraine’s Foreign Financing Needs and the EU’s Role in Restoring Long-Term Growth of the Ukrainian Economy» in the framework of the EU program EURIZON-H2020

Anna HLAZOVA, National Academy of Sciences of Ukraine», Kyiv

PhD (Economics), Scientific fellow at Sector of international financial research, SI «Institute for economics and forecasting. Investigator of the project «Ukraine’s Foreign Financing Needs and the EU’s Role in Restoring LongTerm Growth of the Ukrainian Economy» in the framework of the EU program EURIZON-H2020

References

Acharya, V.V., Imbierowicz, B., Steffen, S., & Teichmann, D., (2020). Does the lack of financial stability impair the transmission of monetary policy? Journal of Financial Economics, 138(2), 342-365. https://doi.org/10.1016/j.jfineco.2020.06.011

Altavilla, C., Brugnolini, L., Gürkaynak, R.S., Motto, R., & Ragusa, G. (2019). Measuring euro area monetary policy. Journal of Monetary Economics, 108, 162-179. https://doi.org/10.1016/j.jmoneco.2019.08.016

Chang, M. (2006). Reforming the Stability and Growth Pact: Size and Influence in EMU Policymaking. Journal of European Integration, 28(1), 107–120. https://doi.org/10.1080/07036330500480664

Dumych, N., & Bashnyanyn, H. (2017). Analysis of monetary policy of Ukraine in the conditions of development of market relations. Economic discourse, 4, 43–48. https://ed.pdatu.edu.ua/article/view/127687.

EEAS Press Team (12 June 2024). Statement from the G7+ Energy Coordination

Group and the Government of Ukraine. Ukraine Recovery Conference, Berlin,

https://www.eeas.europa.eu/eeas/statement-g7-energy-coordinationgroup-and-government-ukraine-ukraine-recovery-conference-2024_en.

Engwerda, J.C., van Aarle, B., & Plasmans, J.E.J. (2002). Cooperative and noncooperative fiscal stabilization policies in the EMU. Journal of Economic Dynamics and Control, 26(3), 451-481. https://doi.org/10.1016/S0165- 1889(00)00056-7

European Commission (13 June 2023). New EU contribution for EIB's Ukraine support package to enable new lending of €100 million. https://neighbourhoodenlargement.ec.europa.eu/news/new-eu-contribution-eibs-ukraine-supportpackage-enable-new-lending-eu100-million-2023-06-13_en.

European Commission (8 November 2023). Commission staff working document. Ukraine 2023 Report. https://neighbourhood-enlargement.ec.europa.eu/ system/files/2023-11/SWD_2023_699%20Ukraine%20report.pdf.

European Investment Bank (2023). EIB and Ukraine strengthen cooperation to support country’s reconstruction projects with €840 million. https://www.eib.org/en/ press/all/2023-231-eib-and-ukraine-strengthen-cooperation-to-support-countrys-reconstruction-projects-with-eur840-million.

European Investment Bank (25 July 2022). EIB Board, supported by the EU Commission, approves €1.59 billion of EU financial assistance for Ukraine. https://www.eib.org/en/press/all/2022-336-eib-board-supported-by-the-eucommission-approves-eur1-59-billion-of-eu-financial-assistance-for-ukraine.

European Union (1 March 2024). Ukraine Facility: what the EU’s 50 billion euro will be spent on and on which conditions. https://eu4ukraine.eu/en/mediaen/publications-en/on-what-conditions-will-be-spent-50-billion-euros.html.

G7 Italia (23-25 May 2024). G7 Finance Ministers and Central Bank Governors’ Communique. https://www.bundesfinanzministerium.de/Content/EN/Downloads/G7- G20/2024-05-25-g7-communique-stresa.pdf?__blob=publicationFile&v=5.

Golpe, A.A., Sánchez-Fuentes, A.J., & Vides, J.C. (2023). Fiscal sustainability, monetary policy and economic growth in the Euro Area: In search of the ultimate causal path. Economic Analysis and Policy, 78, 1026-1045. https://doi.org/10.1016/j.eap.2023.04.038

Heryán, T., & Tzeremes, P.G. (2017). The bank lending channel of monetary policy in EU countries during the global financial crisis. Economic Modelling, 67, 10-22. https://doi.org/10.1016/j.econmod.2016.07.017

Interfax (25 January 2024). EBRD planning 1.5-bln-euro investment in Ukraine in 2024, versus 2.1 billion euros in 2023. https://interfax.com/newsroom/topstories/98749/.

Karaman, S.Y. (2022). Covid-19 sovereign risk and monetary policy: Evidence from the European Monetary Union. Central Bank Review, 22(3), 99-107. https://doi.org/10.1016/j.cbrev.2022.08.001

Loi, G., Rakić, D., & Sabol, M. (2023). European monetary policy. European parliament. https://www.europarl.europa.eu/factsheets/en/sheet/86/europeanmonetary-policy.

Mayes, D. (2009) Early intervention and prompt corrective action in Europe. Bank of Finland Research Discussion Papers. Bank of Finland, 17, 44. https://urn.fi/URN:NBN:fi:bof-20140807240.

Ministry of Economy of Ukraine (2024). The Economic and Social Development Forecast of Ukraine for 2025-2027. [in Ukrainian]. https://tinyurl.com/ymwdj52n.

Ministry of Finance of Ukraine (23 February 2024). Ukraine and IMF reach staff level agreement on the third review of the Extended Fund Facility (EFF) Arrangement. https://www.kmu.gov.ua/en/news/predstavnyky-vlady-ukrainy-ta- mvf-dosiahly-domovlenosti-na-rivni-ekspertiv-shchodo-tretoho-perehliaduprohramy-mekhanizmu-rozshyrenoho-finansuvannia-eff.

Mishkin, F. (2006). Economic theory of money, banking and financial markets [7th ed.]. Pearson, 880 p.

National Bank of Ukraine (2 October 2023). Monthly Business Outlook Survey. https://bank.gov.ua/en/news/all/schomisyachni-opituvannya-pidpriyemstvukrayini-veresen-2023-roku.

National Bank of Ukraine (2023). Strategy of Ukrainian Financial Sector Development. https://bank.gov.ua/en/about/develop-strategy.

National Bank of Ukraine (April 2024). Inflation Report. [in Ukrainian]. https://bank.gov.ua/admin_uploads/article/IR_2024-Q2.pdf?v=7.

Shnyrkov, O., & Chugaiev, O. (2023) Economic integration of Ukraine: context of the Russian-Ukrainian war. Journal of European Economy, 22(1), 48-69. https://doi.org/10.35774/jee2023.01.048

Ukraine Facility (2024). Economic Support Program. https://www.ukrainefacility.me.gov.ua.

World Bank Group (2024). World Bank Group Support to Ukraine. https://thedocs.worldbank.org/en/doc/1cbfe97313f071d12a1a073cf94992d 8-0080012023/original/World-Bank-Group-Support-to-Ukraine.pdf.

Received: August 23, 2024.

Reviewed: September 5, 2024.

Accepted: September 19, 2024.

Downloads

Published

01.09.2024

How to Cite

BORZENKO, Olena, and Anna HLAZOVA. “STABILIZATION MECHANISMS OF EU MONETARY POLICY IN THE CONTEXT OF INTERACTION WITH THE FINANCIAL SPHERE OF UKRAINE”. Journal of European Economy, vol. 23, no. 3, Sept. 2024, pp. 395-18, doi:10.35774/jee2024.03.395.

Issue

Section

MONETARY GLOBALIZATION