On February 20–21, 2006, an International Scientific and Practical Conference – "Monetary Policy Transmission Mechanism in Transition Economies" – was held. It was arranged by the National Bank of the Republic of Belarus and the Belarusian State Economic University
The objective of the conference was to study the theoretical fundamentals of the monetary policy transmission mechanism (i.e., the mechanism through which monetary policy influences the economy); to share experience in the field of examination, modeling, and practical use of transmission mechanism models; as well as to introduce the conferees to the analysis and forecasting systems used by the central banks to support the monetary policy decision–making process.
The conference was attended by more than 70 scientists and experts from 12 countries representing the National Bank of the Republic of Belarus, the Belarusian State Economic University and other educational establishments of Belarus, domestic and foreign research institutions, international organizations (the International Monetary Fund and the European Commission), and the central banks of China, the Czech Republic, Finland, Hungary, Kazakhstan, Moldova, Poland, Russia, Slovakia, Sweden, Turkey, and Ukraine.
The conference focused on three main scientific areas:
- theoretical fundamentals of the monetary policy transmission mechanism, its principal channels, and country specifics;
- monetary policy transmission mechanism modeling and specific results of application; and
- development of the analysis and forecasting system at a central bank for the purpose of providing prerequisites and conditions for enhancing monetary policy efficiency.
The Chairman of the Board of the National Bank of the Republic of Belarus, Petr Prokopovich, addressed the conference. 19 scientific and practical presentations were made and discussed, of which four were provided by the Belarusian participants, two by the IMF, one by the European Commission, and 12 by the central banks of the FSU and non–FSU countries.
The attendees noted the progress achieved the Republic of Belarus and other transition economies in stabilizing prices and national currencies. Conducive to such advances was enhanced monetary policy efficiency on the basis of monetary policy transmission mechanism examination and modeling.
It was noted that the monetary policy transmission mechanism and its structure still remain one of the most topical subjects of the present–day economic science and research efforts of the central banks. In most cases, the central banks' scientists and experts consider several traditional channels of monetary policy transmission, namely, the interest rate, the exchange rate, assets prices, and the credit channel. They also came to an agreement that developing economic and mathematical model is a priority area of transmission mechanism research.
Besides, the participants noted the need for further study of mechanisms of monetary policy and economy interaction and, based on this, improvement of the decision–making process in the field of monetary policy. In doing so, it would be a wise policy to develop the transmission mechanism of monetary policy – which is part of the country's economic policy – as part of the country's overall economic mechanism.
Accordingly, the central banks and the state's economic agencies need to improve the exchange of analytical and forecasting information.
The conference stressed that, taking into account experience to date, it would be expedient to continue cooperation between the central banks, involving the International Monetary Fund, designed to examine the transmission mechanism channels and create analytical instruments with a view to supporting the decision–making process in the monetary policy sphere.
The participants of the conference expressed their hope that the proposed recommendations will be used in practice by the central banks of transition economies, in particular by the National Bank of the Republic of Belarus, as well as by scientists and specialists when tackling urgent problems related to monetary policy transmission mechanism modeling in order to enhance the efficiency of such policy.
Materials of the conference will be published in Bankauski Vesnik publication and can be found on the National Bank of the Republic of Belarus web–site at: http://www.nbrb.by/bv/.