MONETARY POLICY OF WORLD BANKS DURING THE PANDEMIC

Each state chooses a certain type of monetary policy, which varies depending on external conditions, the state of the national economy, the level of technical and technological development of public production, employment, income level and other factors. Restrictive monetary policy is primarily aimed at suppressing inflation and reducing the money supply; it is carried out by restricting the possibilities of lending to legal and natural persons by commercial banks; it leads to a decrease in investments, a decrease in production, an increase in unemployment, and a decrease in savings of the population. As a result, the decrease in consumer demand slows down economic development. Expansionist monetary policy, on the contrary, is aimed at expanding the scale of lending to legal entities and individuals by lowering interest rates, reducing mandatory reserve norms, and easing control over the growth rate of the money supply in circulation. Its implementation leads to an increase in the amount of loans and investments allocated to the development of production, which creates conditions for the increase in the volume of production, jobs, incomes and savings of the population. As a result, the increase in consumer demand stimulates the growth of production. The article is devoted to monetary policy and reactions of world central banks during the pandemic. The study analyzed the Japanese government's monetary policy during the Covid-19 pandemic, the Bank of England's response to Covid-19, and the Federal Reserve's policy response to the pandemic. Since the emergence of COVID-19, central banks around the world have taken emergency measures in coordination with fiscal authorities to mitigate negative effects on the economy and promote recovery. While monetary authorities have largely followed the scenario of the global financial crisis, the scope, scale and speed of the policy response to the pandemic has been unprecedented. Many central banks are turning to increasingly unorthodox approaches to monetary policy, particularly large-scale asset purchases, to boost economic growth. The central banks of Japan, Great Britain, the United States and the Eurozone have bought about $10.2 trillion worth of securities from their already large balance sheets since the outbreak, bringing their combined holdings to $25.9 trillion. The Fed has been buying $120 billion worth of securities each month, accumulating a total of $2.6 trillion in mortgage-backed securities and $5.5 trillion in US Treasuries. In addition to the current Asset Purchase Program (APP), the European Central Bank (ECB) has developed a €1.85 trillion Pandemic Emergency Purchase Program, which includes purchases of private and public sector securities. The recovery of the Japanese economy remains fragile due to low rates of vaccination of the population and restrictions on the pandemic. The shortage of electronic components in the world can negatively affect the production of cars and their foreign deliveries. At the same time, a worrying factor is the emergence of signs of a slowdown in the Chinese economy. On April 7, 2020, the Japanese government adopted a 117.1 trillion-yen (20.9% of 2019 GDP) emergency economic relief package against COVID-19 and included the remainder of previously announced packages. Key measures included issuing cash to everyone and affected firms, tax and social security deferrals, and soft loans from public and private financial institutions. The Government of Japan announced the Second Draft Supplementary Budget for Fiscal Year 2020 on May 27, 2020. The government has increased the amount of soft loans (interest-free and unsecured) primarily for micro, small and medium-sized enterprises affected by COVID-19. As a precautionary measure, the Parliament also approved an increase in the limit of government guarantees on capital injections in regional banks from 12 trillion yen to 15 trillion yen. On September 22, 2021, the Bank of Japan announced that it was keeping its monetary policy unchanged, but at the same time reported that the bank was carefully assessing the prospects for production and exports. The Bank of Japan maintained its assessment of the economic situation, saying that "the growth trend is strengthening, although the economy remains difficult". The bank is expected to keep the interest rate on short term deposits at minus 0.1% and on bonds maturing in 10 years at around 0%. Analysts note that this assessment was given on the eve of a change in the leadership of the ruling Liberal Democratic Party (LDP). Inflation is a limited phenomenon that manifests itself in a limited way in the markets for real goods and services. It can be provoked, among other things, by credit and deposit operations of commercial banks. Measures to combat inflation should be developed, as well as measures to measure it. US government debts are so large, so clearly unpaid, that the question of applying the institution of bankruptcy to individual municipalities has repeatedly arisen. Inflation-induced rise in interest rates will inevitably lead to an increase in the burden of servicing public debt. With a monetary policy aimed at targeting inflation in the region of 2%, the cost of attracting bond loans already at 7% will become the marginal value, after which a default is inevitable. The pandemic, and now its fourth wave is already underway, has objectively strengthened the trend of fencing off not only neighbors (Mexico and Canada), but also from the rest of the world. Keywords: monetary policy, world economy, budget, money supply, national market

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