Theory of economics

The main tasks, functions and operations of the Central Bank. The Central Bank of the Republic of Uzbekistan solves a number of important tasks to ensure the stability of the national currency. The most important of them are:

 - Formation, adoption and implementation of monetary policy and currency management policy;

- Creation of an effective system of settlements in the Republic of Uzbekistan;

 - Regulation of banks and supervision of banks;

- Storage and management of official gold and foreign exchange reserves of the Republic of Uzbekistan;

- Organization of cash execution of the state budget together with the Ministry of Finance.

In order to fulfill these tasks, the Central Bank of the Republic of Uzbekistan shall manage the economy through monetary policy, develop its main directions as an implementer of monetary policy and comply with Article 23 of the Law "On the Central Bank of the Republic of Uzbekistan" not later than 30 days prior to the beginning of the next fiscal year. The central bank changes the size of the money supply, which affects the total volume of production, the level of employment and the growth rate of enterprises. An increase in the money supply during a time of economic crisis will lead to an increase in demand for consumption and capital, and, consequently, to an increase in employment and production. Due to the need to slow down the rapid depreciation of money, the Central Bank will pursue a policy of limiting the amount of money in circulation, which will reduce the demand for it in the economy, change interest rates in money markets, reduce the devaluation of money.

The Central Bank of the Republic of Uzbekistan develops the main directions of monetary policy for a year, and after their approval by the Oliy Majlis, it is adopted as a perfect program. The program includes analysis and forecasting of the economic situation, targets for annual growth of money supply, credit, interest and foreign exchange policies. The need for general economic analysis is due to the fact that the development and implementation of monetary policy are all important macroeconomic events; devaluation of money, the total share of national production and employment of labor resources, is closely linked with the balance of payments. The following diagram shows the means of money management.

Basic tools of monetary policy

In order to adjust the volume of money supply, liquidity of banks and reduce the rate of investment, the Central Bank pursues a policy of setting mandatory reserve requirements for commercial banks. Minimum reserves are the part of the resources of commercial banks that must be kept in the Central Bank. The amount of required reserves is determined as a percentage of the accumulated resources of a commercial bank. While this reserve directly limits the lending capacity of banks, it can be a factor in ensuring their minimum liquidity. The required reserve ratio is currently 20% in Uzbekistan. The amount of reserves by the central bank can be changed taking into account some factors, depending on the size, type, term of deposits and other liabilities of banks.

  Banks are responsible for compliance with the procedure for depositing required reserves with the Central Bank. The procedure for depositing required reserves established by the Regulation "On the procedure for depositing required reserves in the Central Bank by commercial banks" applies to all banks operating in the territory of the Republic of Uzbekistan. Mandatory reserves are transferred to the Central Bank in the form of cash or deposits in the manner prescribed by the Central Bank. The instructions on the establishment or change of the norms or content of the reserve requirements shall specify a period of at least one month, until which time the banks shall comply with the new norms on the composition or amount of the reserves. The central bank decides to pay interest on required reserves. Reserve requirements do not take into account foreign currency funds, deposits of individuals, deposits and savings certificates, and funds raised through the issuance of mortgage bonds. Deposits of required reserves are made by transferring funds from the bank's correspondent account. It is not allowed to cover required reserves with various profitable assets. In case of non-compliance by the bank with the provisions of Article 28 on maintaining the minimum required reserve requirements, the Central Bank shall impose a penalty on the bank in the amount of the missing funds, as well as a fine not exceeding two refinancing rates.

The essence of the central bank's discount policy is that it buys promissory notes from commercial banks. For example, if the buyer does not have enough money to pay for the goods delivered, he may issue a promissory note stating that he will pay for the goods after a certain period of time. The seller has the right to sell the promissory note to a commercial bank when he needs the money. When a commercial bank buys a promissory note, it buys it for less than the amount indicated in it. If necessary, a commercial bank can register the bill with the Central Bank. In this case, the Central Bank also maintains a certain interest rate in its favor. Commercial banks rely on the Central Bank's discount rate when purchasing promissory notes. The central bank's discount rate is the lowest rate set by commercial banks. Generally, the discount rate of commercial banks is higher than the discount rate of the Central Bank.

The central bank's policy of refinancing commercial banks is carried out through direct lending, bill accounting, securities lending and credit auctions. Therefore, the refinancing operation of the Central Bank is carried out in the following ways:

 - crediting of promissory notes at the disposal of commercial banks;

- lending by pledging securities held by commercial banks. Such loans are called pawn loans;

- Direct lending method. In case of financial difficulties in the activities of credit institutions, they can apply to the Central Bank for a loan and use the loan from the Central Bank. The main purpose of remittances is to influence the state of money circulation and credit relations. In pursuing a policy of remittance, the Central Bank emerges as the final creditor. According to the rules established by the Central Bank of the Republic of Uzbekistan, loans can be issued for up to 3 months with the following assets as collateral:

- Gold, foreign currency, foreign exchange and other assets belonging to the category of international reserves;

- Debt obligations of the state and other state-guaranteed debt instruments.

The central bank can issue loans on the basis of banks to the payment of assets transferred to the EITI and acceptable for its EITI, allowed to buy and sell, and the central bank can conduct other types of transactions with them within the framework of this law.

The fact that risk in banking activities does not go beyond the economic-based limits is an important condition for the stable operation of the banking system. The restriction of the scope of risks is carried out by the central bank in accordance with the economic norms established by the central bank for commercial banks. The central bank included the norms of the smell of the economy, which are mandatory for banks:

– Capital adequacy coefficient;

– The maximum amount of risk to a borrower or group of borrowers affected by each other;

- The largest loan risk and the maximum amount of investment;

– Liquidity determines coefficients and others.

The central bank announces at least a month ago about the change in economic norms. Banks and their branches in case of violation of the legislation on banks, established economic norms, the central bank has the right to impose a fine on them up to 0.1 percent of the minimum amount of the authorized capital or to limit the conduct of certain operations for a period of up to six months.