Policy Papers

Policy Paper 03/2019

Modern Monetary Theory: Background and implications for emerging markets

Modern Monetary Theory (MMT) is an increasingly debated economic concept. While mainly brought into the current public discussion by politicians in the US, the concept does have some hetherodox theoretical foundations, which date back to the beginning of the 20th century.

The theory claims that budget deficits can be financed by the central bank creating thereby fiscal space, whereby the monetisation of debt is not an issue of concern, as long it does not lead to high inflation. In the current discussion, the proponents foresee the potential for a massive increase in public investments (be it for a “New Green Deal” or a “Job Guarantee Programme”), essentially without creating any harm, as inflation and interest rates are considered to be at very low levels for a very long time in developed markets.

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Policy Paper 02/2019

Reforming the law “On Prices” in Ukraine: Analysis and recommendations

Price controls describe all regulations directly regulating the price setting by the suppliers of goods and services on markets. They usually take the form of either direct setting of prices (or maximum/minimum thresholds) by government or of limits on the profitability margin or cost markups of goods. They form a part of a wider toolkit for governments to affect market outcomes, including competition policy, producer or product standards, direct market interventions by the state, taxes, subsidies and social transfers.

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Policy Paper 01/2019

Central Bank Digital Currencies: A Survey of the Key Issues

Central bank digital currency (CBDC) is currently a hot topic, discussed in a significant number of central banks as well as in academic circles. As can be expected, there is no clear-cut definition of CBDC. Rather, there are different variants of CBDC being in discussion with mainly one feature in common: It is digital money issued by the central bank. For the purpose of this paper, we focus on CBDC on an account basis that is available for the general public. Thus, in this paper, CBDC is synonym for digital money deposited at the central bank, with every adult being entitled to hold such an account, without any limit to swap deposits against CBDC.

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