CURRENT ISSUES OF MODERN MONETARY POLICY

Аннотация

This article describes the main urgent problems of monetary policy, balancing interest rates, liquidity problems in the banking system, and ways to eliminate the problems, and analyzes them based on statistical data. The article also presents conclusions and proposals for eliminating and improving the current problems of monetary policy in Uzbekistan,countries that are currently facing themost urgent problems in monetary policy. Keywords:monetary policy, fiscal policy, liquidity problem, digital currencies, monetary policy, macroeconomic stability, reserve requirements. Introduction. Monetary policy is a monetary-credit policy implemented by the central bank to ensure economic stability and control inflation. Through monetary policy, measures are taken to regulate the money supply in circulation, aiming to maintain price stability, control inflation, support real output growth, and promote overall economic development. As an integral and inseparable part of national economic policy, monetary policy has long been recognized as playing a crucial role in a country's economy, as proven byglobal experience. It continues to be effective in today's economic environment. Therefore, monetary policy receives special attention from economists, experts, and governments in global banking practices, including in Uzbekistan. In recent years, changes in the global economy have given rise to new challenges for monetary policy. When central banks increase interest rates to curb inflation, economic growth may slow down. Higher interest rates make borrowing more expensive, which leads banks to issue loans to businesses and individuals at higher rates. This reduces investment and consumer spending. As a result, demand decreases and the rate of price growth slows. However, raising interest rates also negatively affects economic growth because companies reduce their investments, potentially leading to job cuts and a decline in overall economic activity. Hence, it is essential to study the pressing issues ofmonetary policy and implement appropriate strategies accordingly. Analysi sand Results. The central bank seeks to maintain a balance between controlling inflation and supporting economic growth. In this context, monitoring liquidity issueswithin thebanking system is ofgreat importance. The following problems can be identified within the banking system: insufficient liquidity in banks can lead to a contraction of the credit market; increasing mistrust among financial institutions; global economic instability; geopolitical tensions; trade wars; and pandemics, all of which have contributed to heightened economic uncertainty. Central banks need to respond to these developments with flexible and adaptive monetary policies.The impact of digital currencies and cryptocurrencies may offer new tools for central banks to implement monetary policy effectively through the introduction of Central Bank Digital Currencies (CBDCs). However, cryptocurrencies can also pose risks to financial system stability and may be difficult to regulate. In particular, it is appropriate to implement specific solutions to page1000 INTERNATIONAL JOURNAL OF ARTIFICIAL INTELLIGENCE ISSN:2692-5206,ImpactFactor:12,23 AmericanAcademicpublishers,volume05,issue05,2025 Journal: https://www.academicpublishers.org/journals/index.php/ijai address each of the emerging challenges. The following measures are proposed to solve these problems:  Developing strict and clear strategies to reduceinflation;  Coordinatingmonetary policy with fiscal policy;  Monitoringliquidity in thebanking system and maintaining optimalinterest rates;  Adapting tothe digital economy and utilizingmodern technologies. We can see from the following data that the dynamics of the central bank's key rate overtheyears hasbeen volatileand that ithas beenable toregulate inflation,namely: 1.18.03.2022 -17%per year 2.From 11.09.2020to17.03.202214% 3.From 15.04.2020to11.09.202015% 4.From 25.09.2018to14.04.202016% 5.From 28.06.2017to24.09.201814% 6.From 01.01.2015to27.06.20179% 7.From 01.01.2014to31.12.201410% 8.From 01.01.2011to31.12.201312% 9.From 15.07.2006to31.12.201014% 10.From 21.12.2004to14.07.200616% 11.From 05.07.2004to20.12.200418% 12.From 10.09.2003to04.07.200420% Developing a firm and clear strategy to reduce inflation means taking specific measures by the central bank and the government. At its core, through tightening monetary policy, the central bank raises interest rates, restricts lending, and reduces the amount of excess money in the economy. By controlling budget expenditures, the government aims to reduce excess spending, limit additional cash inflows into the economy, and increase the supply of goods and services by encouraging local production and supporting local production, thereby preventing sharp price increases. In managing exchange rate policy, the issue of preventing import prices from rising by maintaining a stable national currency is of paramount importance. Uzbekistan's gros