Central Banks - Science topic

Dear Researchers, Scientists, Friends,

In the face of economic crises, governments and central banks are faced with the choice of appropriate tools to stimulate the economy. Expansionary fiscal policy involves increasing public spending and lowering taxes, while a tight monetary policy focuses on controlling the money supply and raising interest rates to combat inflation. For the purposes of this discussion, I have formulated the following research thesis: expansionary fiscal policy can lead to a faster economic recovery by increasing demand, but at the same time it can increase the budget deficit and public debt. On the other hand, a strict monetary policy can effectively control inflation, but it can also slow down economic growth and lead to higher unemployment. Therefore, the analysis of the effectiveness of both approaches requires taking into account the economic context, including the level of inflation, unemployment and the state of public finances. It is important to understand that fiscal and monetary policies are interrelated and their inconsistency can lead to undesirable effects. An example would be a situation where expansionary fiscal policy is pursued simultaneously with restrictive monetary policy, which can undermine the effectiveness of both measures. Furthermore, the reactions of the financial markets to such measures can be unpredictable, which further complicates the assessment of the effectiveness of individual policies.

I have written about the sources of the high inflation that has occurred since 2021 as a result of the Covid-19 pandemic in the following article:

THE POST-COVID RISE IN INFLATION: COINCIDENCE OR THE RESULT OF MISGUIDED, EXCESSIVELY INTERVENTIONIST AND MONETARIST ECONOMIC POLICIES

I have described crisis management in companies in the article:

CRISES IN THE ENVIRONMENT OF BUSINESS ENTITIES AND CRISIS MANAGEMENT

I have described the key issues of anti-crisis state intervention in my article below:

Anti-crisis state intervention and created in media images of global financial crisis

I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

Comparisons of the monetary policy of the central banks of the Federal Reserve Bank and the European Central Bank and the National Bank of Poland

And what do you think about this?

What is your opinion on this matter?

Please reply,

I invite everyone to the discussion,

Thank you very much,

Best regards,

I invite you to scientific cooperation,

Dariusz Prokopowicz

Dear Researchers, Scientists, Friends,

Financial stability is crucial for the proper functioning of the economy. Financial crises such as the one in 2008 have highlighted the need to strengthen the financial system. The two main approaches are to tighten regulations for commercial banks to prevent excessive risk and to create bailout funds financed by the banks themselves that can be used in crisis situations. For the purposes of this discussion, I have formulated the following research thesis: stricter regulations for commercial banks reduce the likelihood of financial crises, but can limit the availability of credit and hinder economic growth. On the other hand, bailouts financed by the banking sector ensure a quick response in crisis situations, but can lead to moral hazard, where banks take excessive risks, hoping for support in case of problems. Therefore, the analysis should take into account the impact of stricter regulations on financial stability and on the lending activities of banks and their ability to finance the economy. It is also crucial to examine the extent to which regulations affect the level of innovation in the financial sector and the competitiveness of banks in international markets. In the case of rescue mechanisms financed by the banking sector, it is important to analyse their effectiveness in mitigating the effects of possible financial crises and their impact on the risky behaviour of financial institutions. An important aspect is also the assessment of the costs of such mechanisms for the banking sector and the ways in which they are financed (e.g. through bank contributions). In addition, the potential social effects of both approaches should be considered, including the impact on savers, investors and taxpayers. The study should also take into account the experiences of different countries in implementing stricter regulations (e.g. Basel III) and creating rescue funds (e.g. Single Resolution Fund in the EU) in order to draw conclusions about the effectiveness of both strategies.

My articles below are related to the above issue in some aspects:

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I invite everyone to the discussion,

Thank you very much,

Best wishes,

I invite you to scientific cooperation,

Dariusz Prokopowicz

Since the commodity crisis of the 1970s, financial markets have been deregulated in many respects. The Bretton Woods international monetary system based on USD dollar parity collapsed (gold parity for the USD dollar was abolished). In the 1990s, many issues of the operation of deposit-credit commercial banks and investment banks were deregulated again.

It was made possible for the two types of banking to merge. This had its effects in generating the global financial crisis of 2007-2009. Due to the deregulation of financial markets, systemic credit risk increased significantly. The importance of improving the credit risk management process implemented in financial institutions, including commercial and investment banks, also increased. In many countries, the practice of money printing without coverage of manufactured products was practised, leading to increased inflation and, in some countries, to the occurrence of hyperinflation. Too low interest rates and government guarantees and other elements of a soft monetary policy led to too cheap money, too high a level of credit for economic activity and too high a level of credit risk, a decline in the repayment of bank loans and, as a consequence, to financial, economic and debt crises, etc. Derivatives specifically generated for this purpose, including credit derivatives such as subprime bonds, CDOs, etc., sold by investment banks to successive investors to generate additional money for unreliably (with practically no credit checks) granted mortgages, led to the major global financial crisis of 2008 in 2007-2009. I have been researching this issue. I have included the conclusions of my research in articles which, when published, I posted on my profile of this Research Gate portal. I invite research collaboration. I would like to hear your views on this issue.

In view of the above, the following question is topical:

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Dariusz Prokopowicz

This research question concerns a fundamental issue that is the subject of extensive debate in macroeconomics. It asks how central banks' monetary policy decisions (interest rate changes, open market operations) affect the balance between inflation and unemployment in the long term. The question is whether keeping interest rates low for a long time leads to higher inflation at the expense of employment growth or, on the contrary, promotes price stability with minimal unemployment. This implies that we are dealing with a question about the potential conflict or coexistence of these two phenomena in the context of monetary policy. Research shows that in the long term, monetary policy aimed at lowering interest rates can lead to an increase in inflation while keeping unemployment low, but at some point this balance may shift, where a further increase in inflation can negatively affect employment. In view of the above, this question is very important in the context of the conclusions to be drawn for economic practice, especially in the era of global economic crises and pandemics. The long-term effects of central bank decisions, such as lowering interest rates, have a direct impact on the pace of economic growth and the structure of the labour market. Research in this area allows for a better understanding of how to balance monetary policy to prevent negative effects in the form of high inflation or recession, while ensuring the long-term development of the economy.

My articles below are related to the above issues in some aspects:

I have written about the sources of the high inflation that has occurred since 2021 as a result of the Covid-19 pandemic in the following article based on my research:

THE POST-COVID RISE IN INFLATION: COINCIDENCE OR THE RESULT OF MISGUIDED, EXCESSIVELY INTERVENTIONIST AND MONETARIST ECONOMIC POLICIES

I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

Comparisons of the monetary policy of the central banks of the Federal Reserve Bank and the European Central Bank and the National Bank of Poland

I have written about the mild, synchronised monetary policy during the global financial crisis of 2008-2009 in the following articles, among others:

Analysis of the effects of post-2008 anti-crisis mild monetary policy of the Federal Reserve Bank and the European Central Bank

ACTIVATING INTERVENTIONIST MONETARY POLICY OF THE EUROPEAN CENTRAL BANK IN THE CONTEXT OF THE SECURITY OF THE EUROPEAN FINANCIAL SYSTEM

What is your opinion on this matter?

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Thank you very much,

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I invite you to scientific cooperation,

Dariusz Prokopowicz

Inflation is one of the most important challenges for monetary and fiscal policy. Central banks usually raise interest rates to limit the money supply and reduce inflationary pressure, but such a move can simultaneously weaken economic growth and increase unemployment. On the other hand, governments can use price regulations, subsidies and grants to mitigate the effects of inflation on citizens, but such measures can lead to market disruptions and further deepen economic imbalances. The question is whether it is better to fight inflation with classic monetary tools or with fiscal policy and administrative price regulation. For the purposes of this discussion, I have formulated the following research thesis, according to which raising interest rates by the central bank is a more effective tool in the long term, while government interventions may have short-term effects but lead to further market disruptions. This problem is therefore interdisciplinary in nature, as it affects both macroeconomics and economic policy. It requires an analysis of the impact of interest rates on the demand and supply of money, but also of the effects of government intervention on price dynamics and market behaviour. The final answer may depend on the economic context of the country concerned, the level of public debt, the structure of the labour market and the scale of global economic disruption.

My articles below are related to the above issue in some aspects:

I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

I have written about the mild, synchronised monetary policy during the global financial crisis of 2008-2009 in the following articles, among others:

What do you think about this?

What is your opinion on this issue?

Please answer,

I invite everyone to the discussion,

Thank you very much,

Best regards,

I invite you to scientific cooperation,

Dariusz Prokopowicz

Modern technologies such as artificial intelligence and blockchain have the potential to revolutionise the way monetary policy is conducted. However, their use in macroeconomic analysis, inflation prediction and payment system management raises a number of questions regarding effectiveness, security and impact on the stability of the financial system. AI and blockchain technologies can significantly improve the effectiveness of monetary policy by enabling faster and more accurate data analysis, forecasting of inflationary trends and better liquidity management in financial markets. Central banks could use artificial intelligence to automatically optimise interest rates and regulate the money supply based on predictive models. Blockchain, on the other hand, can increase the transparency and security of transactions in payment systems by eliminating intermediaries. However, the application of these technologies carries the risk of algorithmic decision errors, vulnerability to cyberattacks and unpredictable consequences for financial markets. This dilemma requires an interdisciplinary analysis combining macroeconomics, computer science, cybersecurity and financial regulations.

I have described the key issues of the opportunities and threats of the development of artificial intelligence technologies in my article below:

I have described the issue of Industry 4.0/5.0 technology applications, including Big Data Analytics, with the aim of improving data and information transfer and processing systems, in the following articles:

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Thank you very much,

Warm regards,

I invite you to scientific cooperation,

Dariusz Prokopowicz

When faced with rising inflation, policymakers can choose between two main strategies: tightening monetary policy (by raising interest rates) or tightening fiscal policy (by reducing public spending). Each of these methods has its advantages and limitations, and their effectiveness depends on macroeconomic conditions.

Both methods have significant macroeconomic consequences. Raising interest rates can limit inflation by reducing demand for credit and curbing consumer spending and investment. However, it can also slow down economic growth, increase the cost of servicing the public debt and lead to recession. In turn, the reduction of public spending may lead to a drop in demand and a decrease in inflationary pressure, but at the same time it threatens to weaken economic growth and worsen the situation on the labour market. The ultimate effectiveness of each method depends on the structure of the economy and factors such as the level of debt, the degree of openness to international trade and the inflation expectations of consumers and businesses.

I have written about the sources of the high inflation that has occurred since 2021 in the wake of the Covid-19 pandemic in the following article based on my research:

I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

And what is your opinion on this topic?

What do you think about it?

Please reply,

I invite everyone to the discussion,

Thank you very much,

Best regards,

I invite you to scientific cooperation,

Dariusz Prokopowicz

Central banks such as the European Central Bank and the Federal Reserve are faced with the dilemma of whether their main objective should be to fight inflation or to promote economic growth. High inflation erodes the value of money and reduces the purchasing power of citizens, while overly restrictive monetary policy can stifle investment and economic growth. Research shows that a focus on stabilising inflation leads to long-term economic stability, but at the expense of short-term economic growth. On the other hand, promoting economic growth through looser monetary policy leads to higher inflation and potential income inequality. Therefore, the above question is crucial in the macroeconomic debate and is of great importance for the country's economic policy. The choice between stabilising inflation and promoting economic growth is not an easy one, as the two objectives are contradictory. History shows that periods of high inflation have often led to economic uncertainty and financial instability, but at the same time, overly restrictive monetary policy has hampered growth and led to recession. A modern approach to monetary policy often involves a compromise between these two objectives, but the effectiveness of this approach depends on economic conditions, the structure of the labour market and the flexibility of the financial system. It is also worth considering the impact of technological innovation and the digitalisation of finance on the ability of central banks to control inflation and economic growth.

My articles below are related to the above issue in some aspects:

THE POST-COVID RISE IN INFLATION: COINCIDENCE OR THE RESULT OF MISGUIDED, EXCESSIVELY INTERVENTIONIST AND MONETARIST ECONOMIC POLICIES

I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

Comparisons of the monetary policy of the central banks of the Federal Reserve Bank and the European Central Bank and the National Bank of Poland

What is your opinion on this matter?

What do you think about this?

Please reply,

I invite everyone to join the discussion,

Thank you very much,

Best wishes,

I invite you to scientific cooperation,

Dariusz Prokopowicz

Dear Researchers, Scientists, Friends,

Central banks increasingly have to balance between autonomous monetary policy and international commitments, especially within organisations such as the European Union or the International Monetary Fund. Research shows that an autonomous interest rate policy allows for a better response to local economic conditions. On the other hand, the harmonisation of interest rate policies stabilises the global financial system and reduces the risk of currency crises. Interest rates therefore have a direct impact on inflation, public debt, investment and consumption. In eurozone countries, a common monetary policy means that individual countries cannot adjust interest rates to their own needs, which can lead to economic disparities. In countries outside of monetary unions, full autonomy in monetary policy allows for adaptation to local challenges, but at the same time can lead to currency speculation and financial market instability. This problem is becoming particularly relevant in view of the growing importance of international financial institutions and the digitisation of currencies, e.g. in the context of the introduction of central bank digital currencies (CBDC).

My articles below are related to the above issue in some aspects:

I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

I have written about the mild, synchronised monetary policy during the global financial crisis of 2008-2009 in the following articles, among others:

A what is your opinion on this matter?

What do you think about this?

Please answer,

I invite everyone to the discussion,

Thank you very much,

Best regards,

I invite you to scientific cooperation,

Dariusz Prokopowicz

Dear Researchers, Scientists, Friends,

During economic crises, governments face a dilemma: whether to increase public spending to stimulate the economy or to reduce it to avoid excessive debt. Keynesian policy suggests fiscal stimulation, while neoclassical theory emphasises the need for budget balancing and expenditure reduction. The choice of the right solution depends on the conditions in the respective country and the effects that can result from one or the other strategy. According to the accepted research hypothesis, increasing public spending during a crisis stimulates the economy and accelerates recovery from recession. On the other hand, cutting public spending reduces debt but can deepen the crisis by reducing domestic demand. In addition, the optimal approach is to manage spending flexibly depending on the nature of the crisis and the current macroeconomic situation. In view of this, governments often face a choice between austerity policies and fiscal expansion. On the one hand, increased spending can stimulate the economy through increased demand for goods and services and job creation. On the other hand, increased state intervention in the economy can lead to budgetary imbalances and long-term debt problems. The 2008 financial crisis showed that excessive budget cuts in some countries deepened the recession, while countries that used fiscal expansion recovered more quickly from the crisis. The key question is under which conditions one of these approaches is more effective.

I have written about the sources of the high inflation that has occurred since 2021 in the wake of the Covid-19 pandemic in the following article, based on the research I have conducted:

THE POST-COVID RISE IN INFLATION: COINCIDENCE OR THE RESULT OF MISGUIDED, EXCESSIVELY INTERVENTIONIST AND MONETARIST ECONOMIC POLICIES

I have described the key issues of the impact of the Covid-19 pandemic on the economy and financial markets in my article below:

IMPACT OF THE CORONAVIRUS PANDEMIC (COVID-19) ON FINANCIAL MARKETS AND THE ECONOMY

I have described the key issues of the exceptionally deep energy crisis in Poland in 2022 in my co-authored article below:

POLAND'S 2022 ENERGY CRISIS AS A RESULT OF THE WAR IN UKRAINE AND YEARS OF NEGLECT TO CARRY OUT A GREEN TRANSFORMATION OF THE ENERGY SECTOR

I have described crisis management in companies in the article:

CRISES IN THE ENVIRONMENT OF BUSINESS ENTITIES AND CRISIS MANAGEMENT

I have described the key issues of anti-crisis state intervention in my article below:

Anti-crisis state intervention and created in media images of global financial crisis

I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

Comparisons of the monetary policy of the central banks of the Federal Reserve Bank and the European Central Bank and the National Bank of Poland

And what is your opinion on this matter?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best wishes,

I invite you to scientific cooperation,

Dariusz Prokopowicz

Dear Researchers, Scientists, Friends,

Central banks around the world are increasingly using low or zero interest rate policies to stimulate investment and consumption. Proponents argue that cheap loans encourage companies to grow and households to increase spending. Critics, on the other hand, point out that a long-term policy of zero interest rates can lead to speculative bubbles, excessive debt and financial problems in the future. According to the accepted research thesis, a long-term policy of zero interest rates leads to an increase in debt and a speculative bubble in the financial markets, which can result in an economic crisis. History shows that keeping interest rates low for too long can lead to irrational investment decisions, overheating of financial markets and an increase in social inequality. An example of this is the 2008 financial crisis, which was caused, among other things, by excessive monetary policy easing and easy access to mortgages. Interdisciplinary research combining economics, finance and behavioural psychology can help to determine optimal monetary policy strategies in a dynamically changing economy.

My articles below are related to the above issue in some aspects:

I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

I have written about the mild, synchronised monetary policy during the global financial crisis of 2008-2009 in the following articles, among others:

What is your opinion on this issue?

Please answer,

I invite everyone to the discussion,

Thank you very much,

Best wishes,

I invite you to scientific cooperation,

Dariusz Prokopowicz

Globalisation makes national economies increasingly vulnerable to external economic shocks and speculative capital movements. Governments and central banks are faced with the dilemma of how best to stabilise the economy: is it better to pursue a restrictive fiscal policy and reduce debt, or to adopt a loose monetary policy to stimulate economic growth and avoid recession? This issue is crucial for economic management in the 21st century. A restrictive fiscal policy can lead to a reduction in public debt and improve the country's credibility in the financial markets, but at the same time it can limit public investment and economic growth. On the other hand, loose monetary policy can stimulate investment and consumption, but in the long run it threatens excessive private sector debt and rising inflation. This problem is further complicated by the fact that the effects of both policies depend on macroeconomic conditions and the level of integration of the national economy with international markets.

My following articles are related to the above issues in some aspects:

O źródłach wysokiej inflacji jaka wystąpiła po pandemii Covid-19 od 2021 roku na podstawie przeprowadzonych badań napisałem w poniższym moim artykule:

Kluczowe aspekty prowadzonej w ostatnich latach przez banki centralne polityki monetarnej opisałem w poniższym artykule:

I have described the main issues of the impact of the Covid-19 pandemic on the economy and financial markets in my article below:

I have described the issue of economic globalisation as an important factor in the systemic transformation of banking in Poland in the following article:

My highly cited publication on economic globalisation:

What is your opinion on this issue?

Please answer,

I invite everyone to the discussion,

Thank you very much,

Best wishes,

I invite you to scientific cooperation,

Dariusz Prokopowicz

Dear Researchers, Scientists, Friends,

During economic crises, governments face a dilemma: should their economic policies focus on stimulating domestic demand by increasing public spending and social transfers, or should they prioritise the stabilisation and development of the production sector to ensure long-term economic growth? Each of these options has its advantages and disadvantages, making the question difficult to answer unequivocally. Research shows that stimulating internal demand will be more effective in the short term in combating economic crises, but may lead to long-term inflationary problems. On the other hand, there may be a situation in which a focus on stabilising the production sector in the long term contributes to more sustainable economic growth, but may require more costly and time-consuming measures. Accordingly, economic policy in response to economic crises must take into account a number of factors, including the dynamics of inflation, employment, production, but also the specific conditions of the national economy. In the face of financial crises, demand-stimulating solutions are often chosen, such as tax cuts or increased public spending, which can immediately improve the situation of consumers and businesses. However, such solutions can also lead to long-term inflation, which is not a sustainable solution in the medium term. On the other hand, stabilising the production sector – through investment in innovation or support for key industries – may be more effective in terms of long-term growth, but it requires long-term planning and greater financial outlay, which can be difficult to obtain in times of crisis. The choice between these options involves balancing the need for short-term economic stabilisation with the need for sustainable growth.

In the following article, I have written about the sources of the high inflation that has occurred since 2021 as a result of the Covid-19 pandemic, based on research that I have conducted:

THE POST-COVID RISE IN INFLATION: COINCIDENCE OR THE RESULT OF MISGUIDED, EXCESSIVELY INTERVENTIONIST AND MONETARIST ECONOMIC POLICIES

I have described the key issues concerning the sources of the exceptionally deep energy crisis in Poland in 2022 in my co-authored article below:

POLAND'S 2022 ENERGY CRISIS AS A RESULT OF THE WAR IN UKRAINE AND YEARS OF NEGLECT TO CARRY OUT A GREEN TRANSFORMATION OF THE ENERGY SECTOR

I have described the key issues of the impact of the Covid-19 pandemic on the economy and financial markets in my article below:

IMPACT OF THE CORONAVIRUS PANDEMIC (COVID-19) ON FINANCIAL MARKETS AND THE ECONOMY

I have described the key issues of the exceptionally deep energy crisis in Poland in 2022 in my co-authored article below:

POLAND'S 2022 ENERGY CRISIS AS A RESULT OF THE WAR IN UKRAINE AND YEARS OF NEGLECT TO CARRY OUT A GREEN TRANSFORMATION OF THE ENERGY SECTOR

I have described crisis management in companies in the article:

CRISES IN THE ENVIRONMENT OF BUSINESS ENTITIES AND CRISIS MANAGEMENT

I have described the key issues of anti-crisis state intervention in my article below:

Anti-crisis state intervention and created in media images of global financial crisis

I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

Comparisons of the monetary policy of the central banks of the Federal Reserve Bank and the European Central Bank and the National Bank of Poland

What is your opinion on this issue?

Please reply,

I invite everyone to the discussion,

Thank you very much,

Best regards,

I invite you to scientific cooperation,

Dariusz Prokopowicz

This question concerns the impact of technology on monetary policy decision-making. Technologies such as artificial intelligence and automation can revolutionise the way central banks forecast inflation, make interest rate decisions and monitor economic conditions. The use of such tools can improve the accuracy of decisions, but at the same time, it can also bring new challenges and risks. It is possible that the use of modern technologies, such as artificial intelligence, in monetary policy can improve the effectiveness of inflation forecasting and interest rate management, while minimising human error and increasing the speed of response to changes in the economy. Therefore, the use of technologies such as artificial intelligence in monetary policy can contribute to more precise forecasting of inflation trends and faster interest rate decisions. AI can analyse huge data sets, including macroeconomic and market data as well as information from the media, enabling central banks to respond more quickly to changes in the economy. However, there are also concerns about the independence of decisions made by machines, as well as risks associated with algorithmic errors. It is therefore necessary to understand and control the risks associated with automated decisions in such a crucial area as monetary policy, and to ensure that the technology is properly integrated with traditional methods of economic analysis.

My following articles are related to the above issues in some aspects:

I have described the key issues of opportunities and threats to the development of artificial intelligence technologies in my article below:

I have written about the sources of the high inflation that has occurred since 2021 as a result of the Covid-19 pandemic in the following article based on my research:

I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

And what do you think about it?

What is your opinion on this issue?

Please reply,

I invite everyone to the discussion,

Thank you very much,

Best wishes,

I invite you to scientific cooperation,

Dariusz Prokopowicz

My research shows that despite their formal independence, central banks' monetary policies are often politicised, which is reflected in their involvement in anti-crisis measures. Stimulating the economy by issuing national money can bring short-term growth, but it often leads to inflation as well. Central banks are criticised for their delayed reactions to rising inflation, which worsens the situation of borrowers. In turn, tightening monetary policy makes access to credit more difficult, which slows down the economy. The belated raising of interest rates does not effectively curb inflation and deepens the slowdown, undermining the sense of further tightening the policy. In addition, governments often pursue expansionary fiscal policies, increasing public spending without proper control, which makes it difficult for central banks to control inflation. The problems of companies, especially in the SME sector, are the result of misguided economic policies, inflation and external crises such as energy crises. The costs of these mistakes are borne by society as a whole. Monetary policy, despite the formal independence of the central bank, is often used as an instrument of intervention in crises, which carries the risk of further crises. Lack of coordination with fiscal policy and delayed response to inflation have negative consequences. The balance between saving the economy and financial stability is crucial. Over-reliance on monetary policy in crises can lead to wrong decisions, the costs of which are borne by society. The independence of the central bank, transparency and responsible economic policy are important.

Therefore, despite their formal independence, central banks' monetary policies are often exposed to politicisation and used as a tool for intervention in crises, which, combined with a lack of coordination with the government's fiscal policy, leads to macroeconomic destabilisation, rising inflation, economic slowdown and the transfer of costs to society.

I have written about the sources of the high inflation that has occurred since 2021 in the wake of the Covid-19 pandemic in the following article:

I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

What is your opinion on this issue?

Please answer,

I invite everyone to the discussion,

Thank you very much,

Best wishes,

I invite you to scientific cooperation,

Dariusz Prokopowicz

In response to the unprecedented challenges of the Covid-19 pandemic in 2020, both central banks and governments have taken a number of interventionist measures to mitigate the negative effects of the crisis, which, however, in the perspective of 2021-2023, caused significant repercussions for inflation and the country's economic stability. In some countries, a key element of these measures was the direct purchase of government bonds by the central bank and the financing of extensive aid programmes through the issuance of additional money, which resulted in a significant increase in the money supply. These interventions, although intended to protect jobs and support businesses, combined with global disruptions to supply chains and rising commodity prices, contributed to a sharp rise in inflation. In response to the growing inflationary pressure, central banks raised interest rates, which in turn slowed down economic growth and increased the cost of loans, destabilising the financial market. As a result, although the measures taken in 2020 were aimed at minimising the immediate effects of the crisis, their long-term consequences led to significant economic instability, which highlights the complexity and multidimensionality of crisis interventions.

I have written about the sources of the high inflation that has occurred since 2021 in the wake of the Covid-19 pandemic in the following article based on my research:

I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

And what is your opinion on this topic?

Please answer,

I invite everyone to the discussion,

Thank you very much,

Best regards,

I invite you to scientific cooperation,

Dariusz Prokopowicz

Should the monetary policy of the central bank be completely independent from the fiscal and budgetary policy of the government or should it be carried out with consideration of this policy or should both policies, i.e. monetary and fiscal policy, be coordinated, e.g. especially in times of financial and economic crises?

The debate about the relationship between the monetary policy of the central bank and the fiscal policy of the government revolves around the question of autonomy: should the bank act independently, striving for price stability, or coordinate its actions with the government, especially in crises? Independence protects the bank from political pressure, but coordinated action can mitigate crises more effectively. In stable conditions, autonomy is key, but in crises, cooperation becomes essential. Research studies analyse optimal coordination, confirming that the best approach depends on the economic situation.

I have written about the sources of the high inflation that has occurred since 2021 as a result of the Covid-19 pandemic in the following article based on my research:

I have described the key aspects of the monetary policy pursued by central banks in recent years in the following article:

And what is your opinion on this topic?

What do you think about this issue?

Please answer,

I invite everyone to the discussion,

Thank you very much,

Best regards,

I invite you to scientific cooperation,

Dariusz Prokopowicz

The recent bankruptcies of the sizable investment banks Silicon Valey Bank and Signature Bank, which had placed a significant portion of their financial assets in low-interest government bonds prior to the pandemic and financed business ventures with high levels of investment and credit risk, have increased systemic credit risk and inspired renewed consideration of the effectiveness of improving the banks' credit risk management process. Once again, discussions returned to the issue of the level of effectiveness of the improvement of the credit risk management process carried out in banks and the resolution of the issue of the scale of improvement of credit procedures and investment in securities, credit risk analysis, the process of reliably and not fictitiously as in many banks just before the global financial crisis of 2007-2009 carried out analysis of the creditworthiness of a potential borrower and the credit risk of the bank, reliable recommendations and ratings for securities and derivatives offered to clients and investors by investment and commercial banks, and an efficient credit risk management process, taking into account the adjustment of credit activity procedures to technological progress and changing legal norms relating to the activities of banks. In view of the above, the question arises as to what central banks should do now and in the following months and quarters with regard to interest rates? Should central banks continue to raise interest rates, acting on assumption mainly as an anti-inflationary measure, but taking the risk of deepening the downturn, which may result in further bank failures and increased unemployment, or should they do the opposite, i.e. stop tightening monetary policy in order to help the economy return to a better economic situation? Since the legal norms governing the central bank in the USA, i.e. the Federal Reserve Bank, include within the strategic objectives of monetary policy making not only the care of the value and stability of the national currency, but also the support of the government's economic policy to prevent a significant rise in unemployment, it is unlikely that monetary tightening will continue on a significant scale in the coming months and quarters. In addition to this, according to the forecasts of most financial analysts, economists and think tanks of banks and other institutions, inflation should gradually decline in the following quarters starting from the second quarter of 2023. Consequently, the pressure on central banks to continue raising interest rates in the coming months will also decrease.

In addition to this, what also matters globally is the possible synergy and symmetry in terms of a specific monetary policy strategy pursued by other central banks as well, including, among others, the European Central Bank. In a situation where the possible development of a financial crisis would probably not only involve US banks, the aforementioned synergy and symmetry of an easing monetary policy would be advisable. Already in March 2023, the problems of one of the largest banks in Switzerland, Credit Suisse, confirmed the aforementioned thesis that the possible development of a financial crisis would probably quickly involve the banking systems of many countries, including in Europe.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

I describe this issue in much greater detail in the following recent article of mine:

I have written about the sources of the high inflation that occurred after the Covid-19 pandemic from 2021 onwards and the subsequent anti-inflationary monetary policy on the basis of the research carried out in my article below:

What do you think about it?

What is your opinion on this subject?

Please respond,

I invite you all to discuss,

Thank you very much,

I would like to invite you to scientific cooperation,

Best wishes,

Dariusz Prokopowicz

In a situation of double-digit and rising inflation, should the central bank continue to tighten monetary policy (raise interest rates) and the government also tighten fiscal policy (e.g. raise taxes and reduce non-investment spending) or should these policies be pursued differently?

Should both policies, i.e. monetary and fiscal, be conducted in a coordinated and targeted manner with the same objective, i.e. should they be focused on trying to reduce the level of inflation?

Does it make sense if, in such a situation, the central bank tightens monetary policy (raises interest rates) and the government eases fiscal policy (e.g. offers citizens further subsidies, grants, allowances, compensation, additional pensions by increasing the debt of the state finance system and/or by printing domestic money)?

I ask because this is the situation as of October 2021, in the country in which I operate. This is most likely due to the fact that the next general election is due to take place in a year's time and the current government is acting extremely populist.

What is your opinion on this?

What is your opinion on this subject?

Please reply,

I invite you all to discuss,

Thank you very much,

Greetings,

Dariusz Prokopowicz

This question explores the relationship between monetary policy and employment dynamics, particularly in emerging economies. It aims to understand whether expansions or contractions in the money supply significantly influence unemployment rates. Researchers can discuss various factors, such as inflationary pressures, central bank interventions, and the responsiveness of labor markets to monetary fluctuations. Empirical studies and case studies from different regions can provide valuable insights into this complex economic relationship.

Are central banks not lowering interest rates now, although they could do so given the drop in inflation, because they are afraid that inflation will rise again, or is it rather a matter of leaving the issue of interest rate cuts for the proverbial "black hour," i.e. is it rather to leave the issue of lowering interest rates to the proverbial "black hour", i.e. the occurrence of another economic crisis and crash in the capital markets, and to maintain the attractiveness of treasury debt securities, including above all treasury bonds, so that the cost of servicing the public debt does not increase significantly, so that citizens do not redeem treasury bonds but extend the term of their contracts for subsequent years, and so that subsequent investors, including foreign investors are interested in buying new series of treasury bonds issued?

As I write this commentary on the above question, it is early April 2024. Inflation, which had been rising rapidly since 2021 after the Covid-19 pandemic, then after central banks raised interest rates as early as 2022, inflation began to fall and fell particularly rapidly in 2023. In much of the developed world, falling inflation was already falling to near the inflation target in late 2023 or early 2024. Given the issues mentioned above, central banks could have already begun to cut interest rates, but they are still not doing so. Perhaps central banks are not lowering interest rates now, although they could do so given the decline in inflation, because they are afraid of a resurgence of inflation, or rather, the idea is to leave the issue of interest rate cuts for the proverbial "black hour," ie. the occurrence of another economic crisis and crash on the capital markets, and to maintain the attractiveness of Treasury debt securities, including above all Treasury bonds, so that the cost of servicing the public debt does not increase significantly, so that citizens do not redeem Treasury bonds but extend the term of their contracts for years to come, and so that subsequent investors, including foreign investors are interested in buying new series of Treasury bonds issued. Perhaps all of these considerations are taken into account and all of them to some extent determine the decision-making of interest rate committees (in Poland, the Monetary Policy Council operating at the central bank, i.e. the National Bank of Poland). In addition to this, other important factors that may be taken into account include the level of unemployment or, more broadly, the situation in the labor market, the level of economic prosperity in the economy, the issue of stability of the situation in the capital markets, the level of stock market indices on stock exchanges, the formation of exchange rates and the impact of this formation on imports and exports, the issue of the scale and share of long-term business and mortgage loans granted to citizens, entrepreneurs in previous years at variable interest rates. and the impact of changes in the oproc. of these loans by commercial banks during their repayment by borrowers on the economy's prosperity.

I described key aspects of anti-crisis soft monetary policy in the articles:

Synergy of post-2008 Anti-Crisis Policy of the Mild Monetary Policy of the Federal Reserve Bank and the European Central Bank

A safe monetary central banking policy as a significant instrument for liquidity maintenance in the financial system

THE NORMATIVE ROLE OF THE CENTRAL BANK ON THE MONEY MARKET IN POLAND

ACTIVATING INTERVENTIONIST MONETARY POLICY OF THE EUROPEAN CENTRAL BANK IN THE CONTEXT OF THE SECURITY OF THE EUROPEAN FINANCIAL SYSTEM

In view of the above, I address the following question to the esteemed community of scholars and researchers:

What do you think about this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

The Covid-19 pandemic has resulted in the acceleration of the digitization and Internetization of various aspects of the business activities of companies and enterprises, Internet-implemented processes for the sale of products and services, Internet-implemented payments and settlements, Internet-implemented marketing communications with customers, and so on. Much earlier, in the 1990s, in some countries, the first companies began to develop their business activities, including the sale of certain products and/or services via the Internet, the first Internet businesses began to operate, Internet startups, dotcoms growing rapidly, portals offering Internet information services, earning money from the sale of Internet advertising, and so on. At that time, electronic banking was already developing rapidly, offering its banking services remotely, first to institutional clients, and then to individual clients, to citizens. Electronic banking initially providing remote banking services in the form of so-called home banking, and then at the turn of the century transformed into online banking and then into mobile banking. Successively, therefore, the electronification, digitization and Internetization of banking is progressing year by year. In some countries, as early as the late 1990s, there were already considerations about the future of Internet banking development. The possibility of a full transition of banking to online banking was considered, as well as the full replacement of money existing in traditional form, i.e. in the form of banknotes and coins, to the form of electronic money. Already at that time there were theories suggesting that soon, in a few years, all banking will become Internet banking, that physically existing bank branches will disappear completely, physically existing money will disappear from citizens' wallets and will be completely replaced by its electronic counterpart. A continuation of this kind of considerations is the transition of central banks to a kind of form of electronic central banking and the replacement of traditional money with digital currency generated and introduced into the economy by central banks within the framework of shaped monetary policy. In a situation where the progressive processes of digitization and internetization would also apply to central banking then monetary policy could also be subject to these processes. Well, during the Covid-19 pandemic, there was also an increased interest in the development of central bank digital currencies (CBDCs) in some countries. Some countries have attempted to introduce digital currencies of central banks. An interesting issue is the possibility of involving Blockchain technology in the development of systems based on central banks' digital currencies, which could ensure a high level of security for these digital currencies. However, both the positive aspects of the introduction of central banks' digital currencies for the formation of monetary policy, which would also be implemented more digitally, are still not fully recognized. The negative aspects of the introduction of financial systems and their development based on central banks' digital currencies are also not diagnosed. It is not fully explored what new risks in financial markets can be generated by the introduction of central banks' digital currencies. It is not known how the introduction of digital currencies of central banks could affect the stability of financial systems, the situation in financial markets and the macroeconomic stability of the economy as a whole.

I have described the key issues of the central banking problem in my articles below:

Synergy of post-2008 Anti-Crisis Policy of the Mild Monetary Policy of the Federal Reserve Bank and the European Central Bank

Analysis of the effects of post-2008 anti-crisis mild monetary policy of the Federal Reserve Bank and the European Central Bank

A safe monetary central banking policy as a significant instrument for liquidity maintenance in the financial system

ACTIVATING INTERVENTIONIST MONETARY POLICY OF THE EUROPEAN CENTRAL BANK IN THE CONTEXT OF THE SECURITY OF THE EUROPEAN FINANCIAL SYSTEM

Anti-crisis state intervention and created in media images of global financial crisis

I invite you to get acquainted with the issues described in the above-mentioned publications and to scientific cooperation in these issues.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

What do you think about this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

The basis of capital markets is “expectation”. A capital owner of a certain size will expect to evaluate his savings in the most reliable and profitable way. This capital owner can be an individual or corporate, as well as a private or public legal entity. Foreign investors or institutions can also be included in this. If we call them all investors, we should not ignore the other important actors of the capital market, namely the state’s financial management and the Central Bank, as institutions that play a role in the system. It is seen that these market players have expectations along with investors. While all investors try to make a profit in the capital market, the state’s financial management and the Central Bank try to manage their expectations and realize the state’s expectations. Thus, the expectations of each actor in the capital market may differ from each other. The capital market is like a merry-go-round that rotates through different intermediaries and vehicles as wheels operating between these different “expectations” and “returns”. Predicting which cabin to get on and when to get off is the most basic step in realizing our expectations in the capital market.

7.9.2023 the central bank in Poland, i.e. the National Bank of Poland, despite the fact that still, despite the end of the Covid-19 pandemic more than a year ago, large amounts of additional money are being injected extra-budgetarily into the economy as part of the pre-election government social programs, inflation is still over 10 percent, average wage growth is over 10 percent, the rate of economic growth shows no signs of economic recession, the debt level of the state's public finance system is growing rapidly, oproc. of bank deposits is at a low level that does not even compensate for the level of loss of purchasing power of money, the cost of servicing the public debt is growing rapidly, the national currency is weakening reduced interest rates. by 0.75 percent. Most financial analysts, even taking into account political factors in addition to economic factors, were forecasting a reduction of these interest rates by 0.25 percent, not by 0.75 percent. Besides, this was also based on what the president of the National Bank of Poland said and declared at previous press conferences. Financial analysts economists have already become accustomed to the fact that the declarations made at press conferences by the president of this central bank are determined mainly by political factors, often diverge from the facts, contain inconsistencies with objectively conducted analyses of the macroeconomic state of the economy, and so on. The key issue is that the next parliamentary elections in Poland are scheduled for 15.10.2023. The monetary policy pursued by the central bank in Poland in recent years clearly confirms the thesis of strong informal ties between this policy and the government's economic policy. The covid and postcovid monetary policy pursued since 2020 first contributed to inflation from 2021 due to the strong easing of this policy, and then when it was tightened from October 2021 it acted mainly anti-conjunctural instead of anti-inflationary. The anti-conjunctural effect of the previously tightened monetary policy in Poland was mainly due to the fact that commercial banks operating in Poland for many years have been granting long-term mortgages and business loans at variable interest rates for more than 95 percent of the time. This is a kind of evanescence of banking in Poland compared to other developed countries. Oddly, the forecasting analyses developed at the central bank before the earlier monetary tightening apparently did not fully take into account this important economic factor. This is yet another point supporting the thesis that a highly politicized monetary policy is being pursued in Poland. This then raises the following question: won't a monetary policy conducted in this way, in which economic factors are less important than political factors, soon cause mistakes to be made again when conducting this policy and lead to another crisis in the economy? I, on the subject of monetary policy and its role in the issue of systemic credit risk management and in the context of the emergence of the global financial crisis of 2007-2009, conducted research, the results of which I have published in several scientific articles. These articles are available on my Research Gate portal profile. I invite you to join me in scientific cooperation.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

Please answer,

The above text is entirely my own work written by me on the basis of my research.

In writing this text I did not use other sources or automatic text generation systems.

Copyright by Dariusz Prokopowicz

On my profile of the Research Gate portal you can find several publications on the problems of monetary policy and its role in the issue of systemic credit risk management and in the context of the emergence of the global financial crisis of 2007-2009. I invite you to scientific cooperation on this issue.

I invite you to discuss in the problematic of changes in the role of central banking in the context of financial and economic crises. In the context of the ultra-easy monetary policies applied by central banks during the recent economic and financial crises, questions arise about a possible change in the role and importance of central banking in the context of the macroeconomic stability of economies and their impact on the situation in financial markets. Particularly relevant issues of central banking, including the role of central banks in the banking and financial systems of modern countries, anti-crisis instruments of soft monetary policy used by central banks, synergistic actions of central banks using the example of the FED, ECB and NBP, mistakes made by central banks and factors generating the escalation of financial crises I described in the following publication:

Comparisons of the monetary policy of the central banks of the Federal Reserve Bank and the European Central Bank and the National Bank of Poland

I invite everyone to join the discussion,

Thank you very much,

I would like to invite you to join me in scientific cooperation,

Best regards,

Dariusz Prokopowicz

Its an interesting paper that i am half way writing into now. The Australian dollar recently plunged to its lowest level against the US dollar since October 2022. The rapid decline of AUD from 23.93 in Jan 2023 to 21.27 THB is an indication of how economic factors can cause havoc when the Central bank policy runs tangent to government action.the Reserve Bank of Australia’s (RBA) dovish bets might drag the Aussie lower. The RBA’s December meeting minutes emphasised that policymakers have become confident that inflationary pressures are easing in line with expectations. Traders have priced in nearly a 65% chance of a 25 basis points (bps) rate cut at the February 18 meeting, with full expectations for a cut by April.Australia’s economy to avoid recession, RBA to hold rates steady for an extended period, and can this be possible? My guess is that with China's support waning from Australia,( less of iron ore purchases) and lower number of chinese students are two primary reasons.

The main purpose of a central bank's activities is to take care of the value of money, its stability against other currencies and the security of the banking system. However, since the 1970s, since the period of the rise of monetarism developed in accordance with Milton Fredman's concept of monetarism, the increase in the scale of economic globalisation, the transition of international monetary systems from the USD-based system, the system established after the Second World War in Bretton Woods to a system of free market exchange rates, the abandonment in the USA of gold parity with the USD currency, the growth of multinational corporations, the increased importance of speculative financial transactions carried out on foreign capital markets, including securities markets, etc. Central banks are also involved in the processes of stabilising the economy as part of anti-crisis programmes and protecting national labour markets, with the aim of limiting the scale of the increase in unemployment. In some countries, these new, additional central bank functions are added to the legal regulations shaping the functioning of the central bank. In some countries, the issue of linking the central bank's monetary policy is implemented informally.

For years, the central bank in Poland has also been conducting speculative transactions on international financial markets using various currencies and securities. For many previous years, the bank generated a net profit of PLN 9-10 billion of which 95 per cent of this profit was transferred to the state budget by the politically connected central bank to the government, instead of feeding the central bank's reserves and increasing the security of the financial system. For 2021, the central bank in Poland, i.e. the National Bank of Poland, generated as much as PLN 11 billion in net profit thanks to speculative transactions on the international financial markets, almost all of which went to the state budget rather than to central bank reserves, as usual. The annual profit generated by the central bank in Poland until 2021 was a consequence of, among other things, the monetary policy pursued by the bank, which consisted in successive depreciation of the domestic currency PLN against other currencies. However, for 2022, the National Bank of Poland unexpectedly raked in a historically record loss of PLN 17 billion. Could it be that the speculative transactions carried out in 2022 on the international financial markets turned out to be wrong this time? In addition, another key question arises: to what extent will this kind of situation result in a decrease in the level of security of the entire banking system?

In view of the above, I address the following question to the esteemed community of scientists and researchers:

And what is your opinion on this?

What is your opinion on this subject?

Please respond,

I invite you all to discuss,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

Imagine someone has created currency based on grain, which is beyond central bank regulations. Why beyond? Because this grain currency isn't for making loans. It's for trading any goods and services (in result) and for the appropriate transactions, only for that. Here is how it might work. Need grain? Pay grain currency. Don't have it? Give us this and this in exchange for grain currency.

I am looking for the source (online) of these indicators, like St. Louis FED & Kansas FED, with complex & mixed data from macroeconomy and finance.

I am interested particularly to Fin. Stress Indicators of the main commercial banks.

The purpose is to study the financial ecosystem of Quantitative Easing effects.

QE that appear as a new type of (global) strategic & systemic weapon e not only a complex set of economic measures.

.

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-- Was the decision of Swiss National Bank on Euro/SwissFranc (€/CHF) rational or panic-like? .. https://www.researchgate.net/post/Was_the_decision_of_Swiss_National_Bank_on_Euro_SwissFranc_CHF_rational_or_panic-like

-- What was the real effect of the US Quantitative Easing (QE), on the value of the US dollar, Gold, BitCoin and Yuan-Renminbi crosses? .. https://www.researchgate.net/post/What_was_the_real_effect_of_the_US_Quantitative_Easing_QE_on_the_value_of_the_US_dollar_Gold_BitCoin_and_Yuan-Renminbi_crosses

-- There is a relation between Quantitative Easing (QE) and the recent systemic selloff? .. https://www.researchgate.net/post/There_is_a_relation_between_Quantitative_Easing_QE_and_the_recent_systemic_selloff

-- The Quantitative Easing (QE) Financial Ecosystem has Affected the OIL Price Evolutions in this Decade? .. https://www.researchgate.net/post/The_Quantitative_Easing_QE_Financial_Ecosystem_has_Affected_the_OIL_Price_Evolutions_in_this_Decade

-- Why BitCoin was born (searching for socio-financial causes)? .. https://www.researchgate.net/post/Why_BitCoin_was_born_searching_for_socio-financial_causes

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.

Interest rates are a critical tool used by central banks to control inflation, I think it is a myth. Because it exacerbate poverty, especially in developing economies.

Some believe that central banks, like the Federal Reserve, have complete control over the economy through interest rates and monetary policy. In reality, central banks influence the economy but cannot control it entirely. Fiscal policy, global factors, and market sentiment also play significant roles.

with secondary data collected from central bank to know the impact of digitalization in banks profitability, how can its impact be more precisely measured through econometric tools.

reason why central bank changes in interest rates policy from fixed rate to floating rate?

What are the fit and proper criteria for Central Bank Boards across nations?

In a situation of high inflation, the central bank anti-inflationarily raises interest rates. The side effect is to cool economic processes and weaken the economy. When there is a high level of unemployment in the economy, especially Keynsian unemployment and possibly structural unemployment then the central bank anti-crisis lowers interest rates. The side effect of the situation can be an increase in inflation. And what if the economy is plunged into a multi-faceted economic crisis, in which there is high unemployment, recession of the economy and high inflation. In such a situation there is stagflation. Due to high unemployment, the central bank may apply monetary easing. However, there is also high inflation at the same time, during which the central bank tightens monetary policy. Simultaneous easing and tightening of monetary policy can mean that there is no reaction at all regarding a possible change in strategy regarding monetary policy making. Then whether the central bank, caring about the value of money, will tighten monetary policy, including raising interest rates..., or, however, helping the government in conducting anti-crisis economic policy in an attempt to revive economic processes and contribute to the decline of high unemployment anti-crisis will ease monetary policy, including lowering interest rates, among other things, then other factors and determinants will probably decide, including mainly the factors determining the economic development of the country and/or the determinants of the formation of monetary policy taking into account monetary policy factors other than those mentioned above. Among these other factors and determinants of the formation of monetary policy may be the issue of influencing the formation of the national currency against other currencies.

I have described the key issues of the central banking problem in my articles below:

Comparisons of the monetary policy of the central banks of the Federal Reserve Bank and the European Central Bank and the National Bank of Poland

Synergy of post-2008 Anti-Crisis Policy of the Mild Monetary Policy of the Federal Reserve Bank and the European Central Bank

Analysis of the effects of post-2008 anti-crisis mild monetary policy of the Federal Reserve Bank and the European Central Bank

A safe monetary central banking policy as a significant instrument for liquidity maintenance in the financial system

ACTIVATING INTERVENTIONIST MONETARY POLICY OF THE EUROPEAN CENTRAL BANK IN THE CONTEXT OF THE SECURITY OF THE EUROPEAN FINANCIAL SYSTEM

Anti-crisis state intervention and created in media images of global financial crisis

In view of the above, I address the following question to the esteemed community of scholars and researchers:

What do you think about this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

I came to know that Hank (Heterogeneous Agents New Keynesian) models are now in fashion. I skipped two papers on Hank. Those economists who work in Hank boast that this and that that were impossible in Rank (Representative Agent New Keynesian) models became possible. They may be right with this regards.

I have a question. What are the problems that are common to Hank and Rank models?

For example, Rank and Hank both assume the validity of central bank interest rate policy. In the case of Japanese economy, it was not very effective for about 30 years. The very validity of interest rate policy is questioned. Then, I want to know if there are good empirical works that estimated the dimension of peoples’ reaction (in the economy as a whole) to the change of interest rate, especially when the interest rate is very low (or nearly zero).

Green finance, green bonds, green credit, green banking, etc. are all important issues of a green, sustainable closed-loop economy. Banks, by providing green loans, finance green, pro-environmental, pro-climate, sustainable economic projects, which are an important part of the green transformation of the economy, in which the building of a green, sustainable closed-loop economy is carried out. This process is becoming in many countries a strategic, key program segment of environmental, climate, energy, agricultural, transportation development, construction, waste management, nature resource management, forest management, etc. policies. This process includes a strategic plan to carry out a pro-environmental and pro-climate transformation of the classic growth, brown, linear economy of excess to a sustainable, green, zero-carbon zero-growth and closed-loop economy. The financial sector, including the banking and investment fund sector, is playing an increasingly important role in realizing the aforementioned green transformation of the economy. This is due to the need to allocate more and more money to green economic ventures. Besides, taking into account the rate of progressive climate change, including, above all, the accelerating process of global warming, it is necessary to significantly increase the scale of implementation of pro-environmental and pro-climate economic projects, which should result in a significant reduction in greenhouse gas emissions into the atmosphere, reducing the level of environmental pollution, reducing the scale of waste and consumption of natural resources, including the key resources for industrial development, non-renewable raw materials and clean water resources, which should be a renewable resource, but in the increasing area of land areas subject to drought is becoming a non-renewable and scarce resource. The scale of financing for green economic projects implemented in highly developed countries is insufficient in relation to needs, and in economically underdeveloped countries there is usually an even greater deficit in financing the green transformation of the economy. This issue is particularly relevant given that most of the economically underdeveloped countries are located in tropical, subtropical areas, in zones particularly vulnerable to permanent and increasingly frequent periods of severe drought and/or violent storms and downpours, rapid soil aridity and other negative effects of the ongoing process of global warming. In this regard, highly developed countries should increase the scale of financial assistance to less economically developed countries in order to support the financing of green economic projects that play a key role in the implementation of the green economic transformation plan. Because within the framework of international finance, internationally operating banks, i.e. the World Bank, the European Bank for Reconstruction and Development, the International Monetary Fund, which also finance green economic ventures to a certain extent, play an important role. Other key institutions in financial systems include central banks, which shape monetary policy, are banks of the state and banks of banks, influence the level of liquidity in the banking sector and the level of credit, investment, etc. risks taken by financial institutions and non-financial sector operators. Accordingly, central banks can also play an important role in the context of green finance, green financing, influencing commercial banks' lending activities of granting green loans and issuing green corporate bonds. In view of the above, central banks acting as a bank of banks vis-à-vis commercial banks can therefore motivate commercial banks to conduct green banking, including granting green loans and issuing green bonds. In the framework of what could be called green central banking, central banks could provide loans on preferential terms to commercial banks for the development of green lending, with the help of which pro-environmental, pro-climate and/or pro-environmental economic ventures would be financed, e.g. by financing the development of energy based on renewable energy sources, development of sustainable organic agriculture, improvement of waste separation and recycling technologies, development of electromobility, sustainable construction, development of green smart cities, construction of rainwater harvesting facilities, seawater desalination, reforestation of industrially degraded areas, etc. In the context of this issue, there is the question of possible opportunities and conditions for the creation of a strategy involving central banks conducting what could be described as a green monetary policy.

I am conducting research on this issue. I have included the conclusions of my research in the following article:

I invite you to discuss this important topic for the future of the planet's biosphere and climate.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

What do you think about this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

When there is a strong decline in the level of activity of economic entities, the rate of economic growth slows down, there is a risk of the emergence of a recession of the economy, a serious financial and/or economic crisis begins then the governments of individual countries, fearing a strong increase in unemployment, increase the scale of anti-crisis state interventionism, launch programs to activate the economic activity of companies and enterprises under mild fiscal policy and active fiscal policy. With the growing risk of deepening the scale of the financial and/or economic crisis

central banks lower interest rates with a view to lowering the cost of money lent by commercial banks in the form of bank loans and thus increasing liquidity in the banking sector and indirectly in the economy as a whole. When the World Health Organization declared a pandemic state of Covid-19 on March 11, 2020, there was panic in the capital markets involving panic selling of assets. The high level of uncertainty and investment risk prevailing in the capital markets, including those of the stock exchanges, caused companies and businesses to put their investment plans on hold and some had already begun to see declines in the level of sales of their product and service offerings. Subsequently, citizens' fears for their jobs quickly emerged and politicians, fearing the loss of public support, quickly began to launch processes that would result in the introduction of certain anti-crisis instruments. The sharp stock market crashes on the stock exchanges, which lasted for several days, as well as declines in industrial commodity prices, were halted when central banks strongly reduced the level of interest rates. During the Covid-19 pandemic, anti-crisis state interventionism was applied on a large scale to limit the scale of the development of the economic crisis. These anti-crisis interventionist measures were intended to prevent the economy from deepening into a recession in 2020 and the occurrence of stagflation in subsequent years. Stagflation is a particularly unfavorable type of deep economic crisis characterized by high inflation, sometimes hyperinflation and high unemployment. For capital markets, including the stock market, it is a particularly unfavorable type of economic crisis. Triggered by the Covid-19 pandemic and the lockdowns introduced during the pandemic, the global economic crisis starting in the spring of 2020 could, in many countries, as it did during the 2008 global financial crisis, turn into another financial crisis, a debt crisis of the state's public finance system with the simultaneous occurrence of a recession of the national economy. If the anti-crisis, interventionist measures introduced at the time, the aid programs launched for businesses, public institutions, for citizens within the framework of the use of available instruments of fiscal policy and monetary policy did not work, a situation of a significant deepening of the then economic crisis could occur. Then this deepened economic crisis could have been more severe than the one that occurred in 2008 and could have been characterized by stagflation. In such a situation, also the interventionist actions of central banks, e.g. by continuing to lower interest rates, could no longer work effectively because there was already an excess of money in the markets, citizens and companies on bank deposits in commercial banks held record high amounts of money and inflation had already begun to rise in many countries as of 2021. After the anti-crisis reduction of interest rates by central banks, which in many countries took place between March and May 2020, the stock markets quickly returned to prosperity. When this kind of situation lasts for a prolonged period over many months, quarters or even sometimes several years then stock prices can rise to levels described as highly overvalued which can then result in a stock market crash at a time when most market participants do not expect it. In the meantime, stock prices may rise on a "buy the rumors, sell the facts" basis. It is not out of the question that this principle worked in 2023-2024, as most investors active in the stock markets expected the start of the announced interest rate cuts by central banks. Expectations were reasonable since inflation had fallen to levels close to inflation targets and central banks had not lowered interest rates, which had previously been anti-inflationarily raised after the Covid-19 pandemic.

I described the key issues of the central banking problem in my articles below:

Synergy of post-2008 Anti-Crisis Policy of the Mild Monetary Policy of the Federal Reserve Bank and the European Central Bank

Analysis of the effects of post-2008 anti-crisis mild monetary policy of the Federal Reserve Bank and the European Central Bank

A safe monetary central banking policy as a significant instrument for liquidity maintenance in the financial system

In view of the above, I address the following question to the esteemed community of scientists and researchers:

What do you think about this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best regards,

Dariusz Prokopowicz

A key function of central banks in the context of their monetary policy is to take care of the value of money. In the context of increasingly frequent financial and economic crises, central banking increasingly applies other additional priorities related to the functioning of the country's economy when conducting monetary policy. Over the past few decades, mainly since the period of the oil crises of the 1970s, there has been a successive increase in the importance of the monetary policy of central banks carried out in more or less formal correlation with the socio-economic, budgetary, fiscal and social policies of the government taking into account the issues of changes in the rate of economic growth of the national economy, changes in the level of activity of the economic processes of companies and enterprises, changes in the situation in the labor markets and especially the issue of changes in the level of unemployment.

Just before the outbreak of the Great Depression of the 1930s and just before the outbreak of the global financial crisis of 2008, central banks first pursued a mild monetary policy for many years, so that when serious symptoms of an imminent financial and economic crisis appeared, resulting in a potentially high increase in unemployment and the occurrence of a recession in the economy, interest rates were raised, which then caused difficulties in servicing loans in many highly indebted companies and enterprises. Consequently, measures that were supposed to act as anti-crisis measures contributed to the accelerated development of the financial and economic crisis.

Over the past few decades of time, the importance of central banking has increased as not only the institution that shapes monetary policy, on which depends not only the value of money, but also the liquidity situation in the banking sector, the level of commercial bank lending, the scale of credit risk accepted by commercial banks in their bank lending activities and, indirectly, the economic and financial situation of many companies and enterprises that are clients of commercial banks. Therefore, also the changes made by central bank governors usually every few quarters or years in monetary policy strategies correlate to a large extent with what happens to the issue of inflation, if it is demand inflation and indirectly also the issue of monetary policy conducted can be correlated to a serious degree with important factors describing the macroeconomic situation of the economy.

The research shows that any type of monetary policy, i.e. conducted according to an anti-crisis and/or pro-development model of lax or tightened monetary policy conducted by central banking, may involve the risk of either succeeding in generating positive, pro-development effects supporting economic development or making mistakes and generating financial losses in many economic entities and leading to a financial and economic crisis. The idea is that lessons should be learned from the mistakes made at central banks in terms of the monetary policies that are carried out, that monetary policies should be realistically improved based on the conclusions of research, that financial systems should be increasingly secure, that societies should not lose public confidence in institutionalized financial systems and, thanks to this, that another major financial and economic crisis should not occur in the future.

This issue is particularly important because of the security of the entire state financial system, since the central bank, in addition to being a bank of banks and a bank of issue, is first and foremost a bank of the state that creates monetary policy and participates in the creation of money. Since the security of the financial system is largely based on public confidence in the system, including the banking system, so every bank, including the central bank, should carry out its goals and tasks with full integrity, should not engage in international financial operations with a high risk of speculative investment, and should conduct monetary policy in such a way that it does not make serious mistakes in its conduct that result in the occurrence of subsequent financial and economic crises.

I have described the key issues of the central banking problem in my articles below:

Comparisons of the monetary policy of the central banks of the Federal Reserve Bank and the European Central Bank and the National Bank of Poland

Synergy of post-2008 Anti-Crisis Policy of the Mild Monetary Policy of the Federal Reserve Bank and the European Central Bank

Analysis of the effects of post-2008 anti-crisis mild monetary policy of the Federal Reserve Bank and the European Central Bank

A safe monetary central banking policy as a significant instrument for liquidity maintenance in the financial system

ACTIVATING INTERVENTIONIST MONETARY POLICY OF THE EUROPEAN CENTRAL BANK IN THE CONTEXT OF THE SECURITY OF THE EUROPEAN FINANCIAL SYSTEM

Anti-crisis state intervention and created in media images of global financial crisis

In view of the above, I address the following question to the esteemed community of scholars and researchers:

What do you think about this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best regards,

Dariusz Prokopowicz

For years, the media have been conducting sterile discussions based on the low level of economic knowledge of citizens. Discussions in the media by economic commentators tend to lack objectivity, as they are determined by subjective reference to studies conducted by certain institutions, including the NBP, which were also not conducted and commented on under conditions of full political impartiality. The government, without the influence of various pressure groups, prefers the stasus quo to which it is accustomed, to which it is condemned for the next 4 years after winning the elections, and maximizes the pros against the cons of a given state of affairs, that is, the situation of Poland having a national currency. In Poland, the main social group that would definitely benefit from the introduction of the euro in Poland are entrepreneurs, mainly importers and exporters who settle their business activities in euros and therefore bear the costs of hedging against currency risks. However, even this social group is apparently too weak to unite in organizations supporting the plan to introduce the euro. Regarding the issue of the plan to introduce the euro in Poland, there is no such plan in principle. There were first attempts to develop this plan as early as the late 1990s, but as it turned out, the issue of the dominant narrative in the media was politically determined in particular years, or rather, during the periods of the various ruling political parties. The political narrative of the PIS party is related to the policy of printing national currency, the printing of so-called anti-crisis additional domestic money. The second PIS argument for not introducing the euro in Poland is the loss of national monetary policy by the NBP, i.e. the central bank, which theoretically and according to current legal norms (the Polish Constitution and the NBP Act) is an independent bank from the government's fiscal policy, which is not in line with the facts given the political ties of NBP President Prof. Glapinski with the PIS party, which ruled for 8 years from 2016 to 2023. Another third key argument, partly objective and economic, suggests that Poland could adopt the euro in the distant future, when the economic potential of the Polish economy, the production capacity of industrial sectors, labor productivity determined, among other things, by the equipment of manufacturing processes with new technologies and innovations, the balance sheet totals of banks' financial capital, the level of real income of citizens, etc., will almost equal the analogous levels in the largest economy in Europe and at the same time the main trading partner with respect to Poland, i.e. the German economy. In addition to this, the arguments used to question the legitimacy of the introduction of the euro in Poland in recent years often include concerns about the increase in prices of many products and services, which would occur in the first years after Poland's entry into the eurozone. The basis for this argument is to point to such a phenomenon, which has occurred on a certain scale in countries where the euro currency was recently introduced. In a situation where such a phenomenon also occurred in Poland, the most affected would be citizens with the lowest and lower levels of income, citizens who spend a significant part of their income on the purchase of basic products, including food products. From the arguments presented, further arguments follow. Well, if in the situation of a much less developed Polish economy in relation to the largest economy in Europe, which is the German economy, the plan to introduce the euro currency in Poland would be implemented, the less developed Polish economy could continue to develop less well and would not necessarily catch up quickly with the economic development of Germany. On the other hand, there are supporters of the completely opposite theory claiming that if Poland adopted the euro now it would develop faster and thus catch up with Germany's economic development faster. But there are also supporters of the theory that these issues are not necessarily correlated, because it is usually the case that less developed countries, when they develop and are developing, growing countries then the magnitude of the rate of economic growth in such smaller and less developed economies is greater in comparison with the corresponding figures denoting the rate of economic growth expressed in percent, expressed in the indicator macroeconomic determinant Gross Domestic Product. So this issue is almost entirely "malleable," subject to politicized, subjective evaluation. However, if the policy had changed on this issue, a plan for the introduction of the euro had been developed, all the formal requirements of the European Union had been met in terms of the monetary policy and fiscal policy applied in the country and their effects in the form of similar to EU standards issues of the development of the exchange rate of the PKN against the euro and in terms of the level of debt of the system of public finances of the state, and after a few or more years in Poland the euro currency would have been introduced, then in many media commentaries consideration of the pluses of the situation would have begun to prevail instead of consideration of the minuses as before. Then it could turn out that loans would be cheaper, because ECB interest rates are lower than NBP interest rates. However, the fact that the ECB's interest rates are lower than those of the NBP is related to the issue of offering Treasury bonds to foreign investors, who need to be offered a correspondingly higher yield to cover the higher level of risks associated with the peculiarities of the Polish economy. In addition, the issue of higher interest rates of the NBP vis-à-vis the CBs is also related to the transactions carried out by the NBP on international financial markets, as well as the exchange rate of the national currency PLN against other currencies. On the other hand, changes in the exchange rate of the PLN against other currencies also matter to foreign investors conducting speculative investment activities in Poland using securities listed on the Stock Exchange, i.e. primarily investment banks and investment funds operating transnationally. On the other hand, when we ask whether there is any type of entity that cares about the continued existence of the domestic PLN currency in Poland, it is primarily domestic commercial banks generating much higher profits from the situation as it is now, and also the already mentioned foreign banks and investment funds. Well, it has happened more than once that in periods of internationally or globally developing financial and economic crises, a decline in the level of economic stability, an increase in various categories of financial and other risks foreign financial institutions, such as. Foreign financial institutions, such as banks and investment funds based in the City of London, taking advantage of the situation of increased sensitivity of the PLN currency to various crisis factors, the situation of increased amplitude of fluctuations of the PLN exchange rate against other currencies determined by the increase in uncertainty and risks developing in the scope of economic activities carried out by thousands of entities, carried out speculative transactions with the involvement of large financial resources in the foreign exchange markets increasing the scale of destabilization in the issue of the formation of the PLN exchange rate against the euro and other currencies. So, when you do not know what the issue is about it is about money, or when you seem to know what the issue is about you choose many different arguments for the situation, but unfortunately a situation determined mainly by politics and not economics.

Specific economic and financial aspects relating to the issue of the possible adoption of the euro currency in Poland in the precisely unspecified future I described in the following article:

In view of the above, I address the following question to the esteemed community of scientists and researchers:

What do you think about this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best regards,

Dariusz Prokopowicz

We know that during the usage of commodity currencies, the scarcity of metals like gold and silver narrowed the money supply and did not allow economies to grow out of a specific natural capacity by forcing depressions that happened due to the lack of a medium of exchange and in turn, the economic incentives for production.

Fiat standard, however, allows the central banks to affect the GDP as they see fit; they might choose monetary policies that cause the enlargement of the economy, oblivious to the environmental capacity of their countries; this has, of course, resulted in a population boom during the past century but also caused problems within the environment.

Technology has increased our productivity and helped us dodge the Malthusian trap, but even if we look at Technology as a scarce accumulative resource that also takes time and energy to be amassed (unlike Fiat money), is it possible to blame Fiat Standard as a contributor to Humanity's environmental predicaments?

Recent reports have shown a trend of central banks across various economies reporting significant losses. This development raises several questions that touch on the core of monetary policy, fiscal stability, and the broader economic impact. These losses can be attributed to a multitude of factors, including but not limited to currency devaluation, fluctuating gold prices, and shifts in the bond market. Moreover, the unconventional monetary policies adopted during crises, such as quantitative easing, may also play a role.

This discussion invites economists, financial analysts, policymakers, and the informed public to share their insights on a few probing questions:

The perspectives and analyses shared here will contribute to an upcoming post on my blog, https://veridelisi.substack.com/p/why-are-central-banks-reporting-losses-fed-ecb , where we can continue the conversation and explore the broader implications together.

Join the discussion, share your expertise, or simply express your concerns. Your input is valuable in understanding the breadth and depth of central bank losses and their relevance to our daily lives.

Engin YILMAZ (@veridelisi)

In Poland, during the SARS-CoV-2 (Covid-19) coronavirus pandemic, the government introduced a large amount of additional printed money into the economy from April 2020, which was introduced off-budget in a procedure specially created for this purpose. The central bank also participated in the procedure, buying additional new series of Treasury bonds issued by the Treasury directly. The printed money was introduced into the economy through special purpose funds created mainly in government-controlled institutions, such as the Polish Development Fund and Bank Gospodarstwa Krajowego, among others. A large amount of the printed money thus went to government-controlled state-owned companies, including, among others, the monopolistically operating large companies in the energy, fuel and mining sectors, which contribute to the leading part of the national energy industry, which produces energy mainly on the basis of dirty combustion energy, i.e. on the basis of burning fossil fuels. In Poland, still thanks to government subsidies, more than 3/4 of energy is generated from burning fossil fuels. If the subsidies provided from governments to the combustion power sector since the 1990s had fueled the development of renewable and emission-free energy, Poland would now be a modern and energy-secure country, where most of the energy would now be produced by clean renewable energy. With the aforementioned subsidies, several large nuclear power plants, many wind farms and thousands of solar installations could have been built. Unfortunately, the government preferred to be in comity with the unions operating in coal mines, lignite mines, power and fuel companies in order to support the development of combustion energy and inhibit and block the development of renewable and carbon-free energy. Thanks to the topic that hard coal is sourced from deep-sea high methane mines in the country, the government has been subsidizing coal mining for many years with many billions of zlotys. Surcharging was a permanent part of this pseudo-business, since mining had already been permanently loss-making, unprofitable for many years. In addition, thanks to the government's comity with the aforementioned trade unions, the level of wages in the loss-making fossil fuel extraction sector was high and growing despite the declining business efficiency of these companies. Since the SARS-CoV-2 (Covid-19) coronavirus pandemic, more than 300 billion in added PLN has been injected extra-budgetarily into the economy. According to some estimates compiled by scientific institutes independent of the government, this is even an amount of about 400 billion PLN. The printed money was introduced into the economy on the basis of specially introduced for this purpose regulations, covid laws, on the basis of which, on the one hand, lockdowns were introduced, temporarily excluding from real economic activity many companies, mainly service sectors. On the other hand, on the basis of covid laws introduced specifically for this purpose, printed money was transferred to the majority of companies and enterprises operating in the economy as subsidies to pay fixed costs and surcharges on salaries of employed workers on the condition that employment was maintained. Non-repayable said financial subsidies were also given to many companies and enterprises, including state-owned companies, whose business activities were not subject to lockdowns. Since in recent years the annual budget of the state is about 500 billion PLN so the estimated scale of the SARS-CoV-2 (Covid-19) coronavirus printed since the pandemic almost matches the mentioned amount. This was possible because the introduction of covid-based regulations into the economy of printed money continued until the parliamentary elections held on 15.10.2023 despite the fact that the pandemic ended much earlier. The magnitude of the negative impact on the community and on the economy quickly began to decline as early as January 2021, when a mass vaccination program was introduced on the basis of millions of coronavirus vaccines purchased by the government from several pharmaceutical companies. However, the practice of injecting printed money into the economy on the basis of covid regulations continued. The result was an increase in inflation as early as Q2. 2021. Inflation in Poland grew so fast that it was one of the highest in Europe from 2021 to 2023. With the aim of fighting inflation from October 2021, the central bank, i.e. the National Bank of Poland, rapturously began to raise interest rates. Raptly because surprising most financial analysts and economists with this action, since only two months earlier the president of the National Bank of Poland had assured during press conferences that these increases would begin in a year at the earliest. As a result, many citizens at the time took out extremely cheap long-term mortgages and business loans. Since, contrary to the banking standards of Western countries in Poland, for many years more than 90 percent of long-term loans were granted by commercial banks at variable interest rates, shifting the risk of interest rate changes to borrowers, so when the central bank raised interest rates, commercial banks quickly raised the oproc. of loans, including those previously granted, and slowly raised the oproc. of deposits and other bank investment products. Thus, the central bank's raising of interest rates had a very weak anti-inflationary effect and a fast and strong deconflationary effect. This was due to the rapidly declining creditworthiness of borrowers and falling investment levels in many sectors of the economy. For example, in the construction sector in Q3 2022, the level of investment fell by more than two-thirds on an annual basis. Because Poland's central bank raised the key benchmark interest rate from an interventionist, pandemic, anti-crisis level of 0.1 percent to 6.75 percent during the one-year period from the beginning of October 2021 to September 2022, so borrowing during the period of record, interventionist-low interest rates rapidly became more expensive. The period of the aforementioned interventionist, record-low interest rates lasted as long as a year and a half, and, according to assurances from the central bank governor, was expected to last much longer. As a result, the scale of mortgages and economic loans taken out at the time grew rapidly. When the central bank raised interest rates to a significant degree, the installments on repaid loans also increased significantly. For loans taken out at interventionist low interest rates, loan installments in the fall of 2022 were already more than double what they were at the beginning of the loan repayment. In addition, in 2022, producer inflation in some months was even more than 10 percent higher than consumer inflation. This was due to rapidly rising prices of energy and industrial raw materials, prefabricated products, semi-finished goods, wages and other production factors. Enterprises and companies, by passing on the increase in the prices of production factors to the prices of the products they sold, generated record high profits on the one hand and added to the rapidly rising inflation on the other. Commercial banks also generated record profits from mid-2021 onward as the central bank rapidly raised lending opc. rates and much slower deposit rates as interest rates rose. Despite the fact that the central bank had already stopped raising interest rates at 6.75 percent (the basic reference rate) in September 2022, the rate of economic growth was declining rapidly, the downturn was worsening and, interestingly, despite the Central Statistical Office showing no significant increase in unemployment. This happened because entrepreneurs converted full-time employment to part-time employment for many of their employees, and/or forced some of their employed staff to switch to self-employment in the setting up of sole proprietorships, i.e., establishing a sort of mini-company with which they continued to work. In this way, most of the large banks and companies have significantly improved their economic and financial situation since the pandemic, while most citizens have become poorer. For most citizens, the level of real wages, the level of savings since the pandemic has dropped significantly. Even the increase in wages in the corporate sector since Q2 2022 no longer compensated for the decline in the purchasing value of money as a result of high inflation. In addition, despite the fact that the central bank in Poland stopped relatively early, more than a year earlier than the Federal Reserve Bank and the European Central Bank to continue raising interest rates at the aforementioned level of 6.75 percent, Poland's economy went into recession in the 1st half of 2023. According to recently published data by the Central Statistical Office, Poland's recession reached 0.6 percent in April 2023. It is interesting to note that the Polish economy in 2023 experienced one of the highest downturns compared to other European Union countries, and this despite the government's continued social programs, electricity price subsidies, reduced VAT on food since the pandemic, and previously also on motor fuels (until December 2022). Despite soft fiscal policy and the government subsidy programs being developed, financed from the state's public finance system, Poland has experienced a recession. The government's energy price subsidies are due to the fact that the government was planning its re-election in the parliamentary elections, which took place in October 2023. This was one of many financial shielding instruments for citizens, which was intended to provide short-term, ad hoc some relief for citizens from rising household maintenance bills before the parliamentary elections. On the other hand, if the government's energy price subsidy system had not been in place then market energy prices would have been the highest in Poland. They would have been the highest due to the fact that Poland's energy production is extremely expensive, and mainly based on dirty combustion energy. This is a result of the government's restriction and blocking of the development of renewable and emission-free energy sources. The procedure of limiting the development of renewable energy sources and subsidizing dirty combustion energy from the system of state finances since the 1990s. While the procedure of blocking the development of renewable and emission-free energy sources, including onshore wind power since 2016 and solar power since April 2022. The result is a low level of energy security of the energy sector in Poland and some of the highest costs of energy production, not only against the background of the European Union, but also on a global scale. The lack of undertaken, necessary investments in new energy technologies, the limited scale of investments in the development of clean, renewable and emission-free energy, on the basis of which energy could now be produced in the cheapest way, is one of the key determinants limiting economic development, including the prospective development of the Polish economy. In view of the above, in recent years Poland has had an exceptionally chaotic, short-sighted pseudo-economic policy, which led, among other things, to the fact that Poland experienced a recession in Q2 2023. In April 2023, the CSO showed a 0.6 percent recession. In addition, the pseudo-economic policies pursued in recent years have resulted in a large increase in the debt of the state's public finance system. Citizens have finally noticed how irrationally the aforementioned pseudo-economic policies have been carried out in recent years, and voted overwhelmingly against the incumbent government in the parliamentary elections held on 15/10/2023. Perhaps the new government will repair all that has been destroyed in the Polish economy in recent years. Perhaps the new government will restore rationality, pro-social, pro-climate, pro-environmental, etc. in terms of its economic policies.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

And what is your opinion about it?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best regards,

Dariusz Prokopowicz

During the recent economic and financial crises in many countries in the framework of anti-crisis measures and stimulating the rate of economic growth, in the framework of the monetary policy pursued, the formation of the money supply, the change of interest rates formally and/or informally cooperate with the government, which also in the framework of the anti-crisis programs undertaken, instruments for the activation of economic activity of companies and enterprises, the activation of consumption and investment carries out fiscal, social, budgetary, housing, etc. policies. If coordinated mild fiscal policy and mild monetary policy are appropriately synergistically applied within the framework of interventionist anti-crisis and pro-development measures, then stimulating the economic activity of firms and enterprises, stimulating consumption and investment development, reducing the development of the economic crisis can work more effectively. However, the scale of the applied anti-crisis and pro-development measures should be precisely adjusted to the sectoral and industry structure of the economy and the specifics of the macroeconomic processes being implemented, and thus should not lead to a significant and sustained increase in the indebtedness of the state's public finance system, too high a level of creditization of economic processes, too high levels of acceptable credit risk by commercial banks, a strong increase in inflation, a decline in the value of the national currency, a decline in the interest of foreign financial institutions in securities issued by the state treasury and capital companies of the country, etc. Unfortunately, during the SARS-CoV-2 (Covid-19) coronavirus pandemic, first the government in Poland applied anti-pandemic, interventionist measures, including lockdowns imposed on selected sectors of the economy thus causing a deep recession of the economy and then through further interventionist measures highly costly for the state's public finance system, financial subsidies coming from the state's public finance system limited the growth of unemployment. Another negative effect of the applied interventionist measures of the government was the rapid increase in inflation, which began as early as the 2nd quarter of 2021. This was an example of erroneously applied interventionist actions of the government on too large a scale, actions involving the application of selected instruments of state interventionism, instruments of synergistically conducted extremely mild both monetary and fiscal policies, which, as a consequence of their synergistic application, negatively affected the economic processes taking place in the Polish economy. On the other hand, some of the interventionist instruments used, due to the specially created mechanism of their operation and their high scale, may have violated the norms set forth in the Basic Law, i.e. the Constitution of the Republic of Poland. This type of interventionist measure applied on an exceptionally large scale in Poland was the purchase of Treasury bonds by the National Bank of Poland to generate additional, printed money, which was then introduced extra-budgetarily into the economy mainly in the form of non-refundable financial subsidies transferred to many companies and enterprises operating in various sectors of the economy in order to limit the growth of unemployment in a situation of deep economic crisis and economic recession generated by lockdowns. However, the government's main concern was that the unemployment rates shown by the Central Statistical Office did not change significantly despite the real decline in the level of employment, entrepreneurs changing the terms and conditions of employment of employees by, for example, reducing the duration and scale of employment of the same employees, a decline in the economic activity of companies and enterprises, a reduction in the scale of activities carried out by business entities, a reduction in the development opportunities of business entities affected by lockdowns, etc. The state interventionism thus applied during the pandemic consisted of actions and instruments of an also informally coordinated, politically politically ultra-mild monetary policy through an interventionist reduction of interest rates by the central bank and an ultra-mild fiscal policy based on the application of historically large-scale financial, non-refundable state aid. Synergistically and in a coordinated manner, the aforementioned mild monetary policy and fiscal policy applied effectively first limited the development of the economic crisis to then generate further economic problems in the economy. It is estimated that in Poland, since the 1st wave of the coronavirus pandemic, the central bank has created and transferred money to the government with a total value of almost 400 billion zlotys. On the other hand, in the framework of the economic policy unjustifiably described in the media by the government as an economic policy pursuing sustainable economic development, the opportunities that arose during the pandemic have not been used to accelerate the processes of green transformation of the economy, and this despite the fact that opportunities for this have arisen.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

And what is your opinion on this topic?

What is your opinion on this issue?

Please answer,

I invite everyone to join the discussion,

Thank you very much,

Best wishes,

Dariusz Prokopowicz

What is the difference between an organized crime network and the central banking system?

Central banking is the single leading cause for disparity of wealth globally. What alternatives can be instilled that take away financial abuses, market manipulations, money laundering and control from centralized Mafia of global bankers?

I have my own opinion, but I'd like to know yours: is a central bank needed in a de jure dollarized economy? I'd appreciate if you could share some texts about it.

What are the mechanisms for classifying commercial banks to deal in order to enter the currency auction by commercial central banks in the world?

I have written about the origins of the high inflation that occurred after the Covid-19 pandemic from 2021 onwards on the basis of my research in my article below:

I have described key aspects of the monetary policies pursued by central banks in recent years in the following article:

What do you think?

What is your opinion on the subject?

Please reply,

I invite you all to discuss,

Thank you very much,

I would like to invite you to scientific cooperation,

Warm regards,

Dariusz Prokopowicz

At the very beginning of May 2023, another bank in the US, i.e. First Republic Bank, declared bankruptcy and was quickly taken over by one of the largest investment banks JP Morgan. Considering the multitude of assets of this bank prior to the bankruptcy, this is the second largest banking bankruptcy in US history. An already classic mechanism for stopping potential customer panic in the banking sector was used, which was that First Republic Bank of San Francisco was first taken over by a state agency and then resold to a larger bank, i.e. JP Morgan. Financial problems at First Republic Bank were already noticeable from mid-March 2023. These problems quickly began to worsen when two smaller mid-sized investment banking formula banks in the US collapsed, i.e. Signature Bank and Silicon Valley Bank. The bankruptcies of these two banks caused panic among bank customers, who began to withdraw their deposits from many other banks, including First Republic. Consequently, the share price of California-based First Republic Bank also collapsed and entered a stock market crash. At the beginning of 2023, First Republic Bank's share price on the stock exchange was still reaching almost USD 150, while at the end of April 2023, the price was already at only a few USD. During just one trading session on Wall Street, First Republic Bank shares fell by around 50 per cent to US$ 8.1.

The withdrawal of deposits and deposits by bank customers has increased the scale of uncertainty in the financial markets and is linked to a decline in citizens' confidence in the banking sector. This issue, together with persistent inflation, prompted the Federal Reserve Bank to raise interest rates for the 10th time in a row to 5.25 per cent, the highest level since 2007, the year in which the global financial crisis of 2007-2009 began. Two days later, the European Central Bank also raised interest rates by 25 basis points for the 7th time in a row. The process of monetary tightening by two of the largest central banks in the context of global financial markets therefore continues in early May 2023. The tightening of monetary policy is aimed at reducing the levels of acceptable investment and credit risk in the context of transactions in financial markets. A negative side effect of this process is the possibility of a significant reduction in the scale of investment realisation in the real economy and a significant decline in the economic activity of firms and companies. In the situation of the development of such a negative scenario, unemployment may significantly increase, the level of repayment of bank loans may decrease, the level of consumption and tax revenues to the state budget may decrease. An additional systemic risk factor is the high level of debt in the state's public finance system. The steadily growing US public debt of USD 32 trillion will reach the statutory debt limit at the end of June 2023. On the other hand, high inflation helps the government in terms of reducing the scale of public debt servicing costs. However, high inflation with high unemployment can, in a situation of deepening downturn, lead to stagflation, i.e. a situation of economic crisis, during which the possibilities of applying anti-crisis state interventionism are limited.

I will write more on this subject in my book, which I am currently writing. In this monograph I will include the results of my ongoing research on this issue. I invite you to join me in scientific cooperation on this issue.

Counting on your opinions, on getting to know your personal opinion, on an honest approach to discussions in scientific problems, and not on ready-made answers generated in ChatGPT, I deliberately used the phrase "in your opinion" in the question.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

What is your opinion on this topic?

What is your opinion on this subject?

Please respond,

I invite you all to discuss,

Thank you very much,

Warm regards,

Dariusz Prokopowicz

Based on their tradition, the IMF releases its World Economic Outlook and the Regional Economic Outlook twice a year, first in April and another in October. There is an update, which comes in January and July. These projections are being revised, and new editions come on board because of some happenings and sudden events that were not anticipated before the report's writing. That is the essence of revising the forecasts based on these events.

Inflation is a global phenomenon. In 2019, particularly before the Russia-Ukraine war broke out in February 2022, the US has always maintained the long-term inflation target of 2% per annum. Likewise, the EU and the UK. But what happened? The global economy was shaken by the Russia-Ukraine war. This global inflationary pressure is not peculiar to Sub-Saharan Africa.

The dynamism and the uniqueness of the inflationary pressures arising from the geopolitical tensions between Russia and Ukraine are so unique that value supply chains across regions and nationals globally have been disrupted. When supply chains are being disrupted, for a particular product to complete its stages of production, there will be issues if there are issues relating to access to raw materials and access intermediates due to this war. Then, such a product will not proceed to the next production stage. What happens?

It affects every product, and considering the global position of these two countries, Russia and Ukraine, when it comes to global food markets, global agricultural markets, and global commodities markets, Russia is the second largest producer of oil in the world after Saudi Arabia.

Regarding grains, corn and wheat, Russia and Ukraine account for one-quarter of the total world production of grains. Regarding urea, which is attributed to the production of fertiliser, Ukraine can be identified with that. So many other countries depend more on Russian oil, particularly in the EU. This was the reason for the crisis in the EU when there was a multiplicity of bans on Russian oil exports by the UK, EU, US and advanced Western countries.

Countries like Spain leapfrog India as Nigeria's largest importer, particularly in the last two quarters of 2022. The European countries are diversifying their imports markets, particularly for crude oil and energy. Nigeria and other African countries have not been able to take advantage of this current price surge on the global market. even though they have more infrastructure to explore and leverage this advantage.

The trans-African gas pipeline deposits passing through Morocco to Europe, if well explored, it is expected that Nigeria will benefit from natural gas exports rather than just one of the top countries in the world with flared gas involved in gas flaring. Nigeria loses money for every quantum of gas that is flared.

There are a few points to note: one, the issue of inflation is a global phenomenon. two, what is the underlying cause of these inflationary pressures? It is not the demand side. The monetary policy of the monetary authorities and central banks worldwide, including the US Federal Reserve, have been increasing their rates to resume normalisation. This issue that fuels the current inflationary pressure is not a demand-side issue but a supply-side one. thus, measures to bring these inflationary pressures under control should address these supply bottlenecks and supply chain disruptions.

Although I do not doubt the analysis of the IMF, Nigeria has not been taking advantage of the global surge in oil prices due to low domestic oil production, highly attributed to oil theft and low investments in Nigeria's oil and gas sector. Like other African countries, there is too much dependence on other products and exports that do not have value on global markets and have very low international competitiveness.

Unlike the West and the Asian countries involved in refining these products, Nigeria produces oil being the largest producer of crude oil in Africa, but there is nothing to show for it. Nigeria cannot refine crude oil but can import it from other countries because the country's refineries are not working as they should.

The IMF report is an eye-opener for some African countries, including Nigeria, to wake up to this reality. In this part of the world, we do not look before we leap but rather leap before looking because we are unprepared for uncertainties and unexpected events. It is the reason shocks hit sub-Saharan Africa and other developing regions in the world; there is no resilience to absorb the shocks.

Hence, African countries must ensure value is added to their products and that the goods produced command global respect and meet global standards. Nigeria has to go through Ghana to ensure that goods produced are repackaged for export; the value of these packaging accrues to Ghana and not Nigeria's economy. the country must do the right thing at the right time to take advantage of uncertainties and global economic shocks.

The country cannot do something different if the right reforms to attract foreign direct investments into Africa are not initiated. The largest chunk of global FDI is found in Asian countries because they have the absorptive capacity to attract these FDI flows because of improved infrastructure, logistics, and the right institutional framework.

Finally, Asian countries attract a substantial share of the global FDI because there is a conducive environment for foreign investors. therefore, African countries need to think and advocate for African products. How would we ensure that we are advocates of made-in-Nigerian products and have a homegrown control system in Nigeria? So, the IMF analysis is always a business forecast. Everything based on countries or regions is an informed and holistic analysis of what happens and what goes for the region if we do the right thing.

The bankruptcy of Silicon Valey Bank and Signatire Bank, i.e. banks operating within the framework of investment banking based on equity investments in securities has resulted in investor anxiety, increased levels of uncertainty in financial markets, including equity markets, securities markets. Once again, the question of the possibility of a repetition of the situation of the global financial crisis of 2007-2009 has resurfaced, with central banks intervening swiftly and efficiently to fully guarantee all deposits and bank deposits above the statutory limits set for deposit guarantee institutions. This raises the debatable question of why, 15 years after the global financial crisis of 2007-2009, there are still cases of large investment banks failing when, moments afterwards, the central bank announces the full guarantee of all bank deposits and bank deposits and without quota limits in each of the remaining functioning banks. And this is what happened moments after Silicon Valey Bank and Signatire Bank declared bankruptcy. In addition to this, another debatable issue arises regarding the potential for an increase in the scale of moral hazard in both the commercial and investment banking community as well as in bank customers, which could lead to a significant increase in the level of acceptable investment, credit, liquidity, debt, etc. risks for many businesses. If this were to happen, the result could be an increase in systemic credit risk in the banking sector, which is hardly the purpose of central banking, but rather the opposite. But, on the other hand, some central banks also carry out financial operations on international financial markets, often making substantial revenues and profits. This raises a third debatable issue, which is to consider the key priorities of central banks' activities in addition to looking after the value of money and the stability of the banking system. The central bank's participation in the process of injecting additional money into the economy through the purchase of treasury bonds and carrying out financial operations in the international financial markets, including the foreign exchange markets and with the use of securities to a significant extent can influence the formation of the national currency exchange rate on the one hand and can be a way to generate profits for the central bank on the other. Obviously, the issue of the stability of financial markets, the security of the banking system, the formation of the value of the currency within a certain range, not allowing too high a level of overcredit for investment processes carried out by various economic entities also operating in non-financial sectors of the economy and not allowing too high a level of systemic credit risk in banking are key priorities. These priorities are legally anchored both in the Constitution, i.e. the Basic Law, and in the legal norms defining the functioning of the central bank. Of course, the high-security banking system thus built does not exempt commercial banks and investment banks from the need to continually improve their credit risk management systems. New information technologies and Industry 4.0 are emerging and are also being implemented into banking. New risk factors that are difficult to predict are emerging, such as the occurrence of the SARS-CoV-2 (Covid-19) coronavirus pandemic in 2020. Situations continue to arise where the optimum levels of credit risk are exceeded with regard to the investment banks' equity investments in securities. Consequently, there is still a high degree of possibility that investment banks operating in the capital markets may permanently lose liquidity as a result of certain investment decisions and the quality of the credit risk management improvement process carried out. Also, the banking supervisory institutions, the institutions supervising the financial system should review the issue of the adequacy of the prudential instruments applied by banks, instruments for controlling credit risk, liquidity risk, debt risk, operational risk, market risk, foreign exchange risk, interest rate risk, cyber risk, etc. in view of the changing reality in which banks and the whole banking system operate. It is therefore necessary, in this regard, for banking supervisory institutions, institutions overseeing the financial system, to carry out a kind of ongoing monitoring of the adequacy of the credit risk management systems applied in banks and other risk categories, in order to continually answer the question of whether these systems have become obsolete in the context of the technological progress taking place and the emergence of new risk factors not previously known or not previously present on a large scale in the banks' environment or occurring in their customers. Therefore, both the financial supervisory institutions and the risk management departments of commercial banks, deposit and credit banks and investment banks are once again reviewing the adequacy of the applied prudential and risk control instruments, procedures and credit risk management systems in relation to the situation of the growth of investment and other risks, the possibility of a deepening of the downturn in the economy, in the reality of high inflation, high interest rates, the possibility of stagflation.

In view of the above, I address the following question to the esteemed community of scientists and researchers:

What do you think about this subject?

What is your opinion on this subject?

Please respond,

I invite you all to discuss,

Thank you very much,

Warm regards,

Dariusz Prokopowicz