FEATURES OF THE APPLICATION OF MONETARY POLICY INSTRUMENTS IN UKRAINE UNDER MARTIAL LAW
Authors:   Lviv Polytechnic National University, Moroz Natalia , Boberskyi Rostyslav ,   Lviv Polytechnic National University
Published: February 2025

The article examines the application of monetary policy instruments in Ukraine under martial law imposed due to Russian aggression. It focuses on the transformation of the National Bank of Ukraine's (NBU) monetary tools and their role in stabilizing the economy amidst unprecedented challenges. The study provides a comprehensive analysis of key instruments such as the key policy rate, open market operations, foreign exchange interventions, and measures to support the banking system. These tools are evaluated in the context of their effectiveness in mitigating economic disruptions caused by the war and ensuring financial stability. Particular attention is paid to the impact of martial law on the country's financial system. The imposition of martial law has necessitated adjustments in monetary policy aimed at curbing inflationary pressures, addressing liquidity shortages in the banking sector, and maintaining public confidence in the national currency. Structural changes in monetary policy implementation are explored, highlighting the adaptation of existing frameworks to meet the demands of a crisis economy. The analysis identifies specific challenges posed by the wartime economy, including heightened macroeconomic instability, increased risks of capital outflows, and the constraints on monetary circulation. Furthermore, the study highlights the tension between the need for economic stimulus and the risk of exacerbating inflation. The NBU's approach to balancing these competing priorities is discussed, offering insights into the decision-making processes underpinning policy adjustments. The study also addresses the broader implications of martial law on monetary regulation, including changes in currency control mechanisms, restrictions on foreign exchange operations, and the introduction of emergency financial measures. The effectiveness of these interventions is assessed against key performance indicators, such as inflation rates, exchange rate stability, and the resilience of the banking system. Drawing on the experience of other countries that have faced similar crises, the article proposes practical recommendations for enhancing the resilience of monetary policy in Ukraine. These recommendations include diversifying monetary tools, increasing international financial cooperation, and leveraging digital technologies to improve financial oversight. The study emphasizes the importance of transparency and public communication in maintaining trust in monetary policy during times of crisis. This research contributes to the understanding of how monetary policy can be adapted to the unique challenges of a wartime economy. By examining the case of Ukraine, it provides valuable insights for policymakers and central banks worldwide facing similar geopolitical and economic disruptions. The findings underscore the critical role of proactive and flexible monetary policy in fostering economic stability and supporting sustainable development under adverse conditions.