Monetary and Credit Instruments for the Improvement of Financial Market’s Instability

Abstract

Abstract. Monetary and credit policy is the most important and effective direction that is used to stabilize financial
market in the conditions of its instability and high volatility. From one hand, central banks apply monetary and credit
instruments for the purposes of regulation, aiming to achieve price stability, useful allocation of financial resources,
as well as an appropriate development of the economy and financial market. From other hand, central banks choose
priorities to establish an effective level of money supply and money circulation. Global and internal threats have strong
influence on market participants’ activity and monies flows, resulting with unbalanced output of the financial system.
Regulation of the financial organizations is an additional task of the central banks that should be implemented for
establish financial stability on the internal market.
Therefore, in an aggressive economic environment monetary and credit measures should support and protect internal
markets from negative outcome.