MONETARY POLICIES OF CENTRAL BANKS DURING ECONOMIC INSTABILITY AND TURKISH CASE

“monetary policies” are defined as a total of policies which consist of influencing the money transfer, volume of money, cost of retention and other financial conditions and are applied by central banks to carry out such objectives like economic growth, increase in employment, balance of payments and price stability. there are many money policies given in literature in the different perspective of theories. in the historical process, while the countries’ were trying to achieve their economic targets, the functions and the instruments of central banks were changed and varied. the central banks have become the lenders of last resort by having the right of monopoly to export banknotes, so the role and the importance of the central banks have also raised in providing economic and financial stability. before the global crisis in 2008, monetary policy aimed at price stability often preferred, the monetary policy after the crisis also compulsively include the financial and macroeconomic stability. only a monetary policy focused on price stability and the relatively short-term inflation targeting central banks have the opportunity does not provide an effective risk monitoring. therefore, alternative approaches to monetary policy began to gain importance and the role of central banks all over the world has become increasingly important in reducing macrofinancial risks. nowadays, in terms of central banks’ rigid monetary policies especially affect the world trade and the measures taken to be useful in the battle with the economic crisis are discussed. in times of crisis, the importance of central banks’ stable and efficient policy implementations increases while the aggregate demand is contracting, the pace of economic growth is decreasing and the economies are getting smaller.