Formation of the Money Supply in the Russian Economy

The question of optimal monetary policy is one of the most controversial among economists in different countries of the world. The answer to this is largely determined by the way money is formed in the economy. According to modern macroeconomic concepts, money supply can be influenced by factors other than monetary policy. This article discusses the main theoretical approaches to determining the mechanisms of formation of the money supply. The main attention is paid to the post-Keynesian theory of endogenous money supply, within which the accommodation and structuralist approaches dominate. Both approaches are based on the premise that the money supply in the country is affected by changes in bank loans. However, they differ in the degree to which the monetary regulator satisfies the banks’ need for loans: full (accommodation) and partial (structuralism). The main source of money supply growth in the modern world is the credit channel, which is considered key from the standpoint of post-Keynesianism, but considering the Russian economy in retrospect, one cannot help but note two more important sources, such as the currency channel, which was of great importance in the 2000s, and the fiscal channel, which currently also plays an important role in changes in the money supply. Since 2013, the Central Bank has been actively using such a regulatory instrument as the key interest rate in its monetary policy, which is consistent with the position of post-Keynesianism. Using the conducted theoretical review, as well as an analysis of the current state of the Russian money market and monetary policy, it is concluded that there are prerequisites for the endogeneity of the Russian money supply, which provides grounds for further analysis of the cause-and-effect relationships of key macroeconomic indicators using econometric models.