ABSTRACT
This chapter outlines the objectives of the new monetary policy introduced in 1994. It focuses on institutional objectives, highlighting the development of the treasury bill market and the foreign exchange market. The chapter examines the effects of stabilization upon income, inflation, and output, contrasting the first years of hyperinflation with the beginning of stabilization. It focuses on two claims in the debate, that the accessibility of credits would boost production and that domestic producers needed protection through monetary policy. The chapter discusses two crises—the impact of the Russian financial crisis of 1998 on Ukraine and the domestic Ukrainian gasoline crisis in the summer of 1999, followed by a few conclusions. The Russian devaluation and internal default of August 1998 led to an accelerated capital outflow from Ukraine, as foreign portfolio investors drew the conclusion that Ukraine might default on its treasury bills as well.
