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The most appropriate regime is an inflation-targeting regime It's expedient for Ukraine to introduce an inflation-targeting regime, although only after a certain preparation period, according to a policy paper from Ukraine's central bank.

The opinion was given in a study entitled "Monetary Policy of the National Bank of Ukraine (NBU): Present State and Prospects for Changes" drawn up under the direction of NBU Governor Volodymyr Stelmakh.

"According to the opinion of the majority of scientists who have studied the problems of monetary and credit system reformation, at the present stage of Ukraine's economic development, the most appropriate regime is an inflation-targeting regime," reads the study, which has been posted on the NBU's Web site.

Inflation targeting is a strategy of monetary policy aimed at supporting price stability. The experience of countries with inflation-targeting regimes shows that this policy helps ensure a low and predictable level of inflation, which in turn aids a rise in the real incomes of the public and economic entities, the improvement of living standards in the country, and the expansion of the domestic market.

The authors said that the preconditions for the introduction of an inflation-targeting regime are the macroeconomic harmony, a gradual transfer to a regime of a free floating exchange rate, the development of the securities market (firstly, the highly liquid state securities market) and the improvement of the currency regulation system.

"In its medium-term strategy of monetary and credit policy, the NBU is aiming for a gradual transfer to a monetary regime based on price stability. The regime, in which the key goal of monetary and credit policy is price stability, will be based on the management of the monetary and credit markets through the regulation of interest rates," reads the study.