Subject. The article investigates the formation of financial bubbles and crises, using the concepts of the New Theory of Money. Objectives. The aim is to show that the use of tenets of the New Theory of Money enables to reduce the consequences of crises and slows down the growth of financial bubbles. Methods. The study employs methods of economic analysis, comparison, expert assessments, scientific skepticism, content analysis of literature sources and statistics, the systems approach, analogy, and the project method. Results. The findings are essential for public domestic and foreign policy, aimed at streamlining the money circulation within the country and in foreign trade activities based on the use (application) of the national currency in bilateral and multilateral relations with other States; for reforming the stock exchanges and the banking system to focus their activities on investing in the economy and eliminating (weakening) the speculative nature of banking and exchange business. Conclusions. The use of the New Theory of Money makes it possible to develop and apply a set of scientifically grounded measures to reduce the negative impact of economic crises and the rate of financial bubbles formation, ultimately enabling the economy to grow faster, without shocks and collapses.
Keywords: bank, stock exchange, economic law, theory of money, crisis
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