Abstract
The ECCB maintains open access to a common pool of foreign exchange and aims its credit policy at providing strong foreign exchange backing for currency issued, thereby supporting the fixed exchange rate policy. Under this arrangement, of course, there is no scope for monetary policy at the national level, the trend rate of inflation in the region is determined fundamentally by inflation in the United States and the other main trading partners, and market interest rates within the region follow closely world interest rates with a premium reflecting local conditions. While the region’s trading systems have been relatively open by necessity, until recently the capital accounts have been relatively insulated from the rest of the world by restrictions and, perhaps, geographical isolation.
International Monetary Fund Copyright © 2010-2021. All Rights Reserved.