IV Implications for Policy Design and Coordination
Author:
Mr. Bernard J Laurens
Search for other papers by Mr. Bernard J Laurens in
Current site
Google Scholar Close
Language:
English
Print Publication Date:
20 Dec 2005
Keywords:
OP; market; money market operation; monetary policy; central bank; liquidity; money market development; liquidity forecasting framework; monetary policy implementation; money market cash reserve; Commercial banks; Money markets; Treasury bills and bonds; Currencies; Monetary policy instruments; Caribbean; Europe; East Asia; Asia and Pacific; Central Africa; monopoly power; term deposit; asset price channel; liquidity forecasting capacity; market-type operation; Interbank markets; Open market operations; Standing facilities; Central bank rates

Abstract

Market infrastructure weaknesses have undermined the transmission channels of monetary policy in the case study countries. In particular, the asset price channel is largely absent because there are no developed financial markets in which asset prices can be efficiently formed. The exchange rate channel may also be nonexistent in countries with a fixed exchange rate and may be weak in countries with floating, managed floating, or adjustable peg regimes due to the maintenance of controls on capital and/or current account transactions.1 This means that the availability of credit and the interest rate channels are likely to be the most effective transmission channels of monetary policy. Furthermore, there are few sources of funding other than bank lending, and so monetary policy is transmitted via the impact of central bank actions on the balance sheet of the banking system.

Cited By

Within Same Series

Other IMF Content

Other Publishers Content

  • Collapse
  • Expand
Cover Monetary Policy Implementation at Different Stages of Market Development
Monetary Policy Implementation at Different Stages of Market Development
ISBN:
9781589064386
ISSN:
0251-6365
Publication Date:
20 Dec 2005
Publisher:
International Monetary Fund
DOI:
https://doi.org/10.5089/9781589064386.084
Pages:
105

  • Alexander, William E. Tomás J. T. Baliño, and Charles Enoch, 1995, The Adoption of Indirect Instruments of Monetary Policy, IMF Occasional Paper 126 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Baliño, Tomás J. T. Adam Bennett, and Eduardo Borensztein, 1999, Monetary Policy in Dollarized Economies, IMF Occasional Paper 171 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Baliño, Tomás J. T. and Vasudevan Sundararajan, 1997, “Design of Instruments Mix and Coordination of Instruments Design,” in Instruments of Monetary Management: Issues, and Country Experiences, ed. by Tomás J. T. Baliño and Lorena M. Zamalloa (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Bank for International Settlements, 1996, “Changing Financial Systems in Small Open Economies,” Policy Paper 1 (Basel, Switzerland: BIS).

    • Search Google Scholar
    • Export Citation

  • Bank for International Settlements, 1998, “The Transmission Mechanism of Monetary Policy in Emerging Market Economies,” Policy Paper 3 (Basel, Switzerland: BIS).

    • Search Google Scholar
    • Export Citation

  • Bank for International Settlements, 1999, “Monetary Policy Operating Procedures in Emerging Market Economies,” Policy Paper 5 (Basel, Switzerland: BIS).

    • Search Google Scholar
    • Export Citation

  • Banque de France, 2003, “La Cotation Banque de France et le ratio McDonough,” Bulletin de la Banque de France, No. 112 (April).

  • Blenck, Denis Harri Hasko, Spence Hilton, and Kazuhiro Masaki, 2000, “The Main Features of the Monetary Policy Frameworks of the Bank of Japan, the Federal Reserve and the Eurosystem,” in “Comparing Monetary Policy Operating Procedures Across the United States, Japan and the Euro Area,” BIS Paper 9 (Basel, Switzerland: Bank for International Settlements).

    • Search Google Scholar
    • Export Citation

  • Carare, Alina Andrea Schaechter, Mark R. Stone, and Mark D. Zelmer, 2002, “Establishing Initial Conditions in Support of Inflation Targeting,” IMF Working Paper 02/102 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • “Eastern Caribbean Currency Union: Selected Issues,” IMF Country Report 03/88.

  • European Central Bank, 2001, The Monetary Policy of the ECB, 2001 (Frankfurt am Main, Germany: European Central Bank).

  • Fasano, Ugo and others, 2003, Monetary Union Among Member Countries of the Gulf Cooperation Council, IMF Occasional Paper 223 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Group of Ten, 2001, “The Impact of Financial Sector Consolidation on Monetary Policy,” in Report on Consolidation in the Financial Sector (available through the websites of the Bank for International Settlements, International Monetary Fund, and Organization for Economic Cooperation and Development—www.bis.org, www.imf.org, www.oecd.org).

    • Search Google Scholar
    • Export Citation

  • Guitián, Manuel 1994, “Rules or Discretion in Monetary Policy: National and International Perspectives,” in Frameworks for Monetary Stability: Policy Issues and Country Experiences, ed. by Tomás J.T. Baliño and Carlo Cottarelli (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Guitián, Manuel 1996, “Policy and Operational Aspects of Exchange and Interest Rate Coordination,” SEANZA Conference, Kunming, China, November 5, 1996.

    • Search Google Scholar
    • Export Citation

  • Gulde, Anne-Marie David Hoelscher, Alain Ize, David Marston, and Nicolo, Gianni De 2004, Financial Stability in Dollarized Economies, IMF Occasional Paper 230 (Washington: International Monetary Fund)

    • Search Google Scholar
    • Export Citation

  • Handy, Howard, and others, 1998, Egypt Beyond Stabilization: Toward a Dynamic Market Economy, IMF Occasional Paper 163 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Hilbers, Paul, and others, 1993, “Monetary Instruments and Their Use During the Transition from a Centrally Planned to a Market Economy,” IMF Working Paper 93/87 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Hoelscher, David Marc Quintyn, and others, 2003, Managing Systemic Banking Crises, IMF Occasional Paper 224 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, Monetary and Exchange Affairs Department, 1995, “Liquid Asset Ratios—An Effective Policy Tool?” MAE Operational Paper 95/04 (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, Monetary and Exchange Affairs Department, 1996, “The Use of Reserve Requirements in Monetary Control: Operational Features and Country Practices,” MAE Operational Paper 96/01 (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, Monetary and Exchange Affairs Department, 1997, “The Use of Standing Facilities in Indirect Monetary Management: Country Practices and Operational Features,” MAE Operational Paper 97/04 (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, Monetary and Exchange Affairs Department, 1998, “Elements of Central Bank Autonomy and Accountability,” MAE Operational Paper 98/01 (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, Monetary and Exchange Affairs Department, 2000, “Liquidity Forecasting,” MAE Operational Paper 00/07 (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • International Monetary Fund, Monetary and Exchange Affairs Department, 2002, “Establishing Initial Conditions in Support of Inflation Targeting,” MAE Operational Paper OP/02/1 (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Kamin, Steven Philip Turner, and Joseph Van’t Dack, 1998, “The Transmission Mechanism of Monetary Policy in Emerging Market Economies: An Overview,” in “The Transmission of Monetary Policy in Emerging Market Economies,” BIS Policy Paper 3 (Basel: Bank for International Settlements).

    • Search Google Scholar
    • Export Citation

  • Khan, Moshin S., and Carmen M. Reinhart, eds., 1995, Capital Flows in the APEC Region, IMF Occasional Paper 122 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Laurens, Bernard, 1997, “Refinance Instruments: Lessons from Their Use in Some Industrial Countries,” in Instruments of Monetary Management: Issues and Countries Experiences, ed. by Tomás J. T. Baliño and Lorena M. Zamalloa (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Laurens, Bernard, and Abdourahmane Sarr, 2003, Tunisia—Strengthening the Monetary Framework and Instruments, IMF Country Report 03/246. (Washington, D.C.: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Laurens, Bernard, and Abdourahmane Sarr, and Enrique de la Piedra, 1998, “Coordination of Monetary and Fiscal Policies,” IMF Working Paper 98/25 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Mehran, Hassanali, Bernard Laurens, and Marc Quintyn, eds. 1995, Interest Rate Liberalization and Money Market Development: Selected Countries Experiences (unpublished; Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Mehran, Hassanali, Piero Ugolini, Jean Philippe Brifaux, George Iden, Tony Lybek, Stephen Swaray and Peter Hayward, 1998, Financial Sector Development in Sub-Saharan African Countries, IMF Occasional Paper 169 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Mussa, Michael, Paul Masson, Alexander Swoboda, Esteban Jadresic, Paolo Mauro, and Andrew Berg, 2000, Exchange Rate Regimes in an Increasingly Integrated World Economy, IMF Occasional Paper 193 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Reddy, Y.V., 1999, “Development of the Money Market in India,” speech by Dr. Y.V. Reddy, Deputy Governor, Reserve Bank of India, at the Fifth J.V. Somayajulu Memorial Lecture, at Madras, on February 1, 1999.

    • Search Google Scholar
    • Export Citation

  • Reserve Bank of Vanuatu, 2000, “20 Years of Central Banking in Vanuatu.” Port Vila.

  • Schaechter, Andrea, 2001, “Implementation of Monetary Policy and the Central Bank’s Balance Sheet,” IMF Working Paper 01/149 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Sundararajan, V., Peter Dattels, and Hans Blommestein, eds., 1997, Coordinating Public Debt and Monetary Management: Institutional and Operational Arrangements (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • Taylor, John B., 1999, “The Monetary Transmission Mechanism and the Evolution of Monetary Policy Rules,” paper presented at the Third Annual International Conference of the Central Bank of Chile on “Monetary Policy: Rules and Transmission Mechanisms,” September 20–21, 1999.

    • Search Google Scholar
    • Export Citation

  • van Beek, F., J.R. Rosales, M. Zermeño, R. Randall, and J. Shepherd, 2000, The Eastern Caribbean Currency Union, IMF Occasional Paper 195 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation

  • World Bank, 2001, “Developing Government Bond Markets: A Handbook” (Washington).

  • Zelmer, Mark D., 2001, “Monetary Operations and Central Bank Balance Sheets in a World of Limited Government Securities,” IMF Policy Discussion Paper No. 01/7 (Washington: International Monetary Fund).

    • Search Google Scholar
    • Export Citation