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Mr. Charles Collyns

Abstract

This paper discusses the operations of a wide range of central banking institutions in developing countries. The considerable diversity of economic, financial, and political conditions within the Third World has brought forth a wide variety of central banking institutions. Four polar types have been identified as providing coherent alternatives to the central bank. Historical experience certainly indicates that legislation on its own may not be enough to guarantee prudent behavior. Although many countries' central banking institutions have not yet come close to violating foreign exchange cover requirements or restrictions on government lending, in other cases the rules have simply been sidestepped by technical adjustments, altered expediently, or merely ignored. The organizational structure established by legislation probably plays a more positive part in determining a central banking institution's characteristic behavior. Operating procedures, channels of communication, and lines of command all exert some influence on where and how decisions are made in practice. The balance of power between government and monetary authority does not only depend on personality and outside support but will also be influenced by the institutional framework in which their interaction is established.

Olivier Basdevant, Chikako Baba, and Miss Borislava Mircheva
Swaziland has faced a significant fiscal crisis since 2010, in the wake of loss of transfers from the Southern African Customs Union (SACU). The fiscal crisis has led to increasing vulnerabilities, not only of public finances but also on commercial banks and the private sector. This paper provides an analysis of Swaziland's main macroeconomic vulnerabilities and the main policy implications of the analysis.
Mr. Charles Collyns

Abstract

A national central bank is usually high on the shopping list of a newly independent country. Such a country often inherits a currency board—a carryover from the colonial era—and wishes to establish a new monetary authority with far wider executive powers and public responsibilities. Although the principal motives for acquiring such an institution may well be profit and prestige, central banking consists of much more than printing money and attending international conferences. Central banks in developed countries typically conduct a broad array of banking, regulatory, and supervisory functions. In a developing country, however, the problems and opportunities facing the monetary authority may be radically different from those encountered in the developed world. In recognition of this fact, not all of these countries have chosen to set up a full-fledged central bank: many have preferred alternative institutional arrangements. While inevitably a number of common formulas have been applied in designing such new forms of monetary authority, central banking legislation has generally been adapted to fit national needs, capabilities, and aspirations, while the practical execution of a blueprint has often been gradual and idiosyncratic. The result is a wide range of central banking institutions and a corresponding variety of objectives, constitutional powers, policy instruments, and relations with central governments. This paper surveys the alternative institutional forms that have emerged and seeks to explain the observed diversity of experience.

Mr. Charles Collyns

Abstract

Central banks in the developed world are given a wide range of public responsibilities and endowed with a correspondingly broad array of executive powers. The activities of these institutions can be grouped into five general functions:

Mr. Charles Collyns

Abstract

The discussion of Section II presupposed a complex economy, a sophisticated financial system, and a welleducated population. The situation in a developing country when it chooses its central banking institution may be very different. Its economy may be dominated by a limited range of exports and faced by terms of trade beyond domestic control. Its financial system may be rudimentary, based on foreign-owned commercial banks financing commerce and export industries, an informal credit network serving much of the rural economy, and an inherited central banking institution which is essentially a currency board. Its population may be short of workers trained in the technicalities of finance and relatively unsophisticated in appreciating the economic realities of a situation. In these circumstances, an overriding consideration must be to ensure that the new monetary authority will be able to establish credibility as a responsible and effective body that is capable of instilling domestic and foreign confidence in the domestic currency and financial system. At the same time, it must be accepted that the new institution cannot hope to undertake immediately all of the functions of the full-fledged central bank, while the scope for central banking activities would be considerably different from that in a more developed country.

International Monetary Fund

The authorities reiterated their firm commitment to the policies and objectives outlined in the May 17, 2010 Memorandum of Economic and Financial Policies. They are committed to a reduction in other primary spending by 2 percentage points of GDP. With the medium-term outlook broadly unchanged, the policy discussions focused on the FY2011–12 budget and the authorities’ structural reform agenda. Revenues are projected to fall in 2011–12, reflecting the disappearance of exceptional receipts in 2010–11. On the spending side, the authorities are facing a number of additional commitments—some of which are of a temporary nature.

International Monetary Fund
This paper reviews economic developments in Lesotho during 1993–96. Economic growth resumed in 1994 and gained further momentum in 1995; real GDP increased by an estimated 3 percent in 1995. Growth in 1995 was driven by the industrial sector, while agriculture performed poorly. The immediate effects of the banking problems on economic activity and on other macroeconomic developments have been limited. Data on industrial production and retail trade indicate continued growth in the first part of 1996.
International Monetary Fund. African Dept.
This Selected Issues paper provides further background on the macrofinancial sector analysis that informed Lesotho’s 2017 Article IV consultation. Lesotho’s financial sector is small, concentrated, and lacks financial inclusion, although mobile banking services and financial cooperatives offer some encouraging potential. Lesotho’s most important vulnerabilities are exposure to developments in South Africa and dependence on revenues from the Southern African Customs Union (SACU). Shocks to SACU revenues can become a source of systemic risk by affecting the fiscal position and the balance of payments. The financial system will be affected by both channels, with substantial implications if the shock is permanent. This paper focuses on two potential consequences of a severe SACU revenue shock for the financial system: A decline in reserves that may threaten the sustainability of the hard currency peg with the South African rand, and the impact of a forced fiscal consolidation on household income and the quality of credit to households, affecting both bank and nonbank lenders. It turns out that financial shallowness and lack of inclusion may be a defining feature of the formal banking system; thereby raising questions about potential trade-offs between inclusiveness and financial stability.
International Monetary Fund. African Dept. and International Monetary Fund. Monetary and Capital Markets Department
This mission, a follow up to the earlier mission from IMF AFRITAC South (AFS) conducted in March 2017 (STX Mr. Bernie Egan), was designed to further help the authorities in the implementation of Basel II and select elements of Basel III. The main objectives of the mission were to help the CBL finalize the Draft Guidelines to banks on Pillar 1; assist in the implementation of Pillar 2, with attention paid to the Supervisory Review and Evaluation Process (SREP) and the banks´ Internal Capital Adequacy Assessment Process (ICAAP); and evaluate current disclosure requirements in view of the recent revision of Pillar 3 by the Basel Committee on Banking Supervision (BCBS). The adoption of select elements of Basel III especially those related to definition of capital was discussed.