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International Monetary Fund. Monetary and Capital Markets Department
This Technical Assistance report highlights that setting up a liquidity forecasting framework would go a long way in establishing a key building block allowing the Royal Monetary Authority of Bhutan (RMA) to fulfil its legal mandate to formulate and implement monetary policy in ways better aligned with current central bank practices. The structural liquidity surplus, mainly due to foreign reserves accumulation, has been broadly stable in the absence of RMA intervention. The paper discusses that the volatility of autonomous factors and the fragmentation of the money market justify ambitious steps by the RMA towards setting up a liquidity management framework. The mission identified several constraints and gaps that need to be addressed to support the effectiveness of a liquidity forecasting framework. The mission’s recommendations presented in the report aim at streamlining the processing of the Government’s financial transactions and cash balances. Looking ahead, monetary policy transmission would benefit from developing RMA’s liquidity forecasting and management capacity.
International Monetary Fund. European Dept.

(percent, compound) Sources: CBRT and IMF staff calculations. Composition of CBRT’s Repo Auctions 9. Thus, in 2006–08 the effective rate is most of the time equal to the overnight borrowing rate; afterwards, whenever quantity auctions are the only liquidity-providing facility used, the effective rate matches the policy rate; and, finally, whenever a price auction takes place—whether by itself or alongside a quantity auction—the effective rate tends to rise above the policy rate as price auctions usually take place in the environment of increased demand

International Monetary Fund. Monetary and Capital Markets Department

Bhutanese interbank market is shallow and highly fragmented, due to a number of fundamental obstacles : The RMA does not have any regular liquidity-providing operations (in particular no marginal lending facility). 12 The impossibility for a bank to resort to a central bank liquidity-providing facility (as a “safety net”) in case of liquidity need incites banks to keep conservatively their liquidity, rather than engage into interbank lending. The structural hegemonic liquidity position of the State-owned BOB is a major distortion and hindrance to a well

International Monetary Fund. European Dept.
This Selected Issues paper on Turkey discusses the new monetary framework adopted by the Central Bank of Republic of Turkey (CBRT). Instead of relying on one interest rate as inflation-targeting, the CBRT resorted to raising it as inflation pressures intensify and lowering it as they abate. The first version of the framework does not seem to have achieved significant reduction in external and internal imbalances, but the second version of the framework has witnessed an unwinding of imbalances.