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Africa > Uganda

You are looking at 1 - 10 of 33 items for :

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Cover FinTech Notes
Tokenization and Financial Market Inefficiencies
Itai Agur
,
German Villegas Bauer
,
Tommaso Mancini-Griffoli
,
Maria Soledad Martinez Peria
, and
Brandon Tan
Most financial assets are digital today. Tomorrow, they may be tokenized. Tokenization implies recording and transferring assets on a widely shared and trusted digital ledger that can be programmed. Interest in tokenization is strong and experiments abound, but what are the consequences of this new trend for financial markets? This note introduces a taxonomy and a conceptual framework centered on market inefficiencies to evaluate this question. Some inefficiencies could decline across the asset life cycle. Others would remain, however, and new ones could emerge. Issuing, servicing, and redeeming assets might involve fewer intermediaries and thus become cheaper. The costs of trading assets may also decrease as tokenization lowers some counterparty risks and search frictions and offers flexibility in settlement. Additionally, greater competition among brokers could lower transaction fees. However, tokenization may amplify shocks if it induces institutions to become more interconnected and hold lower liquidity buffers or higher leverage, potentially jeopardizing financial stability. Programs themselves may introduce new risks related to strings of contingent contracts or faulty code. While competition may grow among financial intermediaries, the provision of market infrastructure could become more concentrated due to network effects.
Keywords:
Tokenization; central banks; asset lifecycle; financial markets; financial asset market friction; B. market infrastructure investment externality; financial market inefficiency; IMF Library; Note 2025/001; D. knowledge externality; Bonds; Smart contracts; Securities markets; Liquidity; Blockchain and DLT; Global
Cover IMF Staff Country Reports
Kenya: Selected Issues
International Monetary Fund. African Dept.
Selected Issues
Keywords:
trading environment; D. policy effort; gender imbalance; wage employment; market share; Exports; Women; Gender inequality; Competition; Global; Africa; East Africa; Southern Africa; Sub-Saharan Africa
Cover IMF Staff Country Reports
Uganda: Technical Assistance Report-Monetary and Foreign Exchange Operations, Recapitalization, and Act Revision
International Monetary Fund. Monetary and Capital Markets Department
This Technical Assistance Report discusses the findings and recommendations made by the IMF mission regarding monetary and foreign exchange operations in Uganda, Bank of Uganda (BOU) recapitalization, and Bank of Uganda Act revision. The presence of sizable precautionary and involuntary reserves and excessive short-end volatility has weakened the transmission mechanism in Uganda. The key challenge remains to enhance monetary and fiscal policy coordination and to ensure that institutional and operational arrangements are robust and conducive to efficient monetary operations framework. The BOU should raise the effectiveness of the monetary and foreign exchange operations framework. To foster further market development there is need to anchor short-term interest rates by using various fine-tuning instruments to ensure improved operational efficiency and strengthen transmission of policy signals across the curve.
Keywords:
ISCR; CR; financial market; balance sheet; capital structure; interest rate; BOU recapitalization securities; reverse repo; short term; foreign exchange; exchange rate; Liquidity; Open market operations; Financial statements; Securities; Liquidity forecasting; Global
Cover IMF Working Papers
Monetary Policy Implementation and Volatility Transmission along the Yield Curve: The Case of Kenya
Mr. Emre Alper
,
Mr. R. Armando Morales
, and
Mr. Fan Yang
This paper analyzes the degree to which volatility in interbank interest rates leads to volatility in financial instruments with longer maturities (e.g., T-bills) in Kenya since 2012, year in which the monetary policy framework switched to a forward-looking approach, relative to seven other inflation targeting (IT) countries (Ghana, Hungary, Poland, South Africa, Sweden, Thailand, and Uganda). Kenya shows strong volatility transmission and high persistence similar to other countries in transition to a more forward-looking monetary policy framework. These results emphasize the importance of a strong commitment to an interbank rate as an operational target and suggest that the central bank could reduce uncertainty in short-term yields significantly by smoothing out the overnight interest rates around the policy rate.
Keywords:
WP; Kenya; rate; Monetary policy implementation; inflation targeting; volatility transmission; interbank rate; overnight rate; headline inflation; inflation objective; money market rate; monetary policy Analysis Unit; interbank rate corridor; inflation target range; interbank market rate; overnight market interest rate; inflation modeling; inflation expectation; Interbank rates; Central bank policy rate; Yield curve; Treasury bills and bonds; Monetary policy frameworks; Africa; Global; interest rate volatility; policy rate change; interbank rate series; year inflation expectation
Cover IMF Working Papers
On the First-Round Effects of International Food Price Shocks: the Role of the Asset Market Structure
Mr. Rafael A Portillo
and
Luis-Felipe Zanna
We develop a tractable small open-economy model to study the first-round effects of international food price shocks in developing countries. We define first-round effects as changes in headline inflation that, holding core inflation constant, help implement relative price adjustments. The model features three goods (food, a generic traded good and a non-traded good), varying degrees of tradability of the food basket, and alternative international asset market structures (complete and incomplete markets, and financial autarky). First-round effects depend crucially on the asset market structure and the different transmission mechanisms they trigger. Under complete markets, inter-temporal substitution prevails, making the inflationary impact of international food prices proportional to the food share in consumption, which in developing economies is typically large. Under financial autarky, the income channel is dominant, and first-round effects are instead proportional to the country's food balance—the difference between the country's food endowment and its consumption—which in developing countries is typically small. The latter result holds regardless of the degree of food tradability. Incomplete markets yield a combination of the two extremes. Our results cast some doubt on the view that international food price shocks are inherently inflationary in developing countries.
Keywords:
WP; core inflation; Food Price Shocks; First-Round Effects; Developing Countries; New-Keynesian Models; Asset Market Structure; IM solution; nominal exchange rate; headline inflation; solution nest; inflation dynamics; market clearing condition; nominal price; Inflation; Consumption; Food prices; Securities markets; Commodity price shocks; Sub-Saharan Africa
Cover The Quest for Regional Integration in the East African Community
The Quest for Regional Integration in the East African Community
Mr. Paulo Drummond
,
Mr. S. K Wajid
, and
Mr. Oral Williams

Abstract

The countries in the East African Community (EAC) are among the fastest growing economies in sub-Saharan Africa. The EAC countries are making significant progress toward financial integration, including harmonization of supervisory arrangements and practices and the modernization of monetary policy frameworks. This book focuses on regional integration in the EAC and argues that the establishment of a time table for the eliminating the sensitive-products list and establishing a supranational legal framework for resolving trade disputes are important reforms that should foster regional integration.

Keywords:
BOOK; East African Community; monetary policy; country; market; EAC country; financial market; convergence criteria; EAC member states; market infrastructure; Monetary unions; Exchange rates; Real exchange rates; Currencies; Stock markets; Global; Sub-Saharan Africa; West Africa; East Africa; Africa; EAC region; EAC banking systems; resident representative; Exchange rate flexibility
Cover IMF Working Papers
How Effective is Monetary Transmission in Low-Income Countries? A Survey of the Empirical Evidence
Ms. Prachi Mishra
and
Mr. Peter J Montiel
This paper surveys the evidence on the effectiveness of monetary transmission in low-income countries. It is hard to come away from this review with much confidence in the strength of monetary transmission in such countries. We distinguish between the "facts on the ground" and "methodological deficiencies" interpretations of the absence of evidence for strong monetary transmission. We suspect that "facts on the ground" are an important part of the story. If this conjecture is correct, the stabilization challenge in developing countries is acute indeed, and identifying the means of enhancing the effectiveness of monetary policy in such countries is an important challenge.
Keywords:
WP; price level; aggregate demand; bond market; central bank; monetary aggregate; monetary policy; exchange rate; interest rate; banks; institutions; developing countries; bank lending channel; regime indicator; nominal exchange rate; lending rate; Bank credit; Securities markets; Stock markets; Exchange rate arrangements; Exchange rates; Sub-Saharan Africa; Central and Eastern Europe; Central Asia; Middle East; North Africa
Cover IMF Working Papers
Financial Intermediation Costs in Low-Income Countries: The Role of Regulatory, Institutional, and Macroeconomic Factors
Mr. Tigran Poghosyan
We analyze factors driving persistently higher financial intermediation costs in low-income countries (LICs) relative to emerging market (EMs) country comparators. Using the net interest margin as a proxy for financial intermediation costs at the bank level, we find that within LICs a substantial part of the variation in interest margins can be explained by bank-specific factors: margins tend to increase with higher riskiness of credit portfolio, lower bank capitalization, and smaller bank size. Overall, we find that concentrated market structures and lack of competition in LICs banking systems and institutional weaknesses constitute the key impediments preventing financial intermediation costs from declining. Our results provide strong evidence that policies aimed at fostering banking competition and strengthening institutional frameworks can reduce intermediation costs in LICs.
Keywords:
WP; interest margin; LICS bank; bank characteristic; dependent variable; Net Interest Margins; Banks; Low Income Countries; Emerging Economies; entry application; margin determinant; bank efficiency; intermediation service; Credit risk; Reserve requirements; Loan loss provisions; Inflation; Competition; Western Hemisphere
Cover Policy Papers
Enhancing Financial Sector Surveillance in Low-Income Countries - Case Studies
International Monetary Fund
This supplement presents ten case studies, which highlight the roles of targeted policies to facilitate sustainable financial deepening in a variety of country circumstances, reflecting historical experiences that parallel a range of markets in LICs. The case studies were selected to broadly capture efforts by countries to increase reach (e.g., financial inclusion), depth (e.g., financial intermediation), and breadth of financial systems (e.g., capital market, cross-border development). The analysis in the case studies highlights the importance of a balanced approach to financial deepening. A stable macroeconomic environment is vital to instill consumer, institutional, and investor confidence necessary to encourage financial market activity. Targeted public policy initiatives (e.g., collateral, payment systems development) can be helpful in removing impediments and creating infrastructure for improved market operations, while ensuring appropriate oversight and regulation of financial markets, to address potential sources of instability and market failures. 
Keywords:
PP; FX market; central bank; interest rate; banking sector; foreign currency; financial market; government bond; exchange rate; Securities markets; Commercial banks; Insurance; Government securities; Baltics; Africa; Global; West Africa; Caribbean
Cover Policy Papers
Enhancing Financial Sector Surveillance in Low-Income Countries - Financial Deepening and Macro-Stability
International Monetary Fund
This paper aims to widen the lens through which surveillance is conducted in LICs, to better account for the interplay between financial deepening and macro-financial stability as called for in the 2011 Triennial Surveillance Review. Reflecting the inherent risk-return tradeoffs associated with financial deepening, the paper seeks to shed light on the policy and institutional impediments in LICs that have a bearing on the effectiveness of macroeconomic policies, macro-financial stability, and growth. The paper focuses attention on the role of enabling policies in facilitating sustainable financial deepening. In framing the discussion, the paper draws on a range of conceptual and analytical tools, empirical analyses, and case studies.
Keywords:
PP; LIC bank; LIC financial systems; LIC government; financial activity; government securities market; underdeveloped financial systems; market friction; debt management; market player; market stability; price discovery; interest rate; market development; Financial sector; Credit; Securities markets; Global