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Africa > Uganda

You are looking at 1 - 6 of 6 items for :

  • Type: Journal Issue x
  • Portfolio Choice; Investment Decisions x
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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
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 Policy Papers
Adequacy of the Global Financial Safety Net—Considerations for Fund Toolkit Reform
International Monetary Fund
liquidity in the face of increased vulnerabilities calls for enhancing the liquidity support provided through the global financial safety net (GFSN). The global economy is experiencing a period of protracted uncertainty, marked by frequent episodes of volatility. Demand for liquidity has intensified, in particular from emerging markets, which are experiencing a build-up of vulnerabilities and the depletion of their fiscal buffers. The enhanced GFSN meets only partially this higher demand for liquidity. The IMFC and G20 have called on the Fund to further strengthen the safety net. The uneven use of the Fund’s toolkit for crisis prevention suggests the need to reconsider its design. Despite a major overhaul of the Fund’s lending instruments available for precautionary financing, only a modest number of countries have used them. In particular, the lack of access to a liquidity backstop for members with strong policies—similar to the standing bilateral swap arrangements (BSAs) among central banks—limits the availability of Fund support over the whole duration of the shock during protracted periods of global uncertainty. Moreover, the need to resort to Fund financing still carries a high political cost (stigma) for some members. To enhance further the Fund’s toolkit for crisis prevention, consideration could be given to revisiting the existing toolkit and introducing new instruments. The toolkit could thus be enhanced by: establishing a new facility for precautionary financing that would provide a "standing" liquidity backstop to members with strong fundamentals and policies for use when hit by liquidity shocks; and adjusting the existing toolkit to maintain cohesion. Any change to the Fund toolkit would need to take into account the tradeoffs between reducing stigma and containing moral hazard, while simultaneously safeguarding Fund resources. A Fund policy monitoring instrument could improve the cohesion of the global safety net. As the GFSN has expanded and become more multi-layered, there is a need to improve cooperation across the different layers to unlock financing and signal commitment to reforms. Creating a policy monitoring instrument that is available to all Fund members could help in this regard. Next steps . In light of Directors’ views on these points, staff could come back with subsequent papers that lay out specific and detailed proposals for reforming the lending toolkit. While these papers focus on the GRA lending toolkit, a separate forthcoming paper will assess some aspects of the concessional lending toolkit.
Keywords:
PP; FCL; director; Short-term Liquidity Swap; resource; lending toolkit; review of the Flexible Credit Line; SLS qualification criteria; FCL qualification framework; crisis prevention; Ara metrics; fund resource; Liquidity; Balance of payments need; Lines of credit; Financial safety nets; Crisis prevention; Global
Cover IMF Working Papers
Monetary Policy in a Developing Country: Loan Applications and Real Effects
Charles Abuka
,
Ronnie K Alinda
,
Ms. Camelia Minoiu
,
José-Luis Peydró
, and
Mr. Andrea F Presbitero
The transmission of monetary policy to credit aggregates and the real economy can be impaired by weaknesses in the contracting environment, shallow financial markets, and a concentrated banking system. We empirically assess the bank lending channel in Uganda during 2010–2014 using a supervisory dataset of loan applications and granted loans. Our analysis focuses on a short period during which the policy rate rose by 1,000 basis points and then came down by 1,200 basis points. We find that an increase in interest rates reduces the supply of bank credit both on the extensive and intensive margins, and there is significant pass-through to retail lending rates. We document a strong bank balance sheet channel, as the lending behavior of banks with high capital and liquidity is different from that of banks with low capital and liquidity. Finally, we show the impact of monetary policy on real activity across districts depends on banking sector conditions. Overall, our results indicate significant real effects of the bank lending channel in developing countries.
Keywords:
WP; bank balance; Monetary policy transmission; Bank lending channel; Bank balance sheet channel; Developing countries; lending rate; demand shock; market power; bank capital; Loans; Bank credit; Credit; Financial statements; Liquidity; Sub-Saharan Africa; East Africa
Cover IMF Working Papers
Stock Market Development in Sub-Saharan Africa: Critical Issues and Challenges
Charles Komla Adjasi
and
Charles Amo Yartey
This paper examines the economic importance of stock markets in Africa. It discusses policy options for promoting the development of the stock market in Africa. The results of the paper show that the stock markets have contributed to the financing of the growth of large corporations in certain African countries. An econometric investigation of the impact of stock markets on growth in selected African countries, however, finds inconclusive evidence even though stock market value traded seem to be positively and significantly associated with growth. African stock exchanges now face the challenge of integration and need better technical and institutional development to address the problem of low liquidity. Preconditions for successful regional approaches include the harmonization of legislations such as bankruptcy and accounting laws and a liberalized trade regime. Robust electronic trading systems and central depository systems will be important. Further domestic financial liberalization such as steps to improve the legal and accounting framework, private sector credit evaluation capabilities, and public sector regulatory oversight would also be beneficial.
Keywords:
WP; economic growth; external finance; stock market; banking sector
Cover IMF Working Papers
Excess Liquidity and Effectiveness of Monetary Policy: Evidence from Sub-Saharan Africa
Mr. Magnus Saxegaard
This paper examines the pattern of excess liquidity in sub-Saharan Africa and its consequences for the effectiveness of monetary policy. The paper argues that understanding the consequences of excess liquidity requires quantifying the extent to which commercial bank holdings of excess liquidity exceed levels required for precautionary purposes. It proposes a methodology for measuring this quantity and uses it to estimate a nonlinear structural VAR model for the CEMAC region, Nigeria and Uganda. The study suggests that excess liquidity weakens the monetary policy transmission mechanism and thus the ability of monetary authorities to influence demand conditions in the economy.
Keywords:
WP; transmission mechanism; nominal exchange rate; contractionary monetary policy