Monetary Instruments and their Use During the Transition From a Centrally Planned to a Market Economy

November 1, 1993

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Format: Chicago

Paul Louis Ceriel Hilbers. Monetary Instruments and their Use During the Transition From a Centrally Planned to a Market Economy, (USA: International Monetary Fund, 1993) accessed December 26, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper discusses different instruments of monetary policy, and in particular the choice between direct and indirect instruments. It identifies the main characteristics of a country’s financial system that should be considered in selecting monetary instruments, and analyzes how these characteristics should influence that selection in countries that are progressing from a state-controlled to a market economy. The characteristics of the financial system during the initial stage of the transition sometimes favor relatively direct instruments. At this stage market-based variants of direct instruments may combine the necessary effectiveness in reducing monetary expansion with the need to introduce and stimulate competition in the financial markets. During this stage indirect instruments can be developed and tested (“belt and braces” approach). In later stages, as experience is gained, these indirect instruments can gradually replace the more direct controls.

Subject: Bank credit, Banking, Commercial banks, Credit, Credit ceilings, Credit controls, Financial institutions, Money

Keywords: Bank, Bank credit, Benchmark interest rate, Central bank, Central bank bank paper, Central bank credit policy, Commercial bank credit, Commercial banks, Credit, Credit ceiling, Credit ceilings, Credit controls, Credit demand, Credit growth rate, Credit plan, Credit policy, Credit supply, Deposit base, Eastern Europe, Market, Market forces, Selective credit control, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 1993/087
Stock No:

WPIEA0871993
ISBN:

9781451850949
ISSN:

1018-5941

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