IMF Working Papers

Making Monetary Policy More Effective: The Case of the Democratic Republic of the Congo

By Felix Fischer, Charlotte J. Lundgren, Samir Jahjah

November 5, 2013

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Felix Fischer, Charlotte J. Lundgren, and Samir Jahjah. Making Monetary Policy More Effective: The Case of the Democratic Republic of the Congo, (USA: International Monetary Fund, 2013) accessed November 21, 2024

Also available in: français

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

The paper looks at the challenges of conducting monetary policy in a context of high dollarization of the banking system and weak institutions in the Democratic Republic of the Congo. The empirical analysis confirms the limited effectiveness of the Central Bank of Congo in controlling inflation, despite a rapid policy response to inflation shocks. Options available to enhance the effectiveness of monetary policy are limited. After exploring the pros and cons of different exchange regimes we conclude that strengthening the current monetary policy framework remains the first-best option, given the country’s exposure to frequent terms-of-trade shocks.

Subject: Central bank policy rate, Currencies, Dollarization, Exchange rates, Financial services, Foreign exchange, Inflation, Monetary policy, Money, Prices

Keywords: Banking system, Bcc monetary policy intervention, Broad money, Central bank policy rate, Currencies, Currency board, Dedollarization, Dollarization, Dollarization measure, Exchange rate regime, Exchange rates, Financial deepening., Foreign currency, Global, Inflation, Interest rate, Monetary policy, Money demand, Sub-Saharan Africa, Transmission mechanism, Unit of account, WP

Publication Details

  • Pages:

    31

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2013/226

  • Stock No:

    WPIEA2013226

  • ISBN:

    9781475516371

  • ISSN:

    1018-5941

Notes

Full Text also available in French

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