Monetization in Low- and Middle-Income Countries

By Noriaki Kinoshita, Cameron McLoughlin

June 1, 2012

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Noriaki Kinoshita, and Cameron McLoughlin. Monetization in Low- and Middle-Income Countries, (USA: International Monetary Fund, 2012) accessed December 3, 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

The degree of an economy’s monetization, which has an important implication on economic growth, can be affected by the conduct of monetary policy, financial sector reform, and episodes of financial crises. The paper finds that monetization--measured by the ratio of broad money to nominal GDP-- in low- to middle-income countries is significantly correlated with per-capita GDP, real interest rates, and financial sector reform. It suggests that maintaining an upward momentum in monetization can be an important policy objective, particularly for low-income countries, and that monetary and financial sector policies need to be conducive to enhancing monetization.

Subject: Bank deposits, Deposit rates, Financial markets, Financial regulation and supervision, Financial sector development, Financial sector reform, Financial services, Inflation, Prices

Keywords: Bank deposits, Central bank financing, Deposit rates, Financial sector development, Financial Sector Reform, GDP, Inflation, Inflation expectation, Influence monetization, Low- and Middle-Income Countries, Monetization, Monetization experience, Monetization outcome, Monetization ratio, Rate, Sub-Saharan Africa, WP

Publication Details

Pages:

23
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2012/160
Stock No:

WPIEA2012160
ISBN:

9781475504651
ISSN:

1018-5941

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