Occasional Papers

Monetary Policy Implementation at Different Stages of Market Development

By Bernard J Laurens

December 20, 2005

Preview Citation

Format: Chicago

Bernard J Laurens. Monetary Policy Implementation at Different Stages of Market Development, (USA: International Monetary Fund, 2005) accessed November 22, 2024

Summary

The most salient trend in monetary policy over the past two decades has been increasing reliance on money market operations, which reflects the belief that allowing market forces to allocate financial resources brings about increased economic efficiency and growth. However, small economies and countries with undeveloped financial markets have found that a lack of competition in their financial markets complicates their efforts to rely on money market operations, at times forcing them to rely instead on direct instruments or moral suasion. In some larger countries, the shift toward a reliance on money market operations has been gradual and, at times, fraught with difficulty. This report draws on a variety of country experiences to analyze the reasons for such difficulties and proposes a stylized sequencing of reforms that enables countries to tailor the introduction of money market operations to their particular circumstances.

Subject: Banking, Commercial banks, Currencies, Financial institutions, Financial markets, Monetary policy, Monetary policy instruments, Money, Money markets, Treasury bills and bonds

Keywords: Asia and Pacific, Caribbean, Central Africa, Central bank, Commercial banks, Currencies, East Asia, Europe, Infrastructure condition, Liquidity, Liquidity forecasting framework, Market, Market infrastructure, Monetary policy, Monetary policy implementation, Monetary policy instruments, Money market cash reserve, Money market development, Money market operation, Money markets, OP, Treasury bills and bonds, West Africa, Western Europe

Publication Details

  • Pages:

    105

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Occasional Paper No. 2005/009

  • Stock No:

    S244EA

  • ISBN:

    9781589064386

  • ISSN:

    0251-6365

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