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Mr. Jaromir Benes, Kevin Clinton, Asish George, Joice John, Mr. Ondrej Kamenik, Mr. Douglas Laxton, Pratik Mitra, G.V. Nadhanael, Hou Wang, and Fan Zhang
India formally adopted flexible inflation targeting (FIT) in June 2016 to place price stability, defined in terms of a target CPI inflation, as the primary objective of monetary policy. In this context, the paper draws on Indian macroeconomic developments since 2000 and the experience of other countries that adopted FIT to bring out insights on how credible policy with an emphasis on a strong nominal anchor can reduce the impact of supply shocks and improve macroeconomic stability. For illustrating the key issues given the unique structural characteristics of India and the policy options under an FIT framework, the paper describes an analytical framework using the core quarterly projection model (QPM). Simulations of the QPM are carried out to illustrate the monetary policy responses under different types of uncertainty and to bring out the importance of gaining credibility for improving monetary policy efficacy.
Ms. Margaret Garritsen De Vries

Fund helped members to establish central banks, to draft banking legislation, to train local personnel in banking, to reform existing banking structures, and to develop a number of monetary policy instruments. 12 External Debt Problems In many developing members, the strains arising from weak fiscal structures had been eased temporarily by recourse to what at the time were viewed as unduly large foreign credits, often with short-term maturities. The collective external debt of developing members had increased from $9 billion in 1956 to more than $30 billion in

Mr. Christopher Browne and Leo Houtven

view to stimulating economic activity, monetary policy was relaxed by removing the ceiling on lending to the private sector and reducing the interest rates of the Bank of Spain. II. The Banking Reform of 1962 and the Credit System in the 1960s Following the 1959 stabilization program, other measures culminated in the 19’62 banking reform, which was to determine the setting of monetary policy for the remainder of the decade. The reform provided for the introduction of a number of monetary policy instruments which, if made fully effective, would have given the

International Monetary Fund

, such as development banks. In other developing countries, where the banking systems are only in an early stage of development, one of the main problems facing a central bank may be to foster the growth of an efficient private banking system as well as other financial institutions. Instruments of Monetary Policy There are a number of monetary policy instruments that a central bank may use to meet the problems outlined above. Many of these instruments may be adapted both to foster monetary stability and to encourage the flow of credit to the financing of specific

International Monetary Fund. Legal Dept.

watered down in 2005, 5 a development which, during the financial crisis, might have impacted market perceptions. 6 The Role of the ECB and the Eurosystem in Combating the Financial Crisis In regulating the establishment and operation of the ECB, the Maastricht Treaty equipped it with a number of monetary policy instruments to achieve its objectives, and in particular its primary objective of maintaining price stability for the euro area. More specifically, the ECB conducts open market operations, offers standing facilities and requires credit institutions to

Mr. Jaromir Benes, Kevin Clinton, Asish George, Joice John, Mr. Ondrej Kamenik, Mr. Douglas Laxton, Pratik Mitra, G.V. Nadhanael, Hou Wang, and Fan Zhang

inflows. Other than interest rates, a number of monetary policy instruments were used to modulate domestic liquidity and aggregate demand and maintain macro-stability. The cash reserve ratio (CRR) was increased sharply concomitant with rate hikes to mop up surplus domestic liquidity and strengthen monetary transmission. Outright sterilization through market stabilization scheme was also carried out. Furthermore, to modulate leverage and asset price inflation, macro-prudential measures in the form of higher risk weights and provisioning norms were prescribed for bank

International Monetary Fund

rates in the market increased uncertainties, reduced the signaling effects of interest rates, and raised the cost of liquidity management, with spikes in interest rates contaminating the whole spectrum of rates ( Figure 4 ). Figure 4. Uganda: Key Interest Rates, 1999-2002 Source: Bank of Uganda, Box 5 Monetary Policy Instruments The BOU administers a number of monetary policy instruments for prudential and liquidity management purposes; these are summarized below. Reserve requirements . The BOU subjects commercial banks to a 10 percent reserve

International Monetary Fund
This paper presents findings of Uganda’s Financial System Stability Assessment, including Reports on the Observance of Standards and Codes on Monetary and Financial Policy Transparency, Banking Supervision, Securities Regulation, Insurance Regulation, Corporate Governance, and Payment Systems. The banking system in Uganda, which dominates the financial system, is fundamentally sound, more resilient than in the past, and currently poses no threat to macroeconomic stability. A major disruption in donor flows could, however, challenge macroeconomic stability and threaten the financial system.
International Monetary Fund
This background paper focuses on the experiences of evolving monetary policy frameworks in nine individual countries and three thematic groupings of countries. The country case studies are complemented by analyses of common issues faced by countries in currency unions in the CFA franc zone, selected resource rich countries, and advanced economies and emerging markets during their modernization process of monetary policy regimes. Finally, the background paper also contains a discussion on the benefits of effective communication in conducting monetary policy.
International Monetary Fund

, even where the deviations are significant. 70 192. The CBN uses a number of monetary policy instruments, but liquidity management is problematic given lumpy oil-related and fiscal flows . Monthly transfers of oil funds from the Nigerian National Petroleum Corporation held at commercial banks to the CBN and consequent fiscal transfers to states and local authorities generate significant intra-month volatility in reserves balances and consequently interest rates. Standing facilities define an interest rate corridor (MPR±200 basis points) to contain the volatility