Njuguna S. Ndung'u, Mr. R. Armando Morales, and Lydia Ndirangu
was also notable (28 and 15 percentage point reduction in exclusion, respectively, between 2009 and 2013), mainly explained by growing activities of nonbank institutions (see Chart 2 ).
The Kenyan example shows that financial inclusion is more about opening financial services to the poor than just providing affordable financing. Banks’ bet on expanding the infrastructure for greater financial presence has been largely successful. More bank branches (especially in rural areas), automated teller machines in growing urban centers, and bankagents in remote locations
To support the understanding that banks’ debt issuance means money creation, while centralized nonbank financial institutions’ and decentralized bond market intermediary lending does not, the paper aims to convey two related points: First, the notion of money creation as a result of banks’ loan creation is compatible with the notion of liquid funding needs in a multi-bank system, in which liquid fund (reserve) transfers across banks happen naturally. Second, interest rate-based monetary policy has a bearing on macroeconomic dynamics precisely due to that multi-bank structure. It would lose its impact in the hypothetical case that only one (“singular”) commercial bank would exist. We link our discussion to the emergence and design of central bank digital currencies (CBDC), with a special focus on how loans would be granted in a CBDC world.
This paper assesses and disseminates experiences and lessons from low-income countries (LICs) in Sub-Saharan Africa that were selected by the Africa Department in 2015-16 as pilots for enhanced analysis of macro-financial linkages in Article IV staff reports. The paper focuses on the common characteristics across the pilot countries and highlights the tools used in the analysis, the challenges encountered, and the solutions deployed in overcoming them.