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Rattan J. Bhatia


As observed earlier, between 1963 and 1974 the deposits of commercial banks increased faster than their demand for rediscountable credit. This, coupled with the BCEAO’s readiness to provide liberal rediscount facilities, enabled the banks to expand their own lending resources, especially for nonrediscountable credit. But between 1965 and 1974 commercial banks in the Union held more rediscounted credit than the liquidity ratio prescribed—on average about 5 percent of total deposits, compared with an average cash ratio of about 4 percent. One reason that not all the increase in deposits was lent as rediscountable credit may have been insufficient demand; alternatively, some banks may have felt that rediscount ceilings would have a restrictive impact on their operations.8

Rattan J. Bhatia


Until 1984, the West African Monetary Union (WAMU) consisted of six West African countries- Benin, Burkina Faso, Ivory Coast, Niger, Senegal, and Togo. (Mali withdrew from the Union in 1961 and rejoined in 1984; it is therefore excluded from this analysis, which deals with a period when it was not a member.)

International Monetary Fund

secondary market of selected bonds issued by banks, and c) an introduction of a new instrument–a discount credit. The discount credit is designed to support new lending to corporates, as under this instrument the NBP would accept for discount promissory notes issued by companies to banks in connection with the granted loan. The introduction of this instrument will require the Monetary Policy Council (MPC) to set a new interest rate of the central bank–the discount rate. The Polish Financial Supervision Authority (KNF) assesses that banks are well capitalized

International Monetary Fund. European Dept.

intend to engage with staff and undertake a PIMA in the second half of 2021, to ensure that the envisaged capital expenditures will be properly supervised at every level. Monetary Policy The NBP has responded swiftly and decisively to the COVID-19 pandemic. It has provided an ample degree of monetary accommodation to the economy through, most of all, interest rates cut and asset purchases. To support liquidity in the banking sector, the central bank has lowered reserve requirements, introduced repo operations, and offered bill discount credit aimed at


, the Bank is independent of instructions from the Federal Cabinet.” 12 The principal powers conferred on the Bundesbank by the Bundesbank Act are the “monetary powers,” such as note issue, discount, credit, and open market policies; minimum reserve policy; deposit policy; and the right to order the collection of statistics on banking and monetary matters. 13 The federal government has no right to issue instructions in connection with the exercise of any of these powers. In addition, the Bundesbank is independent of instructions from the federal government in the

Mr. V. Sundararajan

—bill discount, credit against collateral of bills and securities (Lombard credit), and current account (overdraft) credit. In Czechoslovakia, however, the dependence of deficit banks on the interbank deposits of surplus banks turned out to be so massive as to raise doubts about the degree of competition and flexibility in the money and deposit markets. Payments systems . The clearing and settlement systems for payments are typically on a gross (item-by-item) basis, instead of a net basis (that is, net of payments to other banks). The lack of net clearing arrangements, the

Mr. Eliot Kalter and Mr. Armando P. Ribas

, by the continuous expansion of domestic aggregate demand led by government operations and the nontraded goods sector. As discussed, this sector’s financial strength was facilitated by its ability to pass through cost increases unconstrained by external competition, as well as by the easy access to bank credit. We have constructed a compounded interest rate index based on the average cost of funds of the banks (adding a 400 basis point spread to approximate the average cost to borrowers), and have discounted credit to the private sector and the money supply (M2

Mr. Jaewoo Lee, Mr. Pau Rabanal, and Mr. Damiano Sandri
U.S. household consumption declined sharply in late 2008, marking a departure from the trend of a steady increase in U.S. consumption as a share of income since the 1980s. Combining econometric and simulation analysis, we estimate that this departure will be sustained beyond the crisis: the U.S. household consumption rate will likely decline somewhat further from its current level, as the saving rate rises to around 6 percent of disposable personal income (from nearly 5 percent in 2009). Compared to the pre-crisis years (2003–07), this saving rate implies a decline in U.S. private-sector demand on the order of 3 percentage points of GDP.