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International Monetary Fund
This Selected Issues paper on Samoa reviews limitations to the existing framework of monetary policy, and suggests ways to improve its effectiveness. It examines current instruments at the disposal of the central bank to conduct monetary policy, before showing why monetary policy execution can be sometimes difficult. It also shows that such problems are not uncommon in economies with shallow financial markets. The paper also takes stock of developments since the early 1990s, and asks what major impediments to sustained private development remain.
Mr. Antonio Spilimbergo

Supervision” Czech Journal of Economics and Finance Podpiera, Richard; Dvorak, Tomás “European Union Enlargement and Equity Markets in Accession Countries” Emerging Markets Review Prati, Alessandro; Bartolini, Leonardo “Cross-Country Differences in Monetary Policy Execution and Money Market Rates’ Volatility” European Economic Review Rebucci, Alessandro; Ciccarelli, M . “Has the Transmission Mechanism of European Monetary Policy Changed in the Run-Up to EMU?” European Economic Review Williams, Oral; Adedeji, Olumuyiwa S . “Inflation Dynamics in a Small Emerging Market

International Monetary Fund

framework of monetary policy, and suggests ways to improve its effectiveness. The paper examines current instruments at the disposal of the central bank to conduct monetary policy, before showing why monetary policy execution can be sometimes difficult. It also shows that such problems are not uncommon in economies with shallow financial markets. Finally, the paper suggests possible measures to improve the effectiveness of monetary policy. B. How Is Monetary Policy Conducted and How Effective Is It ? 3. The CBS introduced indirect monetary policy instruments in

Svetlana Vtyurina and Fahad Alturki
This paper attempts to explain short- and long-term dynamics of-and forecast-inflation in Tajikistan using the Vector Error Correction Model (VECM) and Autoregressive Moving Average Model (ARMA). By analyzing different transmission channels through the VECM, we were able to evaluate their relative dominance, magnitude, and speed of transition to the equilibrium price level, with the view of identifying those policy tools that will enhance the effectiveness of monetary policy. We found that excess supply of broad money is inflationary in both the short and long term. The dynamic analysis also demonstrates that the exchange rate and international inflation have a strong impact on local prices. Available monetary instruments, such as the refinancing rate, have proven to be ineffective. Therefore, the Tajik monetary authority could greatly benefit from enhancing its monetary instruments toolkit, including by developing the interest rate channel, to improve its monetary policy execution and to achieve stable inflationary conditions.
Mr. Alessandro Zanello, Mr. Mark R. Stone, Mr. Christopher J. Jarvis, and Mr. Andrew Berg
This paper studies the question of how to achieve monetary policy credibility and price stability after a financial crisis. We draw stylized facts and conclusions from ten recent cases: Brazil (1999); Bulgaria (1997); Ecuador (2000); Indonesia (1997); Korea (1997); Malaysia (1997); Mexico (1994), Russia (1998); Thailand (1997); and Turkey (2001). Among our conclusions, highlights include: (i) monetary policy alone cannot stabilize; (ii) floats bring nominal stability quickly in countries with low pre-crisis inflation and hard pegs have been at least narrowly successful for countries in deeper disarray; (iii) in floats, early and determined tightening brings nominal stability and does not appear more costly for output; (iv) monetary aggregate targeting rarely serves as a coherent framework for floats; informal or full-fledged inflation targeting offers more promise.
Svetlana Vtyurina and Fahad Alturki

, respectively. In addition, excess liquidity has been observed in the banking system prior to the 2009 financial crisis. As discussed above, the refinancing rate has not been an influential tool in directing money supply. The only effective instrument currently employed by the NBT to control the money supply is transactions with foreign currencies. Therefore, to facilitate monetary policy execution and financial market development, the NBT could greatly benefit from improving existing instruments, and developing new ones. Steps to Improve the Monetary Policy Toolkit

International Monetary Fund. Western Hemisphere Dept.
This Selected Issues paper examines the profitability of the foreign exchange (FX) swaps issued the Central Bank of Brazil (BCB) between May 2013 and February 2019 to shed light on the rationale for FX intervention. Using interest rate and exchange rate forecasts, the paper shows that that FX swaps have been profitable in expectation, even though actual returns were negative due to unexpected exchange rate depreciations. Moreover, the scale of FX intervention is correlated with the expected profitability of the swaps, further suggesting that the BCB used FX intervention to stem abnormal movements of the exchange rate. Despite being profitable in expectation, swaps incurred realized losses due to unexpected exchange rate depreciations. The analysis suggests that the BCB used FX intervention to lean against temporary excessive movements of the exchange rate. The expected profitability of FX swaps can be monitored in real time and may thus provide guidance on the appropriate level of intervention.
International Monetary Fund

is in line with fundamentals. The CBG remains committed to maintaining a flexible exchange rate system. However, it will occasionally intervene in exchange markets to prevent disorderly adjustment, correct any misalignment of the exchange rate, and build up foreign reserves or prevent their depletion. This will be conducted in line with its well-defined intervention policy. The authorities intend to pursue measures to enhance the CBG’s operational independence and its monetary policy execution capacity. These will include ensuring compliance with the provisions