Front Matter Page

Gulf Cooperation Council

Strengthening Liquidity Management Frameworks in Support of Stability and Growth in the GCC

Prepared by Staff of the International Monetary Fund

* The views expressed herein are those of the authors and should not be reported as or attributed to the International Monetary Fund, its Executive Board, or the governments of any of its member countries.

Contents

  • EXECUTIVE SUMMARY

  • A. Introduction

  • B. Liquidity Management and Macrofinancial Stability

  • C. Liquidity Developments in the GCC

  • D. Current Liquidity Management Frameworks and Policies

  • E. Liquidity Forecasting

  • F. Conclusions and Policy Recommendations

  • BOXES

  • 1. The Impact of Liquidity on GCC Interbank Interest Rate Spreads

  • 2. Impact of Lower Oil Prices on Bank Lending in the GCC

  • FIGURES

  • 1. GCC: Current Account and Fiscal Balance, 2005–18

  • 2. Policy Rates

  • 3. Monetary and Exchange Rate Policies Transmission Channels

  • 4. Interactions Among Economic Policies

  • 5. GCC Central Bank Liabilities Held by Commercial Banks: January 2007–March 2017

  • 6. GCC Bank Deposits

  • 7. GCC Deposit and Credit Growth

  • 8. Change in Bank Foreign Assets and Liabilities, 2014–May 2017

  • 9. GCC Liquidity Interbank Interest Rate Volatility

  • 10. Interbank Claims

  • 11. Interbank Rate Spreads, LIBOR

  • 12. Deposit and Lending Rates

  • 13. Autonomous Factors of Money Demand

  • TABLES

  • 1. Components of the Central Banks’ Balance Sheet

  • 2. Excess Reserves

  • 3. Simplified Balance Sheet of a Central Bank

  • APPENDICES

  • I. The Impact of Liquidity on Monetary Policy Transmission in GCC

  • II. Central Bank Liabilities Held by Commercial Banks and Commercial Banks’ Deposits

  • III. Monetary Policy Instruments/Prudential Ratios

  • References

Gulf Cooperation Council: Strengthening Liquidity Management Frameworks in Support of Stability and Growth in the GCC
Author: International Monetary Fund