Liquidity Management Under Fixed Exchange Rate With Open Capital Account
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Liquidity Management Under Fixed Exchange Rate With Open Capital Account
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Author : Mariam El Hamiani Khatat
language : en
Publisher: International Monetary Fund
Release Date : 2019-03-18
Liquidity Management Under Fixed Exchange Rate With Open Capital Account written by Mariam El Hamiani Khatat and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-03-18 with Business & Economics categories.
This paper introduces a theoretical framework for liquidity management under fixed exchange rate arrangement, derived from the price-specie flow mechanism of David Hume. The framework highlights that the risk of short-term money market rates un-anchoring from the uncovered interest rate parity due to money and foreign exchange market frictions could jeopardize financial stability and market development. The paper then discusses operational solutions that stabilize money market rates close to the level implied by the Uncovered Interest Rate Parity (UIP). Liquidity management under fixed exchange rate with an open capital account presents specific challenges due to: (1) the larger liquidity shocks induced by foreign reserve swings that challenge the development of money markets; and (2) more complicated liquidity forecasts. The theoretical framework is empirically tested based on the estimate of “offset” coefficients for Denmark and Hong Kong SAR.
Tonga
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Author : International Monetary Fund. Monetary and Capital Markets Department
language : en
Publisher: International Monetary Fund
Release Date : 2025-06-18
Tonga written by International Monetary Fund. Monetary and Capital Markets Department and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2025-06-18 with categories.
The IMF conducted a Technical Assistance mission to assist the National Reserve Bank of Tonga (NRBT) in modernizing its monetary policy framework. The mission aimed to address persistent challenges such as excess liquidity and an inactive interbank market, which have impeded effective monetary policy transmission. The mission is significant as it builds on previous IMF assistance and addresses key vulnerabilities in Tonga's monetary policy framework. The mission also aligns with ongoing Fund surveillance and program priorities. The mission found that the effectiveness of Tonga's monetary policy framework is constrained by gaps in both the institutional arrangements and the calibration of NRBT’s monetary policy actions. In this context, the mission focused on developing a modernized market-based monetary operational framework that enables active liquidity management and the alignment of short-term money market rates with the NRBT policy rate. The mission also focused on improving collateral policies (for liquidity providing monetary policy operations) and strengthening NRBT communications as key complementary tools. To this end, innovative tools were applied, such as Large Language models to assess NRBT communications, and the provision of collateral haircut methodologies to improve risk management. The mission recommended a gradual modernization process focusing on two main workstreams: developing the NRBT’s analytical capacity to assess the monetary policy stance and enhancing its operational capacity to align money market rates with the desired policy stance. This involves transitioning to a mid-rate interest rate corridor with regular open market operations supported by adequate standing facilities, and a robust liquidity monitoring and forecasting framework.
Bosnia And Herzegovina
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Author : International Monetary Fund. Monetary and Capital Markets Department
language : en
Publisher: International Monetary Fund
Release Date : 2019-10-23
Bosnia And Herzegovina written by International Monetary Fund. Monetary and Capital Markets Department and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-10-23 with Business & Economics categories.
This Technical Assistance (TA) report on Bosnia and Herzegovina highlights that the negative spread in a context of structural lower returns on foreign exchange reserves and sizable capital inflows has led to a gradual and steady erosion of the currency board coverage ratio. The Central Bank of Bosnia and Herzegovina (CBBH) requested Technical Assistance to review its reserve requirement framework. The mission recommends aligning the remuneration of reserve requirements on foreign exchange liabilities to the CBBH’s opportunity cost. The mission also recommends prescribing the fulfilment in foreign currency of the reserve requirements for foreign currency liabilities. It also suggested altering the remuneration scheme of domestic reserve requirements. In order to be neutral from an intermediation perspective, the reserve requirement remuneration should be aligned to the market-neutral uncovered interest rate parity rate, whereas the remuneration of excess reserves may take place significantly below the market-neutral rate but at or above the foreign currency remuneration rate. The CBBH may benefit from a constructive dialogue with the Area Department or TA to set the new rates of remuneration of domestic reserve requirement and excess reserves.
Bhutan
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Author : International Monetary Fund. Asia and Pacific Dept
language : en
Publisher: International Monetary Fund
Release Date : 2025-02-28
Bhutan written by International Monetary Fund. Asia and Pacific Dept and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2025-02-28 with categories.
In August 2024, at the request of the Royal Monetary Authority of Bhutan (RMA), the IMF South Asia Regional Training and Technical Assistance Center (SARTTAC) conducted a Technical Assistance (TA) mission in Thimphu. The mission aimed to assist the RMA in establishing an interest rate corridor (IRC) and operationalizing related instruments, liquidity forecasting, and collateral frameworks. The mission identified that the RMA lacks necessary monetary policy instruments to effectively address changing systemic liquidity conditions and financial stability challenges. It emphasized the need to move away from reliance on administrative controls, as the absence of appropriate price incentives reinforces the preference for foreign exchange among Bhutanese residents, increasing pressures on the peg. To tackle these issues, the mission proposed a phased approach to introduce the IRC. Initially, relevant external and internal documents should be finalized, followed by mock operations. The first phase involves introducing a one-week main Open Market Operation (OMO), conducted weekly at the policy rate with full allotment. Automatic access to the IRC's standing facilities should be ensured. Later, fixed-quantity, variable-rate OMOs should be utilized, relying on liquidity forecasting to calibrate operations. Additionally, the mission recommended reinstating sweeping arrangements for government accounts and enhancing coordination with the Treasury to improve liquidity forecasting. These measures aim to strengthen the RMA's operational framework and enhance the effectiveness of monetary policy.
Systemwide Liquidity Stress Testing Tool
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Author : Ms. Hiroko Oura
language : en
Publisher: International Monetary Fund
Release Date : 2022-12-16
Systemwide Liquidity Stress Testing Tool written by Ms. Hiroko Oura and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2022-12-16 with Business & Economics categories.
Developing a systemic liquidity stress testing tool is challenging due to data constraints and hard-to-model behavioral factors. There has yet to be a uniformly accepted model partly because the nature of systemic liquidity risks differs significantly across countries. This paper offers a simple Excel-based tool to assess the high-level impact of aggregate liquidity stress on the whole economy and gauge its spillover across banks, non-bank financial institutions (NBFIs), and non-financial economic sectors. It primarily uses the balance sheet approach (BSA) data—a sector-aggregate matrix of financial exposure by counterpart—that have become increasingly available for various economies with all income levels. The results can identify systemically important financial linkages to be analyzed further and help calibrate macroprudential measures and a liquidity support framework. When liquidity stress stems from capital outflows, the tool can enrich policy discussion based on integrated policy framework (IPF) and international reserve adequacy perspectives.
Islamic Republic Of Mauritania
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Author : International Monetary
language : en
Publisher: International Monetary Fund
Release Date : 2023-02-03
Islamic Republic Of Mauritania written by International Monetary and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2023-02-03 with Business & Economics categories.
Islamic Republic of Mauritania: Selected Issues
Oman
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Author : International Monetary Fund. Monetary and Capital Markets Department
language : en
Publisher: International Monetary Fund
Release Date : 2025-06-10
Oman written by International Monetary Fund. Monetary and Capital Markets Department and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2025-06-10 with categories.
The Central Bank of Oman (CBO) has a strong focus on transparency, building on the Omani Vision 2040. In line with the country’s long-term vision, Vision 2040 (see Box 1), the CBO is committed to enhancing its policies and operations in line with international best practices. The Central Bank Transparency Code (CBT) review – the first one in the GCC region – reflects the commitment of the authorities to strengthening the role of the CBO as a critical public institution, with a transparency framework firmly anchored in the law. This policy has earned the CBO the broad trust of its stakeholders and has paid significant dividends for the CBO in terms of safeguarding its credibility and policy effectiveness.
Central Banking In Latin America
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Author : Mr.Luis Ignacio Jácome
language : en
Publisher: International Monetary Fund
Release Date : 2015-03-17
Central Banking In Latin America written by Mr.Luis Ignacio Jácome and has been published by International Monetary Fund this book supported file pdf, txt, epub, kindle and other format this book has been release on 2015-03-17 with Business & Economics categories.
This paper provides a brief historical journey of central banking in Latin America to shed light on the debate about monetary policy in the post-global financial crisis period. The paper distinguishes three periods in Latin America’s central bank history: the early years, when central banks endorsed the gold standard and coped with the collapse of this monetary system; a second period, in which central banks turned into development banks under the aegis of governments at the expense of increasing inflation; and the “golden years,” when central banks succeeded in preserving price stability in an environment of political independence. The paper concludes by cautioning against overburdening central banks in Latin America with multiple mandates as this could end up undermining their hard-won monetary policy credibility.
Indian Financial System 5th Edition
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Author : Machiraju H.R.
language : en
Publisher: Vikas Publishing House
Release Date :
Indian Financial System 5th Edition written by Machiraju H.R. and has been published by Vikas Publishing House this book supported file pdf, txt, epub, kindle and other format this book has been release on with Business & Economics categories.
This much?awaited new edition of a pioneering textbook written by an expert academic and policy maker is released after a gap of eight years. All through these years the book has been in demand across many university departments and b?schools.
Indian Financial System As Per The Latest Curriculum On The Directives Of Nep 2020 Lpspe Edition
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Author : H.R. Machiraju
language : en
Publisher: Vikas Publishing House
Release Date :
Indian Financial System As Per The Latest Curriculum On The Directives Of Nep 2020 Lpspe Edition written by H.R. Machiraju and has been published by Vikas Publishing House this book supported file pdf, txt, epub, kindle and other format this book has been release on with categories.
This adaptation has been prepared using the content from a popular textbook written by an expert academic and policy maker to cater the requirements of the new NEP curriculum. India has seen landmark changes in its financial system in recent times, which has transformed the economic scenario of the country in a big way. This edition incorporates these changes in all their complexities yet retains the original focus on the analysis of the principles and practices in the money market, capital market and foreign exchange market of India. This all?inclusive textbook ; covering major concepts, regulations and practices in the working of financial intermediaries, capital market, money market and foreign exchange market ; puts the Indian financial system in the right perspective. The book has been thoroughly revised and includes the latest available data.