Prudential Liquidity Regulation in Developing Countries : A Case Study of Rwanda

Author/Editor:

A. E. Wayne Mitchell ; Angelique Kantengwa ; Sarah Sanya

Publication Date:

January 1, 2012

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper analyses the prudential liquidity management framework, in particular the quantitative indicators employed by the central bank of Rwanda in response to the domestic liquidity crisis in 2008/09. It emphasises that the quantitative methods used in the monitoring and assessment of systemic liquidity risk are inadequate because they did not signal the liquidity crises ex-post. There are quick gains to be made from augumenting the liquidity risk indicators with more dynamic liquidity stress tests so that compliance will be achieved through lengthening the maturities of both assets and liabilities on the balance sheet as opposed to simply holding more liquid assets. The paper recommends that policy emphasis shift toward reforms that strengthen systemic liquidity risk assesment, monetary policy implementation as well as improve the efficiency of Rwanda's financial system.

Series:

Working Paper No. 12/20

Subject:

Frequency:

Quarterly

English

Publication Date:

January 1, 2012

ISBN/ISSN:

9781463931827/1018-5941

Stock No:

WPIEA2012020

Price:

$18.00 (Academic Rate:$18.00)

Format:

Paper

Pages:

30

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