Making Monetary Policy More Effective: The Case of the Democratic Republic of the Congo

Author/Editor: Felix Fischer ; Charlotte J. Lundgren ; Samir Jahjah
Publication Date: November 05, 2013
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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: The paper looks at the challenges of conducting monetary policy in a context of high dollarization of the banking system and weak institutions in the Democratic Republic of the Congo. The empirical analysis confirms the limited effectiveness of the Central Bank of Congo in controlling inflation, despite a rapid policy response to inflation shocks. Options available to enhance the effectiveness of monetary policy are limited. After exploring the pros and cons of different exchange regimes we conclude that strengthening the current monetary policy framework remains the first-best option, given the country’s exposure to frequent terms-of-trade shocks.
Series: Working Paper No. 13/226
Subject(s): Monetary policy | Republic of Congo | Central bank autonomy | Dollarization | Exchange rate regimes

Notes Full Text also available in French
Publication Date: November 05, 2013
ISBN/ISSN: 9781475516371/1018-5941 Format: Paper
Stock No: WPIEA2013226 Pages: 31
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