Bank-By-Bank Credit Ceilings : Issues and Experiences

Author/Editor:

Mitra Farahbaksh ; Gabriel Sensenbrenner

Publication Date:

June 1, 1996

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:

Many central banks have abandoned credit ceilings in favor of monetary control frameworks based on indirect instruments. In the long run, ceilings limited competition, hampered the development of a money market, and caused disintermediation. Despite the many distortions associated with the use of credit ceilings, some countries continue to employ them, particularly during the transitional period before full reliance on indirect monetary instruments. The paper argues that the careful attention to design can help reduce distortions typically associated with the use of credit ceilings. It identifies a series of principles that may be followed in designing a system that can minimize those distortions.

Series:

Working Paper No. 96/63

Subject:

English

Publication Date:

June 1, 1996

ISBN/ISSN:

9781451848373/1018-5941

Stock No:

WPIEA0631996

Format:

Paper

Pages:

32

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