Government Securities Versus Central Bank Securities in Developing Open Market Operations: Evaluation and Need for Coordinating Arrangements
May 1, 1994
More Formats on IMF eLibrary
Order a Print CopyDisclaimer: 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
In an indirect monetary policy framework, open market operations become the central bank’s main instrument. In the initial stages, when financial markets are still undeveloped, selection of a financial instrument for those operations and the design of supporting arrangements to ensure the central bank’s operational autonomy when using the instrument, are crucial issues. Based on theoretical arguments and experience of a sample of countries that embarked on financial reforms, this paper argues that government securities are the preferred instrument because of their better capacity to develop financial markets. The use of government securities, however, requires the most complex supporting arrangements.
Subject: Banking, Central bank bills, Central banks, Financial institutions, Government securities, Open market operations, Securities, Treasury bills and bonds
Keywords: bill market, central bank bank paper, central bank bill market, Central bank bills, central bank paper, financial market development, government securities, Government securities, monetary management, open market intervention, Open market operations, rediscount window, Treasury bills and bonds, WP
Pages:
60
Volume:
1994
DOI:
Issue:
062
Series:
Working Paper No. 1994/062
Stock No:
WPIEA0621994
ISBN:
9781451848229
ISSN:
1018-5941
