Experience with Floating Interbank Exchange Rate Systems in Five Developing Economies
April 1, 1993
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Summary
This paper reviews the experience with floating interbank exchange rate systems in five developing countries--The Gambia, Guyana, Jamaica, Nigeria and Sri Lanka--and draws some conclusions about the stability and efficiency of these systems. The experience of these countries illustrates both the difficulties and the advantages of interbank exchange rate markets. The main conclusion is that these markets can operate relatively well with a minimum banking infrastructure, provided that the authorities remove legal and institutional impediments to the free operation of these markets including, in particular, exchange restrictions. Any residual restrictions that may remain will likely give rise to the continued existence of parallel markets.
Subject: Currency markets, Exchange rate arrangements, Exchange rates, Financial markets, Foreign exchange, Interbank markets
Keywords: auction rate, cambio market, cambio market participant, central bank, Currency markets, exchange arrangement, exchange rate, Exchange rate arrangements, exchange rate system, Exchange rates, floating exchange rate system, free market, Interbank markets, liberalization measure, market, market abuse, market instability, market rate, rate, rate depreciation, WP
Pages:
42
Volume:
1993
DOI:
Issue:
036
Series:
Working Paper No. 1993/036
Stock No:
WPIEA0361993
ISBN:
9781451977943
ISSN:
1018-5941
