Monetary Policy Implementation at Different Stages of Market Development
October 26, 2004


Monetary Policy Implementation at Different Stages of Market Development
Country Cases and Appendices—Supplementary Information 1

Prepared by Staff of the Monetary and Financial Systems Department

Approved by Stefan Ingves

October 28, 2004

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This paper was discussed in a Board seminar.

Contents

Overview
I.   Eastern Caribbean Currency Union
  A.   Path Toward Regional Monetary Integration
  B.   Monetary Policy Environment
  C.   Structural Factors and Financial Market Infrastructure
  D.   Conclusions and Lessons
II.   Democratic Republic of the Congo
  A.   Background
  B.   The Central Bank of the Congo
  C.   Monetary Policy in the Context of Low Financial Intermediation
  D.   Financial Intermediation and Dollarization
  E.   Conclusions and Lessons
III.   Egypt
  A.   Path to the Adoption of Money Market Operations
  B.   Monetary Policy Environment
  C.   Financial Market Infrastructure
  D.   Monetary Policy Instruments
  E.   Conclusions and Lessons
IV.   The Kyrgyz Republic
  A.   Monetary Policy Environment
  B.   Monetary Policy Instruments
  C.   Market Infrastructure
  D.   Channels of Transmission of Monetary Policy
  E.   Conclusions and Lessons
V.   Malta
  A.   Path to Reliance on Money Market Instruments
  B.   Monetary Policy Environment
  C.   Market Infrastructure
  D.   Monetary Policy Instruments
  E.   Conclusions and Lessons
VI.   The Gambia
  A.   Background
  B.   Monetary Policy Environment
  C.   Market Infrastructure
  D.   Monetary Policy Instruments
  E.   Conclusions and Lessons
VII.   Tonga
  A.   Adoption and Reversal of Reliance on Money Market Operations
  B.   Monetary Policy Environment
  C.   Monetary Policy Instruments
  D.   Channels of Transmission of Monetary Policy
  E.   Conclusions and Lessons
VIII.   Tunisia
  A.   Path to Reliance on Money Market Operations
  B.   Environment for Monetary Policy Conduct
  C.   Market Infrastructure
  D.   Channels of Transmission of Monetary Policy
  E.   Monetary Policy Instruments
  F.   Conclusions and Lessons
IX.   Uganda
  A.   Adoption of Money Market Operations
  B.   Institutional Framework for Monetary Policy
  C.   Monetary Policy Implementation and Instruments
  D.   Conclusions and Lessons
X.   Ukraine
  A.   Path to Reliance on Money Market Operations
  B.   Monetary Policy Environment
  C.   Money Market Infrastructure
  D.   Monetary Policy Implementation and Instruments
  E.   Conclusions and Lessons
XI.   Vanuatu
  A.   Path to Reliance on Money Market Instruments
  B.   Monetary Policy Environment
  C.   Monetary Policy Instruments
  D.   Channels of Transmission of Monetary Policy
  E.   Market Infrastructure and Liquidity Surplus Problem
  F.   Conclusions and Lessons
XII.   Zambia
  A.   The Path to Reliance on Money Market Operations
  B.   Monetary Policy Environment
  C.   Market Infrastructure
  D.   Channels of Transmission of Monetary Policy
  E.   Monetary Policy Instruments
  F.   Conclusions and Lessons
Tables 
1.   ECCU: Financial System Structure
2.   DRC: Financial System Structure
3.   Egypt: Financial System Structure
4.   The Kyrgyz Republic: Financial System Structure 
5.   Malta: Financial System Structure
6.   The Gambia: Banking System Structure
7.   Tonga: Financial System Structure 
8.   Tunisia: Adoption of Money Market Operations
9.   Tunisia: Financial System Structure
10.   Uganda: Financial System Structure
11.   Ukraine: Financial System Structure
12.   Vanuatu: Financial System Structure
13.   Zambia: Financial System Structure
Figures 
1.   ECCB: Backing Ratio
2.   Stylized Representation of the Channels of Transmission
Boxes
1.   ECCB: Monetary Policy Instruments
2.   DRC: Monetary Policy Instruments
3.   DRC: Forms of Dollarization
4.   Egypt: Monetary Policy Instruments
5.   Kyrgyz Republic: Monetary Policy Instruments
6.   Malta: Monetary Policy Instruments
7.   The Gambia: Monetary Policy Instruments
8.   Tonga: Monetary Policy Instruments
9.   Tunisia: Monetary Policy Instruments
10.   Uganda: Monetary Policy Instruments
11.   Ukraine: Monetary Policy Instruments
12.   Vanuatu: Monetary Policy Instruments
13.   Zambia: Government Securities Market
14.   Zambia: Monetary Policy Instruments 
Appendices 
I.   The Channels of Transmission of Monetary Policy
II.   Eligible Assets: The Example of the ECB and the Banque de France
III.   Enhancing Liquidity Management and Forecasting
IV.   Cross-Country Experiences with a Liquidity Surplus
V.   Selected Country Experiences with Interbank Market Development
Appendix Tables
1.   Eligible Assets in Germany, France, Austria, and Ireland
2.   Standardized Central Bank Balance Sheet
1 Prepared by a Monetary and Financial Systems Department staff team led by Bernard J. Laurens.