How to Improve the Effectiveness of Monetary Policy in the West African Economic and Monetary Union / Alexei Kireyev.

Format:

Book

Government document

Author/Creator:

Kireyev, Alexei.

Series:

IMF Working Papers; Working Paper ; No. 2015/099

IMF Working Papers

Language:

English

Subjects (All):

Banks and banking--Islands of the Pacific.

Economic development--Islands of the Pacific.

Interest rates--Islands of the Pacific.

Local Subjects:

Banks and banking--Islands of the Pacific.

Economic development--Islands of the Pacific.

Interest rates--Islands of the Pacific.

Physical Description:

1 online resource (64 p.)

Place of Publication:

Washington, D.C. : International Monetary Fund, 2015.

Language Note:

English

Summary:

The West African Economic and Monetary Union (WAEMU) is a currency union with a fixed exchange rate and limited capital mobility and, therefore, an independent monetary policy in the short run. The Central Bank of West African States (BCEAO) is conducting the single monetary policy with the main goal of preserving price stability and supporting economic growth. However, the effectiveness of its monetary policy remains low, with a weak reaction of market interest rates and inflation to BCEAO’s policy actions. The paper concludes that, while the institutional setup and the instruments of monetary policy are adequate, the transmission mechanism of monetary policy remains constrained by liquidity management practices, shallow and segmented financial markets, and interest rate rigidities. To improve the effectiveness of monetary policy the BCEAO should be more proactive in determining the stance of fiscal policies, develop financial markets, and liberalize controlled interest rates. The BCEAO is undertaking important reforms in these directions.

Contents:

Cover Page; Contents; Tables; Figures; Boxes; Annexes; I. Introduction; II. WAEMU's Monetary and Exchange Rate Policy; A. Monetary Policy Framework; B. Exchange Rate Regime; C. Capital Mobility; 1. BCEAO and ECB Policy Rates; D. Monetary Control; III. BCEAO's Monetary Policy Instruments; A. Interest Rates; 1. BCEAO: Interest Rates; 1. WAEMU Policy and Market Interest Rates; B. Liquidity Injections; 2. WAEMU Required and Excess Reserves (CFA billion); 2. Banks' Reserves: Composition and Sources of Financing; 3. Evolution of Banks' Own Reserves (CFA billions); C. Reserve Requirements

3. Reserve Requirements Ratio (Percent)4. Reserve Requirements and Excess Reserves; IV. Monetary Policy Transmission Mechanism in the WAEMU; A. Channels of Monetary Policy Transmission; 5. Transmission Mechanism of Monetary Policy; B. Financial Markets and Monetary Policy; C. The Impact of Monetary Policy on Inflation; 4. The Impact of Policy Rate Changes on Market Interest Rates and Inflation; 1. Empirics of Monetary Control; 6. BCEAO: Evolution of Reserve Money and Net Foreign Assets, 1995-2011; 7. BCEAO: Reserve Money and NFA in First Differences (logs)

5. AFD Statistics for BCEAO and ECB Money Market Rates6. Cointegration Analysis of BCEAO and ECB Money Market Rates; 2. BCEAO's Monetary Policy Instruments: a Stylized Presentation; 8. BCEAO's Monetary Policy Instruments; V. References; Footnotes

Notes:

Description based upon print version of record.

Description based on print version record.

ISBN:

9781484367056

1484367057

9781484366950

1484366956