Monetary Policy Transmission in the GCC Countries PDF Download
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Author: Mr.Raphael A. Espinoza
Publisher: International Monetary Fund
ISBN: 1475505094
Category : Business & Economics
Languages : en
Pages : 53
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Book Description
The GCC countries maintain a policy of open capital accounts and a pegged (or nearly-pegged) exchange rate, thereby reducing their freedom to run an independent monetary policy. This paper shows, however, that the pass-through of policy rates to retail rates is on the low side, reflecting the shallowness of money markets and the manner in which GCC central banks operate. In addition to policy rates, the GCC monetary authorities use reserve requirements, loan-to-deposit ratios, and other macroprudential tools to affect liquidity and credit. Nonetheless, a panel vector auto regression model suggests that U.S. monetary policy has a strong and statistically significant impact on broad money, non-oil activity, and inflation in the GCC region. Unanticipated shocks to broad money also affect prices but do not stimulate growth. Continued efforts to develop the domestic financial markets will increase interest rate pass-through and strengthen monetary policy transmission.
Author: Mr.Raphael A. Espinoza
Publisher: International Monetary Fund
ISBN: 1475505094
Category : Business & Economics
Languages : en
Pages : 53
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Book Description
The GCC countries maintain a policy of open capital accounts and a pegged (or nearly-pegged) exchange rate, thereby reducing their freedom to run an independent monetary policy. This paper shows, however, that the pass-through of policy rates to retail rates is on the low side, reflecting the shallowness of money markets and the manner in which GCC central banks operate. In addition to policy rates, the GCC monetary authorities use reserve requirements, loan-to-deposit ratios, and other macroprudential tools to affect liquidity and credit. Nonetheless, a panel vector auto regression model suggests that U.S. monetary policy has a strong and statistically significant impact on broad money, non-oil activity, and inflation in the GCC region. Unanticipated shocks to broad money also affect prices but do not stimulate growth. Continued efforts to develop the domestic financial markets will increase interest rate pass-through and strengthen monetary policy transmission.
Author: Mr.Serhan Cevik
Publisher: International Monetary Fund
ISBN: 1475505396
Category : Business & Economics
Languages : en
Pages : 35
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Book Description
This paper empirically investigates the effectiveness of monetary policy transmission in the Gulf Cooperation Council (GCC) countries using a structural vector autoregressive model. The results indicate that the interest rate and bank lending channels are relatively effective in influencing non-hydrocarbon output and consumer prices, while the exchange rate channel does not appear to play an important role as a monetary transmission mechanism because of the pegged exchange rate regimes. The empirical analysis suggests that policy measures and structural reforms - strengthening financial intermediation and facilitating the development of liquid domestic capital markets - would advance the effectiveness of monetary transmission mechanisms in the GCC countries.
Author: Serhan Cevik
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This paper empirically investigates the effectiveness of monetary policy transmission in the Gulf Cooperation Council (GCC) countries using a structural vector autoregressive model. The originality and significance of the paper are in constructing and analyzing "synthetic" aggregate variables for the GCC as a whole. The results indicate that the interest rate and bank lending channels are relatively effective in influencing non-hydrocarbon output and consumer prices, while the exchange rate channel does not appear to play an important role as a monetary transmission mechanism because of the pegged exchange rate regimes. The empirical analysis suggests that policy measures and structural reforms -- strengthening financial intermediation and facilitating the development of liquid domestic capital markets -- would advance the effectiveness of monetary transmission mechanisms in the GCC countries.
Author: David Cobham
Publisher: Routledge
ISBN: 1136864156
Category : Business & Economics
Languages : en
Pages : 429
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Book Description
Monetary policy in the Middle East and North African (MENA) countries remains an understudied area; this book fills an important gap by examining monetary policy frameworks and monetary policy strategies in the region. Building on the editors’ earlier book, Monetary Policy and Central Banking in the Middle East and North Africa, which focused on central bank independence issues and on exchange rate regimes, this book emphasises monetary policy strategies. Part I contains an overview of the financial markets and institutions which condition the choice of monetary policy strategy in the countries of the region, followed by single-country studies on aspects of the monetary policy frameworks of Lebanon, Egypt, Jordan, the Palestinian Territory and Turkey. Part II includes analyses of the prospects for inflation targeting in Egypt, Morocco and Tunisia, of the monetary transmission mechanism in the Gulf Cooperation Council countries, of the relative advantages of inflation targeting and exchange rate fixity with reference to Egypt, of the problem of fiscal dominance in Egypt, and of the inflationary implications of exchange rate fixity for Saudi Arabia and Kuwait. The contributors are experts from universities inside and outside the MENA region, from central banks in the region and from outside institutions such as the European Central Bank and the International Monetary Fund.
Author: Ms.Ritu Basu
Publisher: International Monetary Fund
ISBN: 1513588516
Category : Business & Economics
Languages : en
Pages : 27
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Book Description
The assessment provides evidence of market segmentation across Islamic and conventional banks in the Gulf Cooperation Council (GCC), leading to excess liquidity, and an uneven playing field for Islamic banks that might affect their growth. Liquidiy management has been a long-standing concern in the global Islamic finance industry as there is a general lack of Shari’ah compliant instruments than can serve as high-quality short-term liquid assets. The degree of segmentation and bank behavior varies across countries depending on Shari’ah permissibility and the availability of Shari’ah-compliant instruments. A partial response would be to support efforts to build Islamic liquid interbank and money markets, which are crucial for monetary policy transmission through the Islamic financial system.This can be achieved, to a large extent, by deepening Islamic government securities and developing Shari’ah-compliant money market instruments.
Author: Sayyed Mahdi Ziaei
Publisher:
ISBN:
Category : Monetary policy
Languages : en
Pages : 538
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Book Description
Author: Thomas Kroen
Publisher: International Monetary Fund
ISBN:
Category : Business & Economics
Languages : en
Pages : 9
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Book Description
Amid a pegged exchange rate to the US dollar and an open capital account, Oman’s policy rates move closely with US monetary policy. In this analysis, we show empirically that transmission from policy rates into effective lending and deposit rates remains subdued in Oman, even compared to GCC peers that similarly face a high oil price environment with persistent excess liquidity in the banking system. A cap on personal loan rates and low exposure of banks to SMEs and riskier borrowers limit passthrough into effective lending rates and credit conditions. The note documents ongoing actions by Omani policymakers to strengthen transmission and provides further recommendations on liquidity management, reserve management, and relaxing the interest rate cap.
Author: Mr.Ugo Fasano-Filho
Publisher: International Monetary Fund
ISBN: 9781589062191
Category : Business & Economics
Languages : en
Pages : 80
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Book Description
The six member countries of the Gulf Cooperation Council (GCC)--Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates--have made important progress toward economic and financial integration, with the aim of establishing an economic and monetary union. This paper provides a detailed analysis of the economic performance and policies of the GCC countries during 1990-2002. Drawing on the lessons from the experience of selected currency and monetary unions in Africa, Europe, and the Caribbean, it assesses the potential costs and benefits of a common currency for GCC countries and also reviews the options for implementing a monetary union among these countries.
Author: Mr.Esteban Jadresic
Publisher: International Monetary Fund
ISBN: 1451969481
Category : Business & Economics
Languages : en
Pages : 27
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Book Description
This paper assesses the eventual replacement of the currencies of the GCC countries with a common currency. It concludes that a properly implemented currency union may contribute to enhance economic efficiency in the region, deepen regional integration, and develop its non-oil economy. However, it cautions that a currency union should be seen as only one component of a much broader integration effort. This should include the removal of the distortions that inhibit intraregional trade and investment, agreements on policy frameworks to ensure macroeconomic stability, and further political integration. The paper also addresses the choice of exchange rate arrangement for the unified currency.
Author: Ritu Basu
Publisher:
ISBN:
Category :
Languages : en
Pages : 28
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Book Description
The assessment provides evidence of market segmentation across Islamic and conventional banks in the Gulf Cooperation Council (GCC), leading to excess liquidity, and an uneven playing field for Islamic banks that might affect their growth. Liquidiy management has been a long-standing concern in the global Islamic finance industry as there is a general lack of Shari'ah compliant instruments than can serve as high-quality short-term liquid assets. The degree of segmentation and bank behavior varies across countries depending on Shari'ah permissibility and the availability of Shari'ah-compliant instruments. A partial response would be to support efforts to build Islamic liquid interbank and money markets, which are crucial for monetary policy transmission through the Islamic financial system.This can be achieved, to a large extent, by deepening Islamic government securities and developing Shari'ah-compliant money market instruments.
