Government Securities Versus Central Bank Securities in Developing Open Market Operations [electronic resource] : Evaluation and Need for Coordinating Arrangements / Marc Quintyn.
Material type: TextSeries: IMF Working Papers; Working Paper ; No. 94/62Publication details: Washington, D.C. : International Monetary Fund, 1994Description: 1 online resource (60 p.)ISBN: 1451848226 :ISSN: 1018-5941Subject(s): Central Bank | Debt Management | Government Securities | Monetary Management | Monetary Policy | Gambia, The | Indonesia | Korea, Republic of | New Zealand | PhilippinesAdditional physical formats: Print Version:: Government Securities Versus Central Bank Securities in Developing Open Market Operations : Evaluation and Need for Coordinating ArrangementsOnline resources: IMF e-Library | IMF Book Store Abstract: 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.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.
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