Managing External Volatility: Central Bank Options in Low-Income Countries

Abstract

flexibility of exchange rates since the late 1980s. Table 1 documents this for Sub-Saharan Africa (SSA), where outside of monetary unions there has been a strong trend towards the adoption of intermediate or more flexible regimes. In many cases the move to greater exchange rate flexibility accompanied a concerted effort to establish monetary aggregates as inflation anchors, via the application of tight limits on budgetary financing and a strengthening of the institutional independence of the central bank. As a result of these developments, the majority of non-CFA central banks in SSA now publicly embrace a market-determined exchange rate. Monetary policy is formally conducted within a variant of reserve-money programming, with an eye on an eventual transition to formal inflation targeting. In practice, however, the move to exchange rate flexibility has been fairly cautious, both by comparison with public pronouncements and by the standards of the more decisive legacy of the period, the abandonment of tight exchange controls and disequilibrium exchange rates.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 17 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.