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Monetary policy strategies, financial institutions and financial markets in the Middle East and North Africa: an overview

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  • Cobham, David

Abstract

Three polar types of monetary architecture are identified together with the institutional and market infrastructure required for each type and the kinds of monetary policy feasible in each case: a ‘basic’ architecture where there is little or no financial system as such but an elementary central bank which is able to fix the exchange rate, as a substitute for a proper monetary policy; a ‘modern’ monetary architecture with developed banks, financial markets and central bank where policy choices include types of inflation targeting; and an ‘intermediate’ monetary architecture where less market-based monetary policies involving less discretion are feasible. A range of data is used to locate the various MENA countries with respect to these polar types. Five countries (Iran, Libya, Sudan, Syria and Yemen) are identified as those with the least developed monetary architecture, while Bahrain and Jordan are identified as the group at the other end of the spectrum, reaching beyond the intermediate polar type in some dimensions but not others. The countries in between vary on different dimensions but all lie between basic and intermediate architectures. The key general findings are that the MENA countries are both less differentiated and less ‘developed’ than might have been expected. The paper ends by calling for research on the costs and benefits of different types of monetary architecture.

Suggested Citation

  • Cobham, David, 2010. "Monetary policy strategies, financial institutions and financial markets in the Middle East and North Africa: an overview," SIRE Discussion Papers 2012-61, Scottish Institute for Research in Economics (SIRE).
  • Handle: RePEc:edn:sirdps:668
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    File URL: http://hdl.handle.net/10943/668
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    References listed on IDEAS

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    1. Miss Eva Gutierrez, 2003. "Inflation Performance and Constitutional Central Bank Independence: Evidence From Latin America and the Caribbean," IMF Working Papers 2003/053, International Monetary Fund.
    2. Douglass C. North, 1991. "Institutions," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 97-112, Winter.
    3. International Monetary Fund, 2004. "Financial Sector Development in the Middle East and North Africa," IMF Working Papers 2004/201, International Monetary Fund.
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    Cited by:

    1. Jamal Bouoiyour & Refk Selmi, 2013. "The effects of central banks' independence on inflation outcomes in emerging countries: Does the choice of exchange regime matter?," Post-Print hal-01886584, HAL.
    2. Mengdi Song, 2018. "Network Effects of Countries’ Exchange Rate Regime Choices: A Spatial Analysis," Open Economies Review, Springer, vol. 29(5), pages 1061-1093, November.

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