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Reserve Requirementson Foreign Currency Deposits in Sub-Saharan Africa: Main Features and Policy Implications

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  • Mr. Arto Kovanen

Abstract

This paper reviews the reserve requirement arrangements of sub-Saharan Africa, focusing on the differences between reserve requirements on domestic- and foreign-currency deposits. The reserve requirement systems in sub-Saharan Africa are relatively simple and transparent, but in some countries high unremunerated reserve ratios impose a significant implicit tax on the banks. The currency denomination of the foreign-currency reserve deposits raises concern in countries undergoing large macroeconomic changes or experiencing exchange rate volatility.

Suggested Citation

  • Mr. Arto Kovanen, 2002. "Reserve Requirementson Foreign Currency Deposits in Sub-Saharan Africa: Main Features and Policy Implications," IMF Working Papers 2002/065, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2002/065
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    References listed on IDEAS

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    1. Mr. Tomás J. T. Baliño & Mr. Charles Enoch & Mr. William E. Alexander, 1995. "The Adoption of Indirect Instruments of Monetary Policy," IMF Occasional Papers 1995/008, International Monetary Fund.
    2. Mr. Akira Ariyoshi & Mr. Andrei A Kirilenko & Ms. Inci Ötker & Mr. Bernard J Laurens & Mr. Jorge I Canales Kriljenko & Mr. Karl F Habermeier, 2000. "Capital Controls: Country Experiences with Their Use and Liberalization," IMF Occasional Papers 2000/009, International Monetary Fund.
    3. Paul R. Masson & Miguel A. Savastano & Sunil Sharma, 2019. "The Scope for Inflation Targeting in Developing Countries," World Scientific Book Chapters, in: Macroeconomic Modelling and Monetary and Exchange Rate Regimes, chapter 10, pages 331-383, World Scientific Publishing Co. Pte. Ltd..
    4. Di Giorgio, Giorgio, 1999. "Financial development and reserve requirements," Journal of Banking & Finance, Elsevier, vol. 23(7), pages 1031-1041, July.
    5. Mr. Patrick Honohan & Mr. Stephen A. O'Connell, 1997. "Contrasting Monetary Regimes in Africa," IMF Working Papers 1997/064, International Monetary Fund.
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    Cited by:

    1. John Hawkins & Paul Masson, 2003. "Economic aspects of regional currency areas and the use of foreign currencies," BIS Papers chapters, in: Bank for International Settlements (ed.), Regional currency areas and the use of foreign currencies, volume 17, pages 4-42, Bank for International Settlements.
    2. Kubo, Koji, 2007. "Do Foreign Currency Deposits Promote or Deter Financial Development in Low-Income Countries? An Empirical Analysis of Cross-Country Data," IDE Discussion Papers 87, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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