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Government Securities Versus Central Bank Securities in Developing Open Market Operations; Evaluation and Need for Coordinating Arrangements

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  • Marc G Quintyn

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.

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  • Marc G Quintyn, 1994. "Government Securities Versus Central Bank Securities in Developing Open Market Operations; Evaluation and Need for Coordinating Arrangements," IMF Working Papers 94/62, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:94/62
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    Cited by:

    1. Sweidan, Osama D. & Widner, Benjamin, 2008. "Transparency and central bank losses in developing countries," Research in Economics, Elsevier, vol. 62(1), pages 45-54, March.
    2. John Hawkins, 2005. "Globalisation and monetary operations in emerging economies," BIS Papers chapters,in: Bank for International Settlements (ed.), Globalisation and monetary policy in emerging markets, volume 23, pages 59-80 Bank for International Settlements.
    3. De Melo, Martha & Denizer, Cevdet, 1997. "Monetary policy during transition : an overview," Policy Research Working Paper Series 1706, The World Bank.

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