Reserve Requirementson Foreign Currency Deposits in Sub-Saharan Africa

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.Reserve requirements;Liquidity management;central bank, reserve requirement, monetary policy, inflation, monetary control, monetary target, bonds, reserve ratios, consolidated bonds, money market, monetary authorities, financial markets, financial market, monetary fund, monetary aggregate, international financial statistics, financial systems, monetary targets, monetary policy instruments, monetary instruments, monetary arrangements, financial intermediation, independent monetary policy, monetary authority, open market operations, flexible exchange rate, money market interest rates, mandatory reserve requirements, monetary management, government securities, monetary liabilities, monetary program, deposit money banks, monetary transmission, monetary regimes, money market interest, deposit money, financial stability, monetary policy instrument, financial liberalization, money market funds, monetary policy independence, inflation-targeting, interest rate targeting, monetary policy implications, high reserve requirements, monetary policy operating procedures, monetary community, monetary policy framework, monetary aggregates, currency of denomination, flexible exchange rate regimes, monetary base, monetary systems, financial instruments, monetary union, monetary transmission mechanism, domestic monetary policy, intermediate monetary target

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Research Papers in Economics

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Last time updated on 10/24/2014

This paper was published in Research Papers in Economics.

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