Monetary Governance and Currencies Resilience in Times of Crisis

Ayyoub Ben El Rhadbane () and Abdeslam El Moudden
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Ayyoub Ben El Rhadbane: National School of Business and Management (ENCG), Ibnou Tofail University, P.O. 1420, Kenitra 14000, Morocco
Abdeslam El Moudden: National School of Business and Management (ENCG), Ibnou Tofail University, P.O. 1420, Kenitra 14000, Morocco

IJFS, 2025, vol. 13, issue 3, 1-19

Abstract: This paper explores the central role of monetary governance, i.e., high politics and low politics, in protecting a currency’s exchange rate and reducing its volatility during periods of global crisis. Using annual panel data from 15 developed and emerging economies between 2001 and 2023, and applying a panel ARDL approach, the study assesses the effectiveness of high politics—captured through governance indicators—and low politics—captured through economic indicators—as a shield against external shocks, such as the 2008 financial crisis, the COVID-19 pandemic, and the Russo–Ukrainian conflict. The findings demonstrate that strong monetary governance significantly strengthens the Real Effective Exchange Rate (REER) and dampens its volatility in the long-term. In contrast, macroeconomic variables such as inflation, public spending, and trade openness exert destabilizing effects. The results highlight the strategic importance of governance as a long-term anchor of exchange rate resilience, suggesting that countries with robust institutional frameworks are better equipped to withstand global disruptions. These insights offer crucial policy implications for reinforcing monetary governance, especially in emerging economies vulnerable to financial and geopolitical turbulence.

Keywords: COVID-19; crisis; exchange rate; monetary governance; policy; Russo–Ukrainian conflict (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2025
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