Monetary Policy in Unified Currency Areas: The Cases of the Cama and Ecca During 1976-90

Jean-Claude Nascimento

No 1994/011, IMF Working Papers from International Monetary Fund

Abstract: The paper compares the performance of monetary policy in the Central African Monetary Area (CAMA) and the Eastern Caribbean Currency Area (ECCA) during 1976-90. Their institutional setup and mechanism for monetary control are examined to explain the opposite trends in the net external position of their banking system during this period. It concludes that monetary policy in the ECCA succeeded by relying on active interest rate management aimed at stemming capital outflows and adhering to stringent rules aimed at limiting credit expansion. The passive policy stance in the CAMA contributed to a significant redistribution of the area’s money stock.

Keywords: WP; money stock; financial market; banking system; CAMA country; CAMA member; money market rate; ECCA relative; single currency; BEAC discount rate; ECCA to the world market; BEAC statute; CAMA money stock; BEAC credit; exchange regime; Monetary expansion; Monetary base; Bank credit; Credit; Domestic credit; Caribbean (search for similar items in EconPapers)
Pages: 48
Date: 1994-01-01
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