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

Marc Quintyn

No 1994/062, IMF Working Papers from International Monetary Fund

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.

Keywords: WP; monetary management; financial market development; open market intervention; central bank bill market; central bank paper; rediscount window; government securities; central bank bank paper; bill market; Central bank bills; Government securities; Open market operations; Treasury bills and bonds (search for similar items in EconPapers)
Pages: 60
Date: 1994-05-01
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Citations: View citations in EconPapers (8)

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