Financial Sector Reform in Jamaica During 1985-1992, Possible Lessons for the Caribbean

Dewitt Marston

No 1995/090, IMF Working Papers from International Monetary Fund

Abstract: This paper reviews the Jamaican experience with indirect instruments and contrasts this with the currency board type arrangements of the common currency area governed by the Eastern Caribbean Central Bank (ECCB). Reforms in Jamaica improved intermediation and banking efficiency, but a weak fiscal position and interest rate caps undermined the effectiveness of indirect instruments in attaining monetary control. The apparent stability amongst members of the currency union may mask fiscal pressures. In most Caribbean countries, problems of quasi-fiscal pressures on money supply, and disintermediation due to some regulation, are evident. Resolving these issues are necessary to facilitate the reforms being pursued.

Keywords: WP; monetary management; central bank; foreign exchange; certificate of deposit; secondary market; liquid asset ratio; floor deposit rate; interest rate structure; exchange arrangement; preferential interest rate scheme; BoJ certificate of deposit; market development; interbank system; currency-board type arrangement; exchange market liberalization; administered interest rates; Credit ceilings; Currencies; Reserve requirements; Open market operations; Caribbean (search for similar items in EconPapers)
Pages: 32
Date: 1995-09-01
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