Reserve Requirements on Foreign Currency Deposits in Sub-Saharan Africa-Main Features and Policy Implications

19 Pages Posted: 13 Feb 2006

See all articles by Arto Kovanen

Arto Kovanen

International Monetary Fund (IMF) - African Department

Date Written: April 2002

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.

Keywords: reserve requirements, foreign currency deposits, liquidity management

JEL Classification: E5

Suggested Citation

Kovanen, Arto, Reserve Requirements on Foreign Currency Deposits in Sub-Saharan Africa-Main Features and Policy Implications (April 2002). IMF Working Paper No. 02/65, Available at SSRN: https://ssrn.com/abstract=879557

Arto Kovanen (Contact Author)

International Monetary Fund (IMF) - African Department ( email )

1700 19th Street, NW
Washington, DC 20431
United States

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