Liquid Asset Ratios and Financial Sector Reform

62 Pages Posted: 15 Feb 2006

See all articles by Anne-Marie Gulde

Anne-Marie Gulde

International Monetary Fund (IMF)

Jean Claude Nascimento

affiliation not provided to SSRN

Lorena Zamalloa

affiliation not provided to SSRN

Date Written: October 1997

Abstract

As a monetary, selective credit, and government debt-management instrument, a liquid asset ratio is generally inefficient and may introduce serious distortions. However, it may play a limited role as a prudential instrument, particularly in less sophisticated banking systems or in the context of currency board arrangements. Recent trends in the use of this instrument have been to either abolish it altogether or to design it so as to minimize distortions. When necessary, these changes have been part of a broader effort to make financial intermediation more efficient by relying more on markets and less on regulations.

Keywords: Banks, Banking Regulation, Central Bank Policy, Monetary Policy

JEL Classification: E52, E58, G21, G28

Suggested Citation

Gulde, Anne-Marie and Nascimento, Jean Claude and Zamalloa, Lorena, Liquid Asset Ratios and Financial Sector Reform (October 1997). IMF Working Paper No. 97/144, Available at SSRN: https://ssrn.com/abstract=882711

Anne-Marie Gulde (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Jean Claude Nascimento

affiliation not provided to SSRN

No Address Available

Lorena Zamalloa

affiliation not provided to SSRN

No Address Available

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