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Issues in Interest Rate Management and Liberalization

Author

Listed:
  • Sérgio Pereira Leite

    (International Monetary Fund)

  • V. Sundararajan

    (International Monetary Fund)

Abstract

The transition strategy from administratively set interest rates to market rates is discussed. Despite worldwide trends toward financial liberalization, few monetary authorities are prepared to accept as reasonable any interest rate level that is market determined. The paper suggests some helpful indicators to assess the adequacy of interest rates and discusses factors that contribute to a smooth liberalization process. The main conclusion is that interest rate liberalization is not synonymous with laissezfaire policies, but requires the replacement of the administratively set interest rates by indirect monetary management techniques that operate through the market.

Suggested Citation

  • Sérgio Pereira Leite & V. Sundararajan, 1990. "Issues in Interest Rate Management and Liberalization," IMF Staff Papers, Palgrave Macmillan, vol. 37(4), pages 735-752, December.
    • Handle: RePEc:pal:imfstp:v:37:y:1990:i:4:p:735-752
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    Cited by:

    1. Calice,Pietro & Diaz Kalan,Federico Alfonso & Masetti,Oliver, 2020. "Interest Rate Repression : A New Database," Policy Research Working Paper Series 9457, The World Bank.
    2. International Monetary Fund, 1991. "Financial Sector Reforms and Monetary Policy," IMF Working Papers 1991/127, International Monetary Fund.
    3. Klaus P. Fischer & Jean-Pierre Gueyie & Edgar Ortiz, 1997. "Financial Liberalization: Commercial Bank's Blessing or Curse?," Finance 9705003, University Library of Munich, Germany.
    4. Buch, Claudia M., 1995. "Monetary policy and the transformation of the banking system in Eastern Europe," Kiel Working Papers 676, Kiel Institute for the World Economy (IfW Kiel).

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