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Dollarization and Foreign Exchange Reserve : Debate on the Effectiveness of Monetary Policy in DR. Congo

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  • Christian P Pinshi

    (UNIKIN - University of Kinshasa)

Abstract

The high degree of dollarization combined with low foreign exchange reserves obstruct the management of monetary policy. The debate is launched on the effectiveness of monetary policy in this context of dollarization and meager reserves. To restore the effectiveness of monetary policy in the DR Congo, we advocate for fiscal discipline (that is to say, eradicate fiscal dominance) that is constant and sustainable, a guarantee of sustainable macroeconomic stability. Monetary targeting should remain the adopted strategy until proven otherwise and the choice of a floating exchange rate regime is better for good macroeconomic management in the case of the DR Congo. However, changes in the nominal exchange rate should be implicitly included in the implementation of monetary policy.
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  • Christian P Pinshi, 2020. "Dollarization and Foreign Exchange Reserve : Debate on the Effectiveness of Monetary Policy in DR. Congo," Working Papers hal-03087715, HAL.
    • Handle: RePEc:hal:wpaper:hal-03087715
    Note: View the original document on HAL open archive server: https://hal.science/hal-03087715
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    References listed on IDEAS

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    Cited by:

    1. Christian P Pinshi, 2022. "Ciblage des prévisions d'inflation : Un nouveau cadre pour la politique monétaire ?," Working Papers hal-03548273, HAL.
    2. PINSHI, Christian P., 2022. "A Note on the Natural Rate of Dollarization: Mathematical Approximation of Limits," MPRA Paper 111671, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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