sanatullo
04-27-2001, 12:00 PM
I am still curious about these matters. Do we have the repressed monetary system in Uzbekistan? or We don't have the repressed monetary system!! :)
For those who are interested in learning the symptons of repressed monetary system, I think, the following notes would be useful:
1. The flow of loanable funds through the organized banking system is reduced, forcing potential borrowers to rely more on self-finance.
2. Interest rates on the truncated flow of bank lending vary arbitrarily from one class of favored or disfavored borrower to another.
3. The process of self-finance within enterprises and households is itself impaired. If the real yield on deposits as well as coin/currency is negative, the firms cannot easily accumulate liquid assets in preparation for making discrete investments. Socially costly inflation hedges look more attractive as a means of internal finance.
4. Significant financial deepening outside the repressed banking system becomes impossible when firms are dangerously illiquid and/or inflation is high and unstable. Robust open markets in stocks and bonds, and intermediation by trust and insurance companies require monetary stability.
5. Inflows of foreign financial capital may be unproductive when the domestic capital market is in disarray and foreign exchange rates are unpredictable.
For those who are interested in learning the symptons of repressed monetary system, I think, the following notes would be useful:
1. The flow of loanable funds through the organized banking system is reduced, forcing potential borrowers to rely more on self-finance.
2. Interest rates on the truncated flow of bank lending vary arbitrarily from one class of favored or disfavored borrower to another.
3. The process of self-finance within enterprises and households is itself impaired. If the real yield on deposits as well as coin/currency is negative, the firms cannot easily accumulate liquid assets in preparation for making discrete investments. Socially costly inflation hedges look more attractive as a means of internal finance.
4. Significant financial deepening outside the repressed banking system becomes impossible when firms are dangerously illiquid and/or inflation is high and unstable. Robust open markets in stocks and bonds, and intermediation by trust and insurance companies require monetary stability.
5. Inflows of foreign financial capital may be unproductive when the domestic capital market is in disarray and foreign exchange rates are unpredictable.