1 open market operations

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1 Open Market Operations

The Fed conducts open market operations by buying and selling US government securitiesespecially US Treasury bills. Since the market for US Treasury bills is so active, the Fed canmake large purchases and sales quickly and easily, without disrupting the market. Although the

FOMC makes decisions on how open market operations are to be conducted, the tradesthemselves are executed at the Open Market Desk at the Federal Reserve Bank of New York.

Open market purchases and sales have permanent affects on the monetary base, but sometimesthe Fed will want to change the monetary base only temporarily. At these times,

it engages in two other types of transactions:

Repurchase Agreement (repo) = The Fed purchases US government securities will anagreement that the seller will buy them back (repurchase them) at a specified price on aspecified date, usually within two weeks. A repo is therefore like a temporary open market

purchase, temporarily increasing the monetary base.

Matched Sale-Purchase Transaction (reverse repo) = The Fed sells US government securitieswith an agreement that the buyer will sell them back at a specified price on a specified date,again usually within two weeks. A reverse repo is therefore like a temporary open market sale,temporarily decreasing the monetary base.

Hence, in conducting monetary policy, open market operations have a number ofadvantages:

1. They are under the direct and complete control of the Fed.

2. They can be large or small.

3. They can be easily reversed.

4. They can be implemented quickly.

2 Discount Loans

When a bank receives a discount loan from the Fed, it is said to have received a loan at the

discount window. The Fed can affect the volume of discount loans by setting the discountrate:

A higher discount rate makes discount borrowing less attractive to banks and will

therefore reduce the volume of discount loans.


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A lower discount rate makes discount borrowing more attractive to banks and willtherefore increase the volume of discount loans.

Discount lending is most important during financial panics:

When depositors lose confidence in the financial system, they will rush to withdraw theirmoney.

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This large deposit outflow puts the banking system in great need of reserves. The Fed standsready to supply these reserves by making discount loans. In such situations, the Fed acts as alender of last resort. Hence, in October 1987 and again in September 2001, the Fed made itclear that it would supply additional reserves to the financial system, as necessary, through thediscount window.

Advantage of discount loans:

They allow the Fed to act as a lender of last resort during a financial panic.Disadvantages of using discount loans as a tool for monetary policy during normal times:

The volume of discount loans can be influenced by the Fed, but not completely controlled:

The Fed cannot be sure how many banks will request discount loans at any given interest rate.

Changes in the discount rate must be proposed by the Federal Reserve Banks before beingapproved by the Board of Governors. Hence, they are neither quickly made nor easily reversed.

3 Changes in Reserve Requirements

By affecting the money multiplier, changes in the required reserve ratio can lead tochanges

in the money supply.

Disadvantages to using changes in reserve requirements as a tool for monetary policy:

Large changes in reserves must be approved by Congress.
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Hence, large changes cannot be made quickly and easily.

Also, if a bank holds only a small amount of excess reserves and the required reserve ratio isincreased, the bank will have to quickly acquire reserves by borrowing, selling securities, orreducing its loans. Each of these three options is costly and disruptive. Hence, changes in

reserve requirements can cause problems for banks by making

liquidity management more difficult.

Source: http://www.shvoong.com/social-sciences/economics/2257090-tools-monetary-policy/#ixzz1lCO2sscn

M t phn tch cho r ng, nh ng i u ch nh chnh sch g n y c a Ngn hng Nh n c c g n v i thng i p th t ch t ti n t .

Cng ty C ph n Ch ng khon B o Vi t (BVSC) v a g i t i nh u t b n bo co c bi t v i ch : T ng li su t c b n - Thng i p th t ch t chnh sch ti n t .

i m xu t pht c a b n bo co l quy t nh nng m t lo t cc m c li su t ch ch t, trong n i b t l vi c t ng li su t c b n ln m c 9% l n u tin sau 11 thng lin t c duy tr m c 8%, c a Ngn hng Nh n c trong ngy 5/11.

y c th l quy t nh b t ng i v i nhi u nh u t song l i l i u khng qu b t ng i v i gi i ngn hng khi bi u li su t lin ngn hng trong nh ng ngy qua lin t c t ng m nh, v n l nh ng bi u hi n u tin v kh n ng Ngn hng Nh n c s t ng li su t c b n, b n bo co nh n nh.

Phn tch t i u ch nh trn, hai thng i p m BVSC cho l r t r c pht i t quy t nh t ng li su t c b n l n ny c a Ngn hng Nh n c: th t ch t ti n t nh m ki m sot l m pht v tr li su t v ng di n bi n cung c u c a th tr ng, gp ph n h nhi t t gi.

nh h ng h m t b ng li su t c a Chnh ph trong th i gian qua m c d r t h p l trong vi c gi m b t chi ph li vay cho doanh nghi p song d ng nh mong mu n ny khng cn ph h p v i b i c nh kinh t v m hi n nay, khi r i ro t gi v l m pht ang khng ng ng leo thang.

Theo BVSC, thng i p v vi c th t ch t ti n t l kh r rng. Th c ch t hi n nay, li su t c b n khng cn ng vai tr quan tr ng nh tr c kia, nh ng y v n c coi l tn hi u i u lm tham chi u cho cc lo i li su t khc. V khng ph i i n khi Ngn hng Nh n c t ng li su t c b n m th c ch t nh ng bi u hi n v vi c th t ch t ti n t c th hi n thng qua ng thi i u ch nh k h n v kh i l ng b m ti n qua nghi p v th tr ng m (OMO) k t gi a thng
http://www.shvoong.com/social-sciences/economics/2257090-tools-monetary-policy/#ixzz1lCO2sscnhttp://www.shvoong.com/social-sciences/economics/2257090-tools-monetary-policy/#ixzz1lCO2sscnhttp://www.shvoong.com/social-sciences/economics/2257090-tools-monetary-policy/#ixzz1lCO2sscnhttp://www.shvoong.com/social-sciences/economics/2257090-tools-monetary-policy/#ixzz1lCO2sscn


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10.

C th , k h n OMO c i u ch nh t 14 ngy xu ng 7 ngy, kh i l ng c ng ch t p trung a ph n cc k h n 7 ngy cho th y nh h ng t p trung h tr thanh kho n v rt d n ti n v c a Ngn hng Nh n c. Cng ty ch ng khon ny c ng cho bi t, k t u thng 11 tr l i y, m c d kh i l ng v n b m qua OMO hng ngy c a Ngn hng Nh n c l t ng i nhi u (trung bnh kho ng 12 nghn t ng/ngy) nh ng a ph n con s ny l v a b p l ng ti n o h n ht v .

Th t ch t cung ti n thng qua nghi p v th tr ng m th c ch t l b c i u tin c a qu trnh th t ch t ti n t . BVSC cho r ng Ngn hng Nh n c s duy tr li su t c b n m c 9% t nh t l n h t thng 2/2011 (sau d p T t Nguyn n) cho n khi l m pht b t u th c s gi m, BVSC a ra d bo.

m t n i dung khc, b n bo co t v n t ng li su t c b n li u c gip h nhi t c n s t t gi hay khng? V vi c li su t c b n t ng cng v i ch tr ng tr li su t v v i th tr ng, nh m r ng ng cho cc ngn hng t ng li su t tr l i, ang c coi l m t trong nh ng bi n php t ng c ng ni m tin c a ng i dn vo ng n i t .

V l thuy t, ch ng no kho ng cch chnh l ch li su t gi a VND v USD v n cn l n b p cho k v ng gi m gi VND th ng i dn v n s tin t ng vo ng n i t . Tuy nhin, trong th c t t u n m n nay, chnh l ch li su t gi a VND v USD lun m c 7- 8% trong khi t gi m i ch i u ch nh h n 5% nh ng

ng i dn v n a thch n m gi USD h n.

Theo , cc tc gi c a b n bo co bnh lu n: Nh v y c th th y, t ng li su t VND ch l m t trong nh ng nguyn nhn gip ng i dn yn tm n m gi ng n i t , bi n php quan tr ng h n v n l s ch ng v minh b ch trong chnh sch t gi c a nh i u hnh. M t chnh sch i u ch nh t gi c l trnh s khi n m i ch th trong n n kinh t t bi t cn i thi t h n trong vi c l a ch n gi a VND hay USD n m gi , trnh c hi n t ng u c khng ng c.

C ng lin quan n v n t gi, m c d Chnh ph m i y tuyn b s bn

m nh USD ra th tr ng v cam k t khng t ng t gi t nay n cu i n m, tuy nhin i t ng ti p c n c ngu n USD ny c a Ngn hng Nh n c c BVSC d tnh c th s r t h n ch . Nhi u kh n ng s ch l nh ng doanh nghi p s n xu t, nh p kh u cc m t hng thi t y u nh l ng th c- th c ph m, x ng d u, phn bn m i mua c USD v i gi tr n nim y t; cn a ph n cc doanh nghi p cn l i ( c bi t l cc doanh nghi p nh p kh u hng xa x ) s ph i tm mua USD v i gi trn th tr ng t do. V theo , r t c th kinh t Vi t Nam s ch ng ki n hi n t ng 2 t gi trong cc thng cu i n m.

Do v y, BVSC cho r ng, vi c t ng li su t c b n s gp ph n nng cao ni m tin

i v i VND trong trung v di h n. Tuy nhin chng ti c ph n e ng i tc ng c a vi c t ng li su t nh m h nhi t t gi trong ng n h n c th s khng c


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nhi u nh nh i u hnh mong mu n.

Sau khi quy t nh li su t c b n c thi hnh, ch c ch n m t b ng li su t trn th tr ng lin ngn hng trong th i gian t i s c i u ch nh t ng theo. i t ng u tin ph i ch u thi t s l cc doanh nghi p khi ph i i vay v i m t b ng li su t cao h n.

Vi c chi ph s n xu t c a doanh nghi p cao do li su t t ng ln m t vi ph n tr m c th s l i nh h ng vo l m pht, tuy nhin, BVSC cho r ng nh h ng ny c th s khng l n v c tr nh t nh. N u nh xt l i trong su t n a u n m 2010 th doanh nghi p v n ph i ch u m c li su t cho vay n 16 - 17% nh ng ch s CPI c ng khng t ng m nh. Nguyn nhn chnh c a vi c l m pht t ng m nh trong th i i m cu i n m ph n nhi u s do nhm hng l ng th c th c ph m v i tnh hnh th i ti t ph c t p. Vi c gi USD trn th tr ng t do leo thang c th c ng s lm cho gi c nhm hng nh p kh u trong d p T t thm c ng

th ng.

V t ng th , bo co c a BVSC k t lu n: Quy t nh t ng li su t c b n ln 9% c a Ngn hng Nh n c s c tc ng tch c c i v i l m pht v t gi trong trung v di h n, cn trong ng n h n, hi n nh ng r i ro ny v n cn r t l n. D u sao, c th th y m t i m r t ng l u l Chnh ph ang t p trung m i n l c cho vi c bnh n kinh t v m, th m ch l ph i hi sinh m c tiu t ng tr ng. y c th l ti n cho s pht tri n n nh c a kinh t v m Vi t Nam trong n m 2011

Th trng hi oi Vit Nam mang c trng l thiu cc cngc phng chng ri ro t gi, cc doanh nghip d chu tn thtkhi t gi bin ng v v vy, vic iu hnh chnh sch tin ttheo nhng mc tiu kinh t ln thng gp nhiu tr ngi. Sdng t gi bnh qun lin ngn hng lm thc o phn noto ra mt s kt qu tch cc.

Tuy nhin, iu chnh nh th no t gi theo st c nhng cni ln ca Chnh ph v phn nh xc thc hn cung cu th trng

hin vn l mt mc tiu nan gii. Theo quan im c nhn, vn ny c th xem xt dicc gc sau:

1. Quan im chung

Th nht: Chnh sch t gi phi c phi hp ng b vi cc chnh sch kinh t v mkhc. C th:

- Hon chnh c ch qun l giao dch ngoi hi v c s php l cho vic iu hnh th trngngoi t.

- Phi hp cht ch, ng b vi cc chnh sch v gii php b phn trong lnh vc tin t(nh li sut, cung ng vn) nhm tc ng c hiu qu vo ni t t nhiu gc .


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- a dn cc cng c qun l tin t trn th gii vo p dng thc tin. Bn cnh , vichin i ha h thng cc t chc ti chnh cn xc tin vi mc tiu pht trin th trng tichnh ni chung nng cao nng lc, m rng phm vi iu chnh v m ca Nh nc.

- Phi hp hiu qu vi cc chnh sch v m khc nh ngoi thng, cn cn ngn sch, thu,

tn dng, thu nhp ngi lao ng.

Th hai: iu hnh t gi xut pht t li ch chung ca nn kinh t; c ngha ti mt thiim phi xc nh r yu t no cn u tin v yu t no c th hy sinh t li ch tngth ti a. V d, quyt nh tng gi ni t gim nh sc p tr n nc ngoi ca doanhnghip (Chnh ph) v chp nhn s suy gim tm thi i vi xut khu nu iu ny t tokh khn hn cho nn kinh t.

Th ba: Xy dng chnh sch t gi trn c s hi nhp th trng tin t trong nc vi quct nhm s dng hiu qu cc ngun ti chnh hn ch v trnh nguy c tt hu.

Th t: Khng ngng nng cao uy tn ca ng Vit Nam trn c s duy tr s tng quan hpl gia gi tr i ni v i ngoi ca ni t, hng dn ti mc tiu ng Vit Nam c khnng chuyn i. Mt ng tin mt uy tn tt yu lm thng tn n tch ly, u t ni a,tng nguy c lm pht, to iu kin cho hi chng ngoi t ha.

Th nm: u tranh c hiu qu vi hin tng u c, tch tr v kim ch tc ng xu cath trng ngoi t ch en.

2. La chn ch t gi

Xt v mi quan h gia mc tiu kinh t di hn v ch t gi, ta thy bt k nn kinh tno cng tp trung vo bn mc tiu kinh t v m c bn l sn lng, n nh gi c, viclm v cn bng ngoi thng (thuc hai nhm mc tiu cn bng ni v cn bng ngoi). Tuynhin, lm pht v ngoi thng ch l yu t ngoi sinh d c tc ng qua li ln nhau. iuquan trng t cc mc tiu trn khng ch quyt nh bi ch t gi hi oi, m do s

phi hp hp l gia cc chnh sch kinh t v m. iu ny th hin r trong ng li kinh tca Vit Nam giai on 1989-1993 khi ni t gn nh c th ni, nhng i km l mtchnh sch tht cht lng tin cung ng, khng nhng chn lm pht m cn thc yxut khu, thu ht u t nc ngoi.

Nhng bin ng gn y trn th gii cho thy rng vic ly nhng ngnh cng nghip cao

lm mi nhn chin lc cho pht trin kinh t l khng kh thi. Bi l, tim lc Vit Namcha thc hin mc tiu ny v kh nng thch ng vi cc bin ng ln l cha cao.Vic hng qu trnh cng nghip ha - hin i ha vo lnh vc nng nghip l mt chtrng ng n xt trn quan im pht huy li th cnh tranh. Tuy nhin, nng phm phthuc nhiu vo iu kin t nhin nn sn lng k hoch v thc t thng chnh lch ln.iu ny nhc nh nn kinh t phi ch trng ng u vi nhng cn sc c ngun gc tth trng hng ha v ng h cho mt ch t gi th ni. Ch t gi th ni khngnhng gip nn kinh t loi tr tc ng ca nhng cn sc t th trng hng ha m cn gipt mc tiu cn bng ngoi mt cch d dng do t gi t bin ng duy tr trng thi cn

bng cung cu ngoi t. Tuy vy, cc cng c iu tit th trng hi oi hin vn cn s si,cha pht huy ng mc kh nng hn ch ri ro hi oi. V d, nghip v hon i ngoi t

(Swap) - mt nghip v c bn v ro chn ri ro hi oi p dng rt hn ch Vit Nam.Ngoi ra, yu t tm l lun c nh hng ln n t gi. S linh hot hon ton trong iu


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kin nh vy rt d gy bin ng mnh v t gi, cng nh khin tng trng xut khu thmbp bnh. T cho thy nu da trn cc mc tiu kinh t c bn th s linh hot c kim sotca t gi s l bc la chn thch hp k tip ca ch t gi th ni hon ton.

Xt di gc khc, tnh trng thm ht ngn sch hy cn nghim trng v kh suy gim

trong tng lai gn do nhu cu chi ngn sch ngy mt tng. H thng ngn hng nhn chung lyu km v ngun d tr ngoi hi mt cng c can thip vo t gi cn thp. Khi cn cnthng mi vn tnh trng nhp siu th mc d tr ngoi t kh c th ci thin r rt vonhng nm ti. Mt cu hi t ra l liu vn trn c c gii quyt khi c nh ni t vimt ngoi t mnh nh ng la M (USD) hay khng? Quan im ny c cng c khivic trin khai cc gii php iu tit kinh t thiu tnh ng b, cng vi h thng thng tin -d bo lc hu, thiu khoa hc hn ch phm vi tc ng ca chnh sch kinh t v m nt gi. Nhng yu im trong ti chnh d bo trc s xut hin nhng cn sc c ngun gct th trng tin t v yu cu duy tr mt ch t gi c nh nhm i ph li. Tuy nhin,ch t gi c nh khng h tr cho mt nn kinh t l thuc nhiu vo xut khu nh Vit

Nam. Khng nhng vy, n cn th hin s phc hi nhng sai lm t giai on qun l kinh

t theo m hnh tp trung, bao cp nh trc 1989, v r rng, y l s la chn tri quy lut.

Tm li, thc trng ti chnh nc nh va i hi mt ch t gi th ni, va ng h ch t gi c nh. Mt ch t gi bn th ni s l s la chn hp l. Bn cnh , cng srt hu ch nu tn ti song song cc cng c hnh chnh vi mc ch can thip kp thi n

bin dao ng ca t gi, phc v cho cc mc tiu kinh t ln tng thi k. Vic ph gini t mt cch thn trng s a gi tr ng Vit Nam tr v mc hp l hn so vi cc ngtin khc trong khu vc, t tng sc cnh tranh cho hng xut khu.

3. nh gi tnh hnh kinh t trc v sau khi iu chnh t gi

Vic xc nh thi im can thip vo t gi, can thip nh th no, b sung nhng bin phph tr sau khi can thip s quyt nh mc thnh cng hay tht bi ca cng tc iuhnh t gi. Xc nh mc t gi hp l l mt vn ty thuc vo nhn nh ca Chnh phtrong mt thi k rng bin s kinh t no l quan trng. Theo nhiu nh kinh t, ch c thtrng mi quyt nh c mc cn bng hp l ny. Theo kin ring, gii php lin quann kha cnh ny c mt s im nn lu nh sau:

(1) Theo st nhng tn hiu trn th trng ngoi t chnh thc.

Khong cch gia t gi mua v bn ca mt ngoi t, trn l thuyt cng nh thc tin, ty

thuc vo phm vi giao dch, mc ri ro v tnh thanh khon ca ngoi t trn th trng.Trong trng thi cn bng ca th trng, p lc cnh tranh lun gi s chnh lch ny vomt mc hp l. Vic ni lng bin dao ng t gi l mt nhu cu thit thc acng tc iu chnh t gi tin gn ti cc quy lut th trng hn, hay cng ng ngha vivic t do ha dn cc giao dch ngoi t. Khi th trng hi oi th gii c bin ng mnh,cc quy nh hnh chnh v bin c th lm ng bng th trng ngoi t trong nc,khuyn khch cc hot ng phi php.

Theo nghin cu ca IMF, t gi thc ca ng Vit Nam so vi USD c nh gi cao hnt gi thc tng ng ca cc nc c quan h mu dch vi Vit Nam nh Trung Quc,Philippines, Malaysia, Thi Lan v thm ch c M. iu c ngha hng Vit Nam c bn

trn th trng th gii vi gi cao hn hng cng loi ca nhng quc gia trn. Mt khc, xuhng hi nhp gn lin vi chin lc cnh tranh bng hng xut khu cng to p lc thay


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i cch qun l t gi danh ngha hin nay, trong kin ni bt l phi ph gi ng VN.Tuy nhin, vic ph gi t ngt ng VN c th gy xo trn ln trong nn kinh t. T gidanh ngha tng l mt li th cho hng xut khu nhng cha th bo m kh nng cnhtranh v chng ta cn vp phi hng ro phi thu quan (tiu chun v kim dch, cht lng sn

phm, hm lng k thut cao trong sn phm, tm l tiu dng, thng hiu ). Trong lc

, cn cn mu dch hin ang tnh trng nhp siu. Mt khi u ra cha m bo th vicph gi s lm trm trng hn s thm ht cn cn mu dch. Mt khc, cc cng c iu titth trng tin t nh nghip v th trng m, li sut ti chit khu cha pht huy tnh uvit. Th nn, vic ph gi mnh ng VN rt c th dn n nhng c sc kinh t nm ngoitm kim sot ca Chnh ph. Xu hng ph gi ni t l mt nh hng ng nhng cn tinhnh thn trng nhm trnh gy sc cho nn kinh t. Vic ni rng bin dao ng t gi t0.1% ln 0.25% k t thng 7.2002 c xem nh bc khi u cho tin trnh ny.

(2) Theo di nhng xu hng vn ng trn th trng ch en.

S tn ti ca th trng ngoi t ch en l mt tt yu xut pht t thc trng kinh t v c

ch qun l ngoi hi ca VN. Nm bt nhng tn hiu trn th trng ny, ni m cc lc thtrng v c bn l khng b iu phi bi cc quy nh hnh chnh, c th gip ch cng tciu hnh t gi. C th:

Chi nhnh Ngn hng Nh nc cc tnh, thnh ph nn hnh thnh chn rt ti nhng umi giao dch trn trng ch en nhm nm bt kp thi xu hng vn ng ca th trngny.

chnh lch gia t gi chnh thc v t gi ch en to nn khi nim m cnh ko,c xem l hn th biu nh gi mc hp l trong iu hnh t gi. Tnh hp l bc lkhi hai t gi ny xch gn li nhau. Khng nht thit lm chng trng nhau v th trng chen cng ch mt mng nh trong tng th th trng, v tnh bt hp php ca n lun chang mt khon ri ro nht nh. Tt hn l nn chp nhn s chnh lch ny, min sao nkhng ln lm r r ngoi t t th trng chnh thc ra chn ch en.

(3) Nng cao nng lc cc cng c can thip t gi

- Cng c nghip v th trng m: Do lng ngoi t d tr ca VN cn qu thp nn cngc ny cha sc gi vai tr ch o trong iu chnh t gi. Sau y l mt s xut:

+ Xy dng khung php l thch hp cho nghip v th trng m.

+ Tranh th ti a kh nng tch ly ngoi t, ng thi duy tr mc d tr ngoi t tng xngvi nhp kim ngch nhp khu. Tp trung qun l ngoi t vo mt u mi duy nht l

Ngn hng Nh nc, ngay c ngoi t ca Kho bc Nh nc c c cng phi bn ngay choNgn hng Nh nc v khi c nhu cu th mua li nh nhng n v khc.

+ Nng cao hiu qu s dng ngun ngoi t d tr. C th, khi cn tung d tr ngoi t voth trng, Ngn hng Nh nc c th ng ra bo lnh cho cc tng cng ty nhp khu ccmt hng chin lc (nh xng du). iu ny gip m bo ngoi t d tr c s dngng cho hot ng ngoi thng.


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+ La chn c cu d tr ngoi t kh thi. Trong s cc ng tin mnh hin nay, ng quantm ch c ba loi: USD, EUR v JPY. Xu hng vn ng ca cc ng tin ny tm c ghinhn nh sau:

la M: y l ngoi t thng dng nht ti VN (hn 90% cc giao dch i ngoi qua

Vietcombank c thc hin bi ng tin ny). Sau cuc chin Iraq, USD lin tc trt gi sovi nhiu ngoi t mnh khc trn th gii (nh EUR, JPY, CHF ). Theo gii phn tch, mts nguyn nhn su xa ca s suy yu bt thng trn l bi chi ngn sch M trong nm tichnh va qua (kt thc ngy 30 thng 9 nm 2004) ln ti 413 t USD, tng ng 3,7%tng sn phm quc ni (GDP); mc thm ht mu dch cng ln ti 590 t USD, bng 5,7%GDP (ring trong thng 9 va qua l 51,6 t USD), lm cho nn kinh t M mt cn i v suygim lng lng tin ca gii u t vo ng USD. Nhiu ngi tin rng M ang thc thichnh sch mt ng USD yu nhm y mnh kim ngch xut khu. K t khi EUR ra in nay, gi 1 EUR xp x i c 1,30 USD. Chnh sch ny ang e da s tng trngkinh t da vo xut khu ca EU. Vo ngy 19 thng 11, B trng ti chnh v Thng c

Ngn hng trung ng G20 (gm G7, EU, Nga, Trung Quc, An , Hn Quc, Nam Phi, Th

Nh K, Argentina,c, Brazil, Indonesia, Mexico, Saudi Arabia) cng World Bank, IMF nhm hp ti Berlin (c) tm gii php n nh t gi hi oi gia ng USD v nhiungoi t mnh khc.

S trt gi qu mnh ca USD t nhiu nh hng n vic iu hnh t gi VN. Tnh tu nm n nay, gi USD ch tng 0,3% so vi VND (mc tng thp nht trong vng 8 nmtr li y), nhng nu ch so vi 6 thng u nm vi mc tng 0,5% th trong 4 thng tr liy, ng USD gim gi so vi VND. Bn thn t gi hch ton m B ti chnh cng bcng gim trong 3 thng tr li y, mc d mc gim rt nh: thng 9 l 15.721 VND/USD,thng 10 l 15.720 v thng 11 l 15.719. Theo xu hng trn, t gi VND/USD tnh c nm skhng tng nu M tip tc theo ui chnh sch mt ng USD yu.

Tuy gp nhiu kh khn v ti chnh ln chnh tr, M vn gi vai tr l mt nn kinh t hngmnh nht th gii v l mt i tc quan trng ca cc doanh nghip VN. V vy, vic chimt trng u th ca USD trong tng d tr ngoi t quc gia kh c th thay i trong tng laign.

ng Euro: ng tin ny mang tnh quc t ha th hai sau la M. Thc trng u m hinnay ca nn kinh t M gp phn y EUR tng gi. Tuy nhin, s tng gi EUR so viUSD ch tc ng xu thm s phc hi kinh t v lm su sc hn nhng bt n vn c cakhu vc s dng EUR. Gia cc thnh vin EU lun c bt ng trn nhiu mt; s lin kt

gia cc quc gia ny n cha nguy c mt kim sot i vi nhng ngun lc phnh rngkhi thiu ht thng tin hay thiu ng b trong iu hnh kinh t.

Do vy, tnh n nh ca ng tin cn c kim nghim thm trc khi c quyt nh iuchnh ln trong c cu d tr ngoi t.

ng Yn Nht: ng tin ny cho n nay vn cha thc s l ng tin quc t v ncNht vn ang trong n lc quc t ha ng tin ca mnh. Theo cc nh kinh t phng Tyth ngi Nht kh lm c iu ny v hai l do: Th nht, vo nhng nm 1970-1980 khinc Nht ang pht trin vi mt tc thn k, h t chi mong mun ca cc nc t

bn khc v vic quc t ha ng yn v khng mun nhng th lc bn ngoi can thip su

vo nn kinh t ca mnh. Vi thc trng kinh t hin nay cha thot khi suy thoi v mtchnh sch phc hi kinh t da phn ln vo xut khu ang gp tr ngi bi ng USD gim


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gi cng gi du la tng vt, ngi Nht xem nh nh mt thi c quc t ha ng tinca mnh. Th hai, ngi M ang phi i u vi s xm ln ngi v ca EUR, khi michuyn cha ng ng th h khng mun thy s xut hin ca mt ng tin i trng th ba.

- Cng c li sut ti chit khu: Bn thn li sut ch c tc ng gin tip n t gi v ng

vai tr l bin ngoi sinh; tuy nhin n li tc ng trc tip n u t v sn xut kinh doanhv gn lin vi chi ph s dng vn. Do vy, vic s dng cng c ny cn nhiu s cn nhc.

Lung vn ra vo nn kinh t VN ch yu l u t trc tip nc ngoi (FDI). u t gintip v dng vn ngn hn gn nh khng c do th trng chng khon v tin t cha phttrin. Tnh trng ny hy cn tip din trong nhiu nm. Hn na, giao dch vn cha c mca mt phn bi cc quy nh ca Chnh ph, mt phn do iu kin ti chnh VN cha chnmui v ng VN cha c t do chuyn i. Tt c cho thy li sut cha th c nh hngmnh n t gi. Tc ng ca n ch gii hn ch lm thay i nhng dng tin t lu thngtrong th trng ni a, t ni t chuyn sang ngoi t v ngc li. Vy, gii php tng

bc nng cao sc mnh ca cng c ny s ng nht vi vic t do ha ti khon vn quc

gia (m trc ht l cc giao dch vn ngn hn v u t gin tip). y cng chnh l conng tng bc a ng VN tr thnh mt ng tin chuyn i.

- Cng c hnh chnh: Nhng bin php hnh chnh trong thi gian qua em li hiu qukh tt, nh chng m VN thnh cng trong vic iu hnh chnh sch t gi hi oi vhn ch tc ng ca cuc khng hong ti chnh ng Nam . Tuy y ch l gii php tnhth nhng vic d b tc thi cc bin php hnh chnh cng khng phi kh thi. Chng chnn c ni lng tng xng vi mc can thip ca cc cng c kinh t. hon thin cngc ny c th tp trung vo mt s im sau:

Tng cng gim st cc giao dch ngoi hi thng qua vic kim sot cht hp ng thanhton ngoi t; ra mc pht nng i vi trng hp k khng gi ca hp ng xut nhpkhu v i vi cc hnh vi gian ln khc.

Duy tr cng tc thanh tra, kim tra vic thc thi quy nh v ch qun l ngoi hi hinhnh; cng quyt trng pht nng khng phn bit thnh phn kinh t nu xut hin hnh vivi phm.

R sot thng xuyn cc vn bn php quy ci tin kp thi

.

Inflation target c th va l iu kin cn, cng c th l iu kin nng caocreditability ca SBV, ti ngh rng, cng cuc chng lm pht trong nm 2011 v 2010 tht

bi cn do tnh cht k vng (expected inflation), nu lm pht mc tiu hp l v to c uytn, s loi dn lm pht k vng. CSTT s pht huy hiu qu cao hn. t , cng nng caoc gi tr ca VND. Xem thm: inflation target?:

CSTT da trn Inflation target l vic thc thi CSTT vi mc tiu chnh chnh l kim sot lmpht, hng n vic n nh gi c, n nh tin t: gi tr ng ni t v nim tin vo ngni t, c quy nh r rng v quyn hn, trch nhim, cng nh tnh minh bch. Khi thchin CS theo mc tiu ny, h ra mc tiu trung tm (th hin bng con s c th, c th

cng/tr i mt phn sai lch) v thc hin trong trung di hn theo mc tiu ny. Hin nay ckhong 26 quc gia theo mc tiu ny [1], trong , phn ln l cc quc gia mi ni
http://nghiatq.wordpress.com/2011/07/08/inflation-target/http://nghiatq.wordpress.com/2011/07/08/inflation-target/


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(Emerging market) nh Brazil (4.5%), Philippines (4.5%), Indo (4% 6%, bnh qun 5%),Thi Lan (0.5 3%), Mexico (3%); cc quc gia pht trin nh Anh (2% Two pointZero[2]), Canada (2%), Thy in (2%), New Zealand (1% 3%), Hn Quc (3%), Australia(2 3%).Bn cnh , mt s Central bank ln nht nh Fed, ECB, BoJ, SNB Swiss

National Bank c cho l s dng mt phn ni dung trong Inflation target.]

http://books.google.co.uk/books?id=iFI8-A02Xl8C&pg=PA305&dq=operating+target+of+monetary+policy&hl=en&sa=X&ei=wl0vT-0fxfPxA7O0uIAP&ved=0CG0Q6AEwCA#v=onepage&q=operating%20target%20of%20monetary%20policy&f=false

http://www.ft.lk/2011/10/19/objectives-of-monetary-policy/

http://kinhtetaichinh.blogspot.com/2009_04_01_archive.html

INFLATION TARGETING

Nhiu ngn hng trung ng ln trn th gii p dng inflation targeting l mc tiucho chnh sch tin t ca mnh. Cch y khng lu Fed ngm tha nhn mc tiuny, l do m nhiu ngi cho rng Fed khng cn cch no khc l li sut c bnca Fed hin qu thp nn khng cn kh nng ct gim c na. Khi Fed p dngquantitative easing, buc Fed phi chn mt nominal anchor mi v n gin nht lchn inflation.

T trc n gi ti vn ngh nominal anchor ca Fed l li sut ngn hn trn thtrng Fed fund (Fed funds rate). NhngNick Rowe va c mt bi cho rng nominalinterest rate khng phi l "nominal variable" bnh thng v n khng th dng lmnominal anchor cho chnh sch tin t c v mt l thuyt. S d t trc n gi Fedv mt s ngn hng trung ng khc thnh cng trong vic iu hnh chnh schtin t bng cch target nominal interest rate l v price stickiness v self-fulfilling trust.

Nu Fed thay i li sut nhanh hn tc thay i ca inflation (Taylor's rule) th hthng s stable, ngha l d khng c anchor nhng Fed to ra mt lc y mnhngc vi chiu ca sng nn s gi cho con tu khng tri i xa.

Trong tnh hnh hin ti, theo Rowe, nhiu kh nng Fed s khng th ct gim li sut nhanh na. Th nht v li sut qu thp v khng th gim xung di khng(ngoi tr lp lun ca Robert Hall v Susan Woodward ti cp n trong entryny) nn khng th chy theo deflation expectation. Th hai v real activities suy gimqu nhanh (suy thoi) nn real rate cng gim nhanh hn kh nng ct li sut ca Fed.C l v vy Fed buc phi i theo con ng inflation targeting. y cng l iuMankiw ngh vi ngy trc (nhngPaul Volckerc v khng ng h).
http://books.google.co.uk/books?id=iFI8-A02Xl8C&pg=PA305&dq=operating+target+of+monetary+policy&hl=en&sa=X&ei=wl0vT-0fxfPxA7O0uIAP&ved=0CG0Q6AEwCA#v=onepage&q=operating%20target%20of%20monetary%20policy&f=falsehttp://books.google.co.uk/books?id=iFI8-A02Xl8C&pg=PA305&dq=operating+target+of+monetary+policy&hl=en&sa=X&ei=wl0vT-0fxfPxA7O0uIAP&ved=0CG0Q6AEwCA#v=onepage&q=operating%20target%20of%20monetary%20policy&f=falsehttp://books.google.co.uk/books?id=iFI8-A02Xl8C&pg=PA305&dq=operating+target+of+monetary+policy&hl=en&sa=X&ei=wl0vT-0fxfPxA7O0uIAP&ved=0CG0Q6AEwCA#v=onepage&q=operating%20target%20of%20monetary%20policy&f=falsehttp://books.google.co.uk/books?id=iFI8-A02Xl8C&pg=PA305&dq=operating+target+of+monetary+policy&hl=en&sa=X&ei=wl0vT-0fxfPxA7O0uIAP&ved=0CG0Q6AEwCA#v=onepage&q=operating%20target%20of%20monetary%20policy&f=falsehttp://www.ft.lk/2011/10/19/objectives-of-monetary-policy/http://kinhtetaichinh.blogspot.com/2009_04_01_archive.htmlhttp://kinhtetaichinh.blogspot.com/2009/03/inflation-targeting.htmlhttp://worthwhile.typepad.com/worthwhile_canadian_initi/2009/04/interest-rate-control.htmlhttp://kinhtetaichinh.blogspot.com/2009/04/negative-interest-rate.htmlhttp://www.nytimes.com/2009/04/19/business/economy/19view.htmlhttp://blogs.wsj.com/economics/2009/04/18/kohn-volcker-go-toe-to-toe-on-inflation-target/http://blogs.wsj.com/economics/2009/04/18/kohn-volcker-go-toe-to-toe-on-inflation-target/http://books.google.co.uk/books?id=iFI8-A02Xl8C&pg=PA305&dq=operating+target+of+monetary+policy&hl=en&sa=X&ei=wl0vT-0fxfPxA7O0uIAP&ved=0CG0Q6AEwCA#v=onepage&q=operating%20target%20of%20monetary%20policy&f=falsehttp://books.google.co.uk/books?id=iFI8-A02Xl8C&pg=PA305&dq=operating+target+of+monetary+policy&hl=en&sa=X&ei=wl0vT-0fxfPxA7O0uIAP&ved=0CG0Q6AEwCA#v=onepage&q=operating%20target%20of%20monetary%20policy&f=falsehttp://books.google.co.uk/books?id=iFI8-A02Xl8C&pg=PA305&dq=operating+target+of+monetary+policy&hl=en&sa=X&ei=wl0vT-0fxfPxA7O0uIAP&ved=0CG0Q6AEwCA#v=onepage&q=operating%20target%20of%20monetary%20policy&f=falsehttp://www.ft.lk/2011/10/19/objectives-of-monetary-policy/http://kinhtetaichinh.blogspot.com/2009_04_01_archive.htmlhttp://kinhtetaichinh.blogspot.com/2009/03/inflation-targeting.htmlhttp://worthwhile.typepad.com/worthwhile_canadian_initi/2009/04/interest-rate-control.htmlhttp://kinhtetaichinh.blogspot.com/2009/04/negative-interest-rate.htmlhttp://www.nytimes.com/2009/04/19/business/economy/19view.htmlhttp://blogs.wsj.com/economics/2009/04/18/kohn-volcker-go-toe-to-toe-on-inflation-target/


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HomeAbout the Fed

FedpointRepurchase and Reverse RepurchaseTransactions(http://www.newyorkfed.org/aboutthefed/fedpoint/fed04.html)

Printer version

The Fed uses repurchase agreements, also called "RPs" or "repos", to makecollateralized loans to primary dealers. In a reverse repo or RRP, the Fedborrows money from primary dealers. The typical term of these operations isovernight, but the Fed can conduct these operations with terms out to 65 businessdays.

The Fed uses these two types of transactions to offset temporary swings in bankreserves; a repo temporarily adds reserve balances to the banking system, whilereverse repos temporarily drains balances from the system.

Repos and reverse repos are conducted with primary dealers via auction. In arepo, dealers bid on borrowing money versus various types of general collateral.In a reverse repo, dealers offer interest rates at which they would lend money to

the Fed versus the Feds Treasury general collateral, typically Treasury bills.Among the tools used by the Federal Reserve System to achieve its monetary policy objectivesis the temporary addition or subtraction of reserve balances via repurchase and reverserepurchase agreements in the open market. These operations have a short-term, self-reversingeffect on bank reserves.

Repurchase agreements are made at the initiative of the trading desk at the New York Fed (theDesk). The Desk implements monetary policy for the Federal Reserve System at the behest ofthe Federal Open Market Committee (FOMC).

Repos are the most common form of temporary open market operation, and are used totemporarily add balances to those already in the system as a result of securities purchased and


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held in the SOMA portfolio. The SOMA portfolio is grown via securities purchases, also calledpermanent open market operations.

RPs and reverse repurchase transactions are particularly useful in offsetting temporary swings

in the level of bank reserves caused by such volatile factors as float, currency held by the publicand Treasury deposits at Federal Reserve Banks.

While the mechanics of a repo involve buying and then reselling securities at a set price and aset time, at its financial essence, a repo is a collateralized loan. Fed repos can be conducted forterms anywhere from one to 65 business days. They are usually overnight, though rarely longerthan 14 days.

There are two main types of settlement methods for repos: triparty and delivery vs paymentor DVP. Fed repos are done via triparty settlement, which means that the Fed and the primarydealers use a triparty agent to manage the collateral. In a triparty repo, both parties to the repo

must have cash and collateral accounts at the same triparty agent, which is by definition also aclearing bank. The triparty agent will ensure that collateral pledged is sufficient and meetseligibility requirements, and all parties agree to use collateral prices supplied by the tripartyagent.

The Desk selects winning propositions on a competitive basis. Each dealer is requested topresent the rates they are willing to pay for the agreements versus various types of collateral.The three types of general collateral, or GC, the Fed accepts are marketable U.S. Treasurysecurities (including STRIPS and TIPS), certain direct U.S. agency obligations, and certainagency pass-throughs (or Mortgage Backed Securities, often called MBS).

The significance of the GC designation on the collateral is that GC collateral is fungible.That is, the Fed is not looking for specific securities; rather it is looking for any of the eligiblesecurities that do not have scarcity value. As such there are a number of securities that wouldsatisfy the requirements, and neither the dealer nor the Fed needs to know which specificsecurity or securities are going to ultimately be pledged to a winning proposition. The Deskestablishes relative values across the three collateral types, and then uses these values to selectthe best bids presented.

The New York Fed makes payment for the securities by crediting the reserve account of thedealer's triparty agent, a commercial bank. This act of crediting the bank's account actually

creates reserve balances. When the repo matures, the dealer returns the loan plus interest, andthe Fed returns the collateral. The return of funds to the Fed extinguishes the reserves that wereoriginally created by the repo.

The collateral pledged by dealers towards the repo has a haircut applied, which means theyare valued at slightly less than market value. This haircut reflects the underlying risk of thecollateral and protects the Fed against a change in its value. Haircuts are therefore specific toclasses of collateral. For example, a U.S. Treasury bill might have one haircut rate, while anagency coupon might have a different haircut.

Fed reverse repos are settled DVP, where securities are moved against simultaneous payment.

In this case, the Fed sends collateral to the dealers clearing bank, which triggers asimultaneous movement of money against the security. At this point, reserve balances are


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extinguished. When the deal matures, the dealer sends the collateral back to the Fed DVP,which triggers the simultaneous return of the dealers funds. This act re-creates the reserve

balances that were extinguished on the front leg of the transaction.

Market participants frequently use repurchase agreements and RRP transactions to acquirefunds or put funds to use for short periods. However, transactions not involving the central

bank do not affect total reserves in the banking system.

In the absence of an active market for government securities, a special Treasury issue mightalso be considered as a means of adding to bank reserves needed for long-term growth. Thiswould involve giving the central bank authority to auction a special Treasury deposit thatwould be created along with the debt issue. Such a special issue, guaranteed by thegovernment, may help strengthen and diversify the central bank's balance sheet.

Transformations to Open Market Operations(http://www.imf.org/external/pubs/ft/issues5/index.htm)Stephen H. Axilrod1997 International Monetary FundJanuary 1997PDF File (181k) also available. Use the freeAdobe Acrobat Readerto view pdf files.

[Preface] [Transformations to Open Market Operations][How Are Open Market Operations Related to Other Monetary Instruments?][Discount Window Policy] [Reserve Requirements][The Market and the Role of the Central Bank] [Suitability of Markets][Regulatory Role of the Central Bank] [Market Architecture][Conduct of Open Market Operations] [Instruments for Open Market Operations][Flexible Open Market Operations] [Government Debt Management][Concluding Observations] [Author Information]

Preface

The Economic Issues series was inaugurated in September 1996. Its aim is to make accessibleto a broad readership of nonspecialists some of the economic research being produced in theInternational Monetary Fund on topical issues. The raw material of the series is drawn mainlyfrom IMF Working Papers, technical papers produced by Fund staff members and visitingscholars, as well as from policy-related research papers. This material is refined for the generalreadership by editing and partial redrafting.

The following paper draws on material originally contained in IMF Working Paper 95/146,"Transformation of Markets and Policy Instruments for Open Market Operations" by StephenH. Axilrod, who was a consultant with the Fund in 1995. Neil Wilson collaborated in the

preparation of the present version. Readers interested in the original Working Paper maypurchase a copy from IMF Publication Services.
http://www.imf.org/external/pubs/ft/issues5/issue5.pdfhttp://www.imf.org/adobehttp://www.imf.org/adobehttp://www.imf.org/external/pubs/ft/issues5/index.htm#Prefacehttp://www.imf.org/external/pubs/ft/issues5/index.htm#Transformationshttp://www.imf.org/external/pubs/ft/issues5/index.htm#Howhttp://www.imf.org/external/pubs/ft/issues5/index.htm#Discounthttp://www.imf.org/external/pubs/ft/issues5/index.htm#Reservehttp://www.imf.org/external/pubs/ft/issues5/index.htm#Markethttp://www.imf.org/external/pubs/ft/issues5/index.htm#Suitabilityhttp://www.imf.org/external/pubs/ft/issues5/index.htm#Regulatoryhttp://www.imf.org/external/pubs/ft/issues5/index.htm#MarketArchitecturehttp://www.imf.org/external/pubs/ft/issues5/index.htm#Conducthttp://www.imf.org/external/pubs/ft/issues5/index.htm#Instrumentshttp://www.imf.org/external/pubs/ft/issues5/index.htm#Flexiblehttp://www.imf.org/external/pubs/ft/issues5/index.htm#Governmenthttp://www.imf.org/external/pubs/ft/issues5/index.htm#Concludinghttp://www.imf.org/external/pubs/ft/issues5/index.htm#Authorhttp://www.imf.org/external/pubs/ft/issues5/issue5.pdfhttp://www.imf.org/adobehttp://www.imf.org/external/pubs/ft/issues5/index.htm#Prefacehttp://www.imf.org/external/pubs/ft/issues5/index.htm#Transformationshttp://www.imf.org/external/pubs/ft/issues5/index.htm#Howhttp://www.imf.org/external/pubs/ft/issues5/index.htm#Discounthttp://www.imf.org/external/pubs/ft/issues5/index.htm#Reservehttp://www.imf.org/external/pubs/ft/issues5/index.htm#Markethttp://www.imf.org/external/pubs/ft/issues5/index.htm#Suitabilityhttp://www.imf.org/external/pubs/ft/issues5/index.htm#Regulatoryhttp://www.imf.org/external/pubs/ft/issues5/index.htm#MarketArchitecturehttp://www.imf.org/external/pubs/ft/issues5/index.htm#Conducthttp://www.imf.org/external/pubs/ft/issues5/index.htm#Instrumentshttp://www.imf.org/external/pubs/ft/issues5/index.htm#Flexiblehttp://www.imf.org/external/pubs/ft/issues5/index.htm#Governmenthttp://www.imf.org/external/pubs/ft/issues5/index.htm#Concludinghttp://www.imf.org/external/pubs/ft/issues5/index.htm#Author


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Transformations to Open Market Operations: DevelopingEconomies and Emerging Markets

By buying or selling bonds, bills, and other financial instruments in the open market, a central

bank can expand or contract the amount of reserves in the banking system and can ultimatelyinfluence the country's money supply. When the central bank sells such instruments it absorbsmoney from the system. Conversely, when it buys it injects money into the system. Thismethod of trading in the market to control the money supply is called open market operations.

Open market operations are the major instrument of monetary control in industrial countriesand are becoming important to developing countries and economies in transition. Open marketoperations allow central banks great flexibility in the timing and volume of monetaryoperations at their own initiative, encourage an impersonal, businesslike relationship with

participants in the marketplace, and provide a means of avoiding the inefficiencies of directcontrols. Developing indirect controls is important to the process of economic development

because, as a country's markets expand, direct controls tend to become less effective, andmarkets eventually find a way around them, especially in a global world economy. With morecountries seeking to deregulate and unleash the potential of market forces, many policymakersand central bankers are grappling with ways to realize the full benefits of open marketoperations.

For such operations to become part of monetary policy, however, other monetary instrumentsnow in place need to be adjusted and the market infrastructure must be transformed. This paperassesses the options available to a central bank for addressing these matters and designinginstruments for implementing open market operations. First, it provides a brief review of theconnection between open market operations and other monetary operations. Then, it discusseshow the central bank can encourage development of the necessary financial marketarchitecture. Finally, it reviews the advantages and limitations of specific approaches to openmarket operations.

How Are Open Market Operations Related to Other Monetary Instruments?

Open market operations affect the money supply and related financial measures through theirimpact on the reserve base of the banking system. As a matter of monetary policy tactics incontrolling these reserves, open market operations can be conducted in one of two ways:actively, by aiming for a given quantity of reserves and allowing the price of reserves (that is,

the interest rate) to fluctuate freely; or passively, by aiming at a particular interest rate,allowing the amount of reserves to fluctuate. Industrial countries, with well-developed andsensitive markets, normally employ a passive approach, although there have been exceptions. A

passive approach also appears to be the norm in emerging markets that have reached a certainlevel of sophistication. There are advantages to a more active approach in developing countries,however. In such countries, the absence of efficient secondary or interbank markets--totransmit the influence of monetary policy--might be one reason for an active approach. Anothermight be that the active approach allows the central bank to define its policies more clearly,especially when control of inflation is the overriding goal. Such an approach is embodied in anumber of programs supported by the International Monetary Fund for particular countries.

If open market operations are to become the principal policy instrument, other monetaryinstruments obviously need to be given less importance, particularly the central bank's discount


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window, where the banking system can obtain reserves on its own initiative simply byborrowing from the central bank. Other adjustments may also be needed, depending in part onthe particular strategy adopted for conducting day-to-day open market operations.

Discount Window Policy

For open market operations to be effective, limitations need to be placed on the access of banksto borrowing from the central bank at the discount window. Without such limitations, openmarket operations could not be used as the principal monetary instrument for controlling bankreserves and overall financial conditions. The discount window should therefore be designed tomake access to the central bank's credit less attractive in one way or another, perhaps through ahigh penalty rate or restrictive guidelines. Some countries, such as Germany, employ a dualrate structure, comprising a basic discount rate and a penalty Lombard rate, to discourageoveruse of this facility.

Restrictions on the discount window need, however, to be handled with care. If a penalty rate isset well above current market conditions, the system might not react quickly enough tounanticipated liquidity demands. Guidelines that restrict access to the window ought to permitsmooth adjustment when reserve shortages occur. In a tight money period, borrowing from thecentral bank for very limited periods allows banks to make more orderly portfolio adjustments.Such short-term borrowing at the discount window should be differentiated from longer-termstructural borrowing at the window, which, among other things, allows emergency long-termadvances to institutions in severe operating difficulties.

Reserve Requirements

In addition to use of the discount window, imposing reserve requirements has traditionally beenused by central banks as a means of monetary control. The ability to vary the proportion ofassets that banks are required to hold in reserve is an obvious means of controlling the moneysupply. Reserve requirements can be regarded as either an alternative to open market operationsor a way of enhancing their effectiveness for monetary control purposes. Since the use of openmarket operations has become more widespread, central banks have, in fact, had less recourseto changes in reserve requirements, which are a relatively crude tool. In many countries, theyhave also gradually been lowered and, in some cases, eliminated, since such requirements can

place banks at a significant competitive disadvantage to other institutions providing similarservices.

A minimum binding level of reserve requirements may be useful in helping to gauge the impactof open market operations on interest rates and the money supply. The experience of somecountries that do not impose reserve ratios, such as the United Kingdom, may suggest that theyare not really necessary. On the other hand, the financial crisis at the end of 1994 in Mexico,which had abolished reserve requirements, raises questions about whether such requirements--and the ability to vary them--could still play a useful role. They may be particularly useful incircumstances where bank liquidity needs to be adjusted rapidly in markets that are thin, andwhere the central bank needs to give clear, swift, and unambiguous signals on the need forexpansion or contraction of the money supply. Even in the United States, with its highlydeveloped money market, reserve requirements remain binding on transaction deposits. Theability to make relatively predictable estimates of required reserves seems to be particularly

useful to the Federal Reserve in its decisions on the timing and size of open market operations.


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The Market and the Role of the Central Bank

As an economy grows, financial markets can be expected to broaden and deepen, butexperience shows that the pace and pattern of market development may need guidance frommonetary and government authorities. The associated development of open market policy

instruments tends to occur in two stages. First, there is a shift away from direct controls towarduse of open market operations in the primary market through auctions of new issues ofsecurities. Later, there will be a further shift toward the use of fully flexible two-way operationsin existing securities as active secondary markets develop. In addition to their policy function,open market operations in primary markets can be viewed as a prelude to--and helpful in--theevolution of active secondary markets.

Suitability of Markets

Ideal conditions for flexible open market operations exist in few developing or transitioneconomies. Nevertheless, open market operations of one sort or another can and should beundertaken in markets that may not be entirely ideal but are at varying stages of developmenttoward a deregulated, competitive system. In such cases, operations may need to be limited insize or employed only periodically. The participation of the central bank should hasten marketdevelopment, though the bank does need to take care that this does not compromise or add tothe riskiness of its own balance sheet, which may in turn diminish its credibility and stature. Acentral bank will be able to function more effectively if markets perceive that its portfolio ofassets is highly liquid and essentially risk free.

The markets most suitable for flexible open market operations are normally those where short-term instruments are traded, though it should be possible--and may sometimes be desirable--to

trade in instruments with various maturities. Well-developed markets are characterized by alarge and continuous volume of trading by a variety of participants, including government,financial institutions, and other businesses.

Three sectors present the best opportunities for effective open market operations. These are themarkets for government and central bank securities, for interbank debt, and for short-terminstruments issued by financial institutions and other corporate entities, including commercial

paper, finance company paper, and bank certificates of deposit.

Given the government's ability to raise taxes, the government securities market is generallyregarded to be free of credit risk and therefore the best medium for open market operations.

Unstable political and economic conditions, however, may make it impossible to maintain aviable market for issuing debt. Political stability and a sustained government record of meetinginterest payments and redemption schedules are therefore essential to the use of open marketoperations. Apart from a failure to meet such contractual obligations, a government securitiesmarket can also dry up if the central bank pursues an inflationary policy that drives investorsout of the market by eroding the real value of outstanding debt. Thus, keeping inflation withinacceptable bounds is also a vital precondition.

Short-term private debt, including interbank debt, is less suitable for open market operationsnot only because of its inherent credit risks but because it leaves the central bank with someawkward choices. If the central bank is willing to buy this debt, commercial concerns may take

the opportunity to off-load riskier paper. And if the central bank suddenly refuses, the marketmay turn away from such paper entirely, possibly precipitating a crisis. One way to resolve this


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type of quandary is for the central bank to restrict its operations to paper that carries a suitablecredit rating, as established by an independent rating agency. In circumstances in which theamount of government debt is low or fast declining, central banks can find that open marketoperations are necessarily restricted to private money market instruments. When this occurs,operations in commercial bank instruments or interbank debt may raise fewer difficult credit

risk issues than in other private instruments given the ongoing relationships between banks andthe central bank. If a significant government debt market does not exist, a central bank maydecide to create a similar balance sheet effect by developing debt instruments of its own, orthrough the use of a special government issue employed only for monetary policy purposes.These could serve as a permanent and liquid addition to the central bank balance sheet,substituting for private assets.

Regulatory Role of the Central Bank

Both the central bank and the government need a reliable marketplace for governmentsecurities, where participants feel secure that counterparties will perform according to theirobligations and which is transparent enough to encourage wide participation. To obtain itsobjectives through open market operations the central bank should establish performancestandards for participants. This is also the natural focal point for market surveillance throughgathering statistics and publishing market aggregates.

The central bank may not wish to go beyond these functions by assuming direct regulatory andoversight responsibilities, which may unduly tax its limited personnel resources and expose thecentral bank to a loss of stature and credibility should scandals erupt in the governmentsecurities market--as they sometimes do. A division of labor between monetary policyoperations (the responsibility of the central bank) and regulatory authority (the responsibility of

some other agency or, if within the central bank, of a department separate from open marketoperations) may serve a nation's interest better. This said, the public will tend to look to thecentral bank as bearing some responsibility for markets in which it operates, whatever its

precise role. For this reason alone, the central bank's market group should take steps that helprationalize the market's architecture and enhance its performance.

Market Architecture

A central bank generally prefers to operate in a transparent market that trades continuously,where communication of its operations is prompt, and in which its purposes are wellunderstood. It can take steps to help achieve these goals, such as promoting an interbank

market, designing market instruments and trading infrastructure, providing financing facilities,establishing criteria for dealing with the central bank's open market function, collecting anddisseminating statistics, and encouraging a safe payments and clearing mechanism.

An active interbank market is particularly important because it helps clarify the timing andvolume of open market operations. Many countries have developed such a market by adjusting

policy instruments. The more successful have also used discount window policies thatdiscourage, penalize, or forbid short-term borrowing at the central bank. The central bank canalso encourage interbank trading through more technical measures, such as using its transferand settlement mechanism to assure the integrity of interbank flows.

The central bank should take the lead, along with the Treasury, in encouraging market practicesconducive to competitive trading. It could, for instance, encourage a computerized system of


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bids and offers for securities that protects anonymity. To foster market transparency, it shouldalso discourage trading from taking place outside the established markets. The Treasury shouldhave equal or greater interest in competitive trading, given that the cost of national debt shouldfall as government securities become more liquid.

Prior to the emergence of an active interbank and money market, the availability of an officialfinancing facility can be particularly helpful at the early stages of market development. It canencourage market-makers to take positions and carry an adequate inventory, a necessarycondition for a liquid market.

Many countries have been moving toward use of repurchase agreements (repos) as the mostflexible and convenient form of financing. Repos, by which market participants buy or sellsecurities in return for cash with an agreement to reverse the transaction at a later point, areseen as an effective instrument for increasing market liquidity and helping to smooth the way to

broader market development. They are usually short term, but may have longer maturities.

The central bank should make it clear that the availability of such financing depends primarilyon monetary policy rather than strictly market considerations. Nonetheless, it may give a littlemore consideration to market needs at early stages of development. It may consider, forinstance, whether a relatively favorable financing rate should be offered to encourage theemergence of active market-makers. In doing so, however, it should also take into account the

political problems that often accompany subsidies and the inconsistency of treating somemarket participants favorably when it is trying to encourage competition. Indeed, in most cases,official financing should be provided at a competitive rather than favorable rate, even for atransitional period.

The central bank can also encourage market development by setting down ground rules forparties with which it deals. Criteria for a business relationship with the central bank mayinclude membership in a group of primary dealers. A number of countries conduct open marketoperations through such primary dealers, who have an obligation to make reasonable bids andoffers when the central bank enters the market, as well as in Treasury auctions. Brazil, theCzech Republic, India, Malaysia, the Philippines, Poland, and Russia, for example, have allintroduced, or are introducing, such primary dealer systems. To perform their function moreeffectively, dealers would also have to seek retail customers, and would thereby help develop a

broader and more liquid market.

In smaller countries, the creation of a primary dealer system where the number of participants

may be few may be more problematic and impractical. When a market becomes large enough,however, there is much to be said for confining operations to a group of dealers, perhaps bydesignating a minimum level of capital. In order to avoid charges of favoritism, the group mayhave to be quite large. But, by establishing such a group, the central bank will be in a stronger

position to encourage dealers to establish better market-making standards, such as minimumtransaction sizes for dealing at quoted prices. Of course, ongoing rapid technological changeswill also influence the best approach for the central bank to take toward market structure and itsown counterparties.

The central bank is the natural focus for collection and dissemination of market statistics. Theprocess of data collection, including daily figures on positions, transactions volume, and

financing by type of issue, should begin at the very earliest stages of development. Thesefigures provide the basis for surveillance. Later, when the number of participants is sufficient


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so that individual firm data cannot be deduced, the central bank should be able to publishaggregate data on market activity, something it should do as quickly as possible in order toenhance market transparency. Publication should be timed with sufficient lag, perhaps a weekor a month, depending on the instrument, to avoid market overreaction.

The central bank should also take the lead at an early stage in encouraging the market to setdelivery and payment standards. No market functions effectively without reasonable assurancethat securities will be delivered on time and paid for as agreed. Although the speed andreliability of the clearing and payments systems obviously depend on the market's technicalcapacity and institutional arrangements, the central bank can play a powerful role ingalvanizing such efforts because of its leverage as lender of last resort. It can also worktogether with the Treasury to introduce up-to-date technology in the government securitiesmarket, such as a book-entry system to record security ownership and a simultaneous delivery-versus-payment procedure through the central bank's deposit accounts. The monetary authorityshould ensure that clearing institutions obtain adequate credit lines from banks to act as a

backstop in the event of delivery and payment failures.

Conduct of Open Market Operations

Whether it adopts an active or a passive approach, the central bank should start by collectingfigures on the supply of and demand for bank reserves. An up-to-date flow of data on bankdeposits is particularly important for implementing policy changes sooner rather than later inorder to offset undesired trends. In economies undergoing rapid growth or transition, the central

bank needs to be especially alert to changes in various measures of the money supply. Evenwith a passive approach to open market strategy focusing on interest rates, the promptavailability of deposit data will enable the bank to make better projections of the demand for

reserves, helping to gauge the effect of open market operations on money market conditions.The central bank will also require estimates of other factors affecting reserve supply, such asgovernment deposits, currency in circulation, foreign exchange, and the float arising fromtiming differences between crediting and collecting funds in the central bank clearing system.Many of these estimates require close cooperation with the Treasury at a working level.

In practice, the accuracy of reserve estimates needs to judged against incoming evidence oninterest rates from the interbank or money market and what that reveals about liquidity

pressures. Interpretation of this information should be aided by continuing contacts with themarket. Traders from the central bank's open market function should be continually speakingwith other traders in an effort to understand the factors influencing market conditions, enabling

policymakers to better assess market psychology.

A short-term market rate, in particular an overnight interbank rate (interest charges on fundsborrowed to meet the day-to-day residual need for funds in the banking system) may usefullyserve as the primary guide for open market operations. Using such a rate does not, however,lessen the need for prompt collection of statistics on basic factors affecting the demand andsupply of reserves. An inadequate statistical base would greatly hamper the central bank in itsability to judge whether daily money market rate movements are merely temporary.

Many countries use such day-to-day operating guides as a matter of tactics in pursuing themeasures that they use as intermediate policy guides. For example, net domestic assets have

been used as an intermediate guide in Poland and Mexico, base money in the Philippines andBrazil, M3 in India and Malaysia, and the foreign exchange rate in Egypt. In many emerging


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markets, it seems that central banks have generally decided to conduct open market operationson a passive basis, leaving themselves with more flexibility to determine the degree of day-to-day pressure on the banking system and the basic cost of liquidity.

Instruments for Open Market Operations

Without an active secondary market in securities, central banks are in practice limited to openmarket operations in the primary market. Typically, such operations include auctioning newlyissued securities to absorb reserves or auctioning central bank credit to provide reserves. Onemuch used open market operation involves the issue of new Treasury or central bank securitiesin order to absorb excess liquidity. The Czech Republic and Ghana employ both. Egyptauctions only T-bills to absorb reserves, but also mops up liquidity through the placement ofcommercial bank deposits directly with the central bank. In the Philippines, however, the use of

both T-bills and central bank bills created some confusion and difficulties. In Indonesia, wherethere is no government debt, the central bank auctions its own bills only to absorb liquidity and

purchases bank paper to provide reserves.

If the central bank offers a new Treasury security to absorb reserves, it should be considered asa monetary operation only if the incoming funds are not available to government for spending.The cleanest approach is to set the funds aside in a special account created purely for purposesof monetary policy. Such an account would ensure that bank reserves are reduced"permanently" by the operation, at least until policy is adjusted. In cases where the central bankfinds that it overestimated the surplus of reserves, it can buy back the securities beforematurity, leaving the special account balance unchanged. Such repurchases before maturity,

perhaps followed by subsequent resales as policy is further adjusted, can have the ancillaryadvantage of helping to develop a secondary market.

Issuing central bank securities should be no more or less costly than offering special Treasuryissues created especially for purposes of monetary policy. Choosing between the two types ofinstruments therefore depends mostly on institutional and market considerations. Central bankissues may be useful, if not necessary, to conduct open market operations in a country, such asIndonesia, where domestic government debt is not allowed. In the Philippines, as noted, thecentral bank took the same course in the early 1980s because it did not have access to sufficientgovernment debt. Its experience, however, illustrates some of the problems that can occur in amarket in which both government and central bank instruments coexist. In particular, thedevelopment of an active government securities market appears to have been retarded, ratherthan stimulated, by large-scale issues of the central bank's own bills. The government thus

came to view central bank issues as complicating its policies on interest rates and debtmanagement because they were segmenting what was already a thin market. At the same time,the central bank was taking large losses from operations in foreign exchange and in therestructuring of weak commercial banks, thus putting its credibility into question. By 1993, thecentral bank was restructured and received a broad portfolio of Treasury securities to facilitateopen market operations.

Problems like those in the Philippines may not be inevitable. In Brazil, for instance, wherethere is a relatively broad overall market, central bank issues have traded well alongsidegovernment securities. Open market operations in which special securities are issued for

purposes of monetary policy are of most practical use when excess liquidity is flooding the

banking system. Because these securities can be bought back before maturity and resold, theycan also be employed to adjust to the ebb and flow of liquidity pressure. But they do not


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provide the same flexibility as open market operations in the secondary market. In the absenceof an active money and interbank market, the central bank is deprived of ongoing informationabout actual and emerging liquidity conditions, which makes planning the timing and size ofoperations more difficult. The outcome of open market operations may thus be more subject tothe vagaries of primary market bidding than to the central bank's prior intentions.

In the absence of an active market for government securities, a special Treasury issue mightalso be considered as a means of adding to bank reserves needed for long-term growth. Thiswould involve giving the central bank authority to auction a special Treasury deposit thatwould be created along with the debt issue. Such a special issue, guaranteed by thegovernment, may help strengthen and diversify the central bank's balance sheet.

Flexible Open Market Operations

As their economies expand and their markets mature, more countries are implementingmonetary policy through open market operations in the secondary market, mainly in the formof repos and reverse repos. In contrast with outright operations, repos provide temporaryfinancing of reserve shortages and surpluses, but do not directly influence demand and supplyin the security that serves as collateral. Most positively, repos tend to enhance liquidity in theunderlying securities, helping to develop a more active secondary market. The use of reposwith a short maturity should also make it clear to the market that the central bank isencouraging participants to develop as many alternative sources of short-term lending and

borrowing as possible.

Repos and reverse repos are ideally suited for offsetting short-term fluctuations that affect bankreserves. They are also useful for offsetting large shifts in liquidity caused, for instance, by a

wave of capital inflows or outflows. For these reasons, repos can be expected to become thedominant tool for open market operations, as experience in various countries suggests. Reposcan be used in various maturities, although short-term operations tend to dominate. In Brazil,where repos have become the main instrument of policy control, operations are undertakenthrough informal auctions on a daily basis, with maturities generally overnight. Mexico andPoland also undertake frequent operations with short maturities. Thailand employs an elaborateauction process twice a day, with maturities ranging from overnight out to six months.Maturities appear longest in the Philippines, where reverse repos are used to absorb liquidity,with maturities commonly between one week and one month and with a maximum out to oneyear.

Outright purchases and sales of Treasury securities in the secondary market are also used inmany of these countries. In Brazil they are used to provide or absorb reserves on a morepermanent basis. In India and the Philippines, they are considered an important instrument ofmonetary control and are undertaken on a daily basis. When secondary markets are stillcomparatively thin, however, outright transactions run a high risk of dominating the market andimpeding further development, especially in longer-term sectors.

Government Debt Management

Government decisions on debt management and deposit balances obviously have an impact onthe use of open market operations. Sometimes they can help facilitate operations. At other

times, they can complicate the task. In all countries, the Treasury and central bank worktogether on these issues, though with varying degrees of tension and power. On pure debt


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management decisions, the Treasury in most cases makes the final decision, with the centralbank serving as its agent. In areas where governmental operations have a more direct impact onbank reserves, the central bank normally has a bigger say. The particular working relationshipdiffers according to the traditions and financial history of the country.

Whatever the relationship, open market operations will be most effective where the centralbank has control over factors that affect the reserve base of the banking system. To helpmaintain a clear separation between monetary and fiscal policies, it is most desirable if thegovernment debt issued to meet fiscal needs is sold directly into the market by the Treasury,avoiding any potential conflict between debt management and monetary policy needs. Suchsales should be in the form of auctions, helping to develop a competitive, deregulated marketsystem. This also avoids pressure on the central bank to facilitate primary market issues at a

predetermined rate.

For open market operations, it is particularly important for the central bank to be able toinfluence, if not control, the Treasury's operating balance with the bank, fluctuations in which

affect the supply of bank reserves. It is unusual for the central bank to be given substantialdiscretionary power over government deposits, but there are exceptions. The Bank of Canada,for instance, has the right to transfer government deposits between itself and commercial banks.Bank Negara Malaysia auctions such deposits as an instrument of policy. Germany'sBundesbank has a veto over the government's ability to hold deposits outside the central bank.

In general, open market operations will function most effectively when the government abidesby, and the public believes in, a clear division between debt management and monetary policyoperations. In practice, this usually involves an agreement to neutralize the monetary effect ofthe Treasury's balance or to delegate substantial control over it to the central bank. In virtuallyall countries, debt management decisions are made with ongoing input from the central bank,

both informally and through formal committee structures.

Concluding Observations

There is much to be said for switching to open market operations as soon as possible.Deregulation and globalization of markets make it virtually impossible to use direct controlswithout adverse side effects. Experience suggests that in practice countries act as if they havelittle choice except to begin this type of transition. Countries where central banks seem to havelagged often found themselves hampered in meeting policy objectives. On the other hand,availability of market instruments is no guarantee of success, as recent experience in Mexico

shows. Clearly, an arsenal of open market instruments is a necessary condition for success, butnot a sufficient one.

Most countries have begun making complementary adjustments in reserve requirementsconsistent with the growing importance of open market operations. They have also beenrestricting access to the discount window, which has nevertheless remained open as a safetyvalve. Still, for most emerging markets and transitional economies, which are prone to surgesin liquidity and sudden capital flows and with markets at varying stages of development, acomplementary mix of all monetary instruments may be the best solution. Transformation ofmarkets usually occurs in two stages: the establishment of a primary market followed bydevelopment of a secondary market. The initial transition is much easier to accomplish. Well-

functioning secondary markets, however, must develop largely within the private sector,although the central bank can exert some influence through the legal, regulatory, and payments


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infrastructure. It is difficult for the central bank to accelerate development through transactionsalone, as this risks dominating the market. Repos and reverse repos would appear to be themost effective instruments for encouraging such development. It is crucial, however, to developan interbank market, which can then provide signals for policy. There are risks if the central

bank relies excessively on operations in private paper, which can become illiquid. In the

absence of an active government securities market, the use of the central bank's own issues, orof special Treasury issues designated for monetary policy purposes, might be considered as asupplement.

Author Information

Stephen H. Axilrod was educated at Harvard University and the University ofChicago. He served as staff director for monetary and financial policy for theBoard of Governors of the Federal Reserve System and as staff director andsecretary of the Federal Open Market Committee. He also served as U.S.representative or chairman on a number of OECD and BIS committees on such

subjects as monetary operations, Euro-currency banking markets, and economicand monetary policy.

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Open Market Operations(http://www.newyorkfed.org/aboutthefed/fedpoint/fed32.html)

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Open market operations, or OMOs, are the Federal Reserve's most flexible andfrequently used means of implementing U.S. monetary policy.

The Federal Reserve has at its disposal several different types of OMOs, though

the most commonly used are triparty repos and securities purchases.

Open market operations enable the Federal Reserve to affect the supply of reservebalances in the banking system and thereby influence short-term interest rates andreach other monetary policy targets.

In addition to open market operations, the Federal Reserve can impact the level ofreserve balances by either reinvesting the proceeds of maturing securities in theSystem Open Market Account into new securities (reserve-neutral) or redeemingmaturing securities (reserve-draining).

Open market operations are one of three basic tools used by the Federal Reserve to reach itsmonetary policy objectives. The other tools are changing the terms and conditions for
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borrowing at the discount window and adjusting reserve requirement ratios. The execution ofOMOs in the "open market"also known as the secondary market for securities purchasesisthe Federal Reserve's most flexible means of carrying out its objectives. By adjusting the levelof reserve balances in the banking system through open market operations, the Fed can offset

or support permanent, seasonal or cyclical shifts in the supply of reserve balances and therebyaffect short-term interest rates and by extension other interest rates.

The FOMC and Monetary PolicyThe Federal Open Market Committee (FOMC) is the Federal Reserve Systems top monetary

policy-making body. The FOMC delegates responsibility for implementing U.S. monetarypolicy to the Manager of the System Open Market Account (SOMA) at the Federal ReserveBank of New York through the Authorization. This Authorization is contained in the minutesof the first FOMC meeting of each year.

The SOMA Manager is responsible for the staff of the Trading Desk at the Federal Reserve

Bank of New York (the Desk). The Desk thus executes open market operations on behalf ofthe entire Federal Reserve System.

After each policy meeting, which occur every six to eight weeks, the FOMC issues a Directiveto the SOMA Manager outlining the approach to monetary policy that the FOMC considersappropriate for the time period between its meetings. The Directive contains the rate at whichthe FOMC would like fed funds to trade over the intermeeting period. The FOMCsannouncements of changes in monetary policy thus specify the changes in the Fed's target rate.

Open Market TransactionsThe Federal Reserve conducts open market operations with primary dealersgovernmentsecurities dealers who have an established trading relationship with the Federal Reserve. Sowhile the target policy rate is the uncollateralized lending rate between banks (fed funds), theFed operates in the collateralized lending market with primary dealers (repo). This structureworks because the primary dealers have accounts at clearing banks, which are depositoryinstitutions. So when the Fed sends and receives funds from the dealer's account at its clearing

bank, this action adds or drains reserves to the banking system.

Through this adjustment to the supply of reserve balances, open market operations influencethe federal funds ratethe interest rate that depository institutions pay when they borrowunsecured loans of reserve balances overnight from each other. Banks borrow reserves in the

federal funds market in order to meet reserve requirements set by the Federal Reserve, and toensure adequate balances in their accounts at the Fed to cover checks and electronic paymentsthat the Fed processes on their behalf. Changes in the federal funds rate often have a strongimpact on other short-term rates.

To most effectively influence the level of reserve balances, the Federal Reserve has createdwhat is called a structural deficiency. That is, it has created permanent additions to the supplyof reserve balances that are somewhat less than the tota

1 open market operations

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