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Monetary Policy of Bhutan

Monetary Policy of Bhutan. ROYAL MONETARY AUTHORITY OF BHUTAN Research & Statistics Division (Financial Literacy Program). GOPAL GIRI Research Officer. March 15, 2010. Outline. Introduction Conduct of Monetary policy Conclusion. Introduction. 3. RMA’s functions – Monetary policy

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Monetary Policy of Bhutan

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  1. Monetary Policy of Bhutan ROYAL MONETARY AUTHORITY OF BHUTAN Research & Statistics Division (Financial Literacy Program) GOPAL GIRI Research Officer March 15, 2010

  2. Outline • Introduction • Conduct of Monetary policy • Conclusion

  3. Introduction 3 • RMA’s functions – Monetary policy • Monetary policy targets

  4. Conduct of monetary policy 4 • Maintaining of Peg • Volume of money & credit – CRR and SLR, RMA Bills, prudential measures

  5. Conduct of Monetary policy (2)

  6. Conduct of Monetary policy (3) 9 December 2009 a. Alignment of domestic interest rate with India • RMA liberalized interest rate in 1997 • Targets- promote investment and market b. Government Treasury Bills • Monetary policy instrument- Establish Repo/Reverse Repo, bench-mark rates • Short term fiscal management tool

  7. Conduct of Monetary policy (4) 9 December 2009 • Need for effective Rupee management in Bhutan -Correct BOP position with India -Monitor inflows and outlows of Rupees -Maintaining proper account for Rupee in circulation • Importance for Bhutan and for all Bhutanese to use Rupee more prudently

  8. Conclusion 9 December 2009 • Limited Independent Monetary policy- close economies ties with India. • Promoting RMA’s defend mechanism to safeguard Peg Arrangement- Indian Rupee management • Rupee continue to be a legal tender in Bhutan • Current best option for Bhutan to continue with Peg Arrangement

  9. THANK YOU

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