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The Evolution of Monetary Instruments and Policy in Spain
Developments in the Spanish credit system and in the conduct of monetary policy over the past 20 years fall into three distinct periods: the 1950s, the 1960s, and the period since 1969. During the 1950s, the authorities lacked the instruments to control the liquidity of the credit system, and they gave priority to meeting the financing needs of the public sector. Following the implementation of the 1959 stabilization program, the banking reform of 1962 provided the authorities with instruments for liquidity control, but these were not effectively utilized in the period up to 1969 because priority was given to meeting the needs of the rapidly growing private sector. In both periods, monetary management contributed to the repeated emergence of balance of payments difficulties, strong upward pressures on prices, and wide cyclical swings in economic activity. Since 1969, the authorities have increasingly turned their attention to gaining effective control over the liquidity of the economy through the use of additional monetary policy instruments. The new system was put to its first major test in 1973, when the authorities aimed for a slowing down of monetary expansion--after the unusually high rates recorded in the two preceding years, when they had pursued an accommodating policy to promote the reactivation of the economy. In the first half of 1973, the authorities acted to reduce the liquidity of the banks by a variety of measures. Three-month Treasury bills were issued, compliance by the banks with the minimum cash ratio was required on a daily basis, and rediscount lines at the Bank of Spain were reduced. However, the rate of monetary expansion remained excessive, in part because of a substantial inflow of foreign funds, reflecting the large balance of payments surplus. Nevertheless, by mid-year the authorities appeared to be in a position, for the first time in many years, to slow the pace of credit expansion through indirect liquidity control. The banking reform of 1962 introduced measures to increase and widen the range of financial institutions, including abolition of longstanding restrictions on the establishment of new banks and bank branches. At the same time, however, the reform strengthened the policy of preferential credit to priority sectors, which was already widespread in the 1950s, and increased the compartmentalization of the credit system--for example, by requiring private banks to qualify either as commercial banks or as industrial banks and by reforming the operations of the official credit institutions. The granting of preferential credit expanded sharply in the first half of the 1960s and by 1966 affected more than one third of credit to the private sector. However, since 1969 important steps have been taken to induce greater competition among financial intermediaries and to increase the role of market forces in the collection and allocation of financial resources.
Ketersediaan
| Call Number | Location | Available |
|---|---|---|
| SP2101 | PSB lt.dasar - Pascasarjana | 1 |
| Penerbit | Washington, D.C.: International monetary fund 1974 |
|---|---|
| Edisi | Vol. 21, No. 1, Mar., 1974 |
| Subjek | Economic activity Spain Monetary policy instruments Spanish monetary |
| ISBN/ISSN | 0020-8027 |
| Klasifikasi | NONE |
| Deskripsi Fisik | 27 p. |
| Info Detail Spesifik | Staff Papers (International Monetary Fund) |
| Other Version/Related | Tidak tersedia versi lain |
| Lampiran Berkas |