European Parliament Library

Fixed Exchange Rates and the Autonomy of Monetary Policy :, The Franc Zone Case, Romain Veyrune

This paper compares monetary policy of currency boards with that of the franc zone during the period 1956-2005. It concludes that monetary policy in the zone was more autonomous than under a currency board, even though both systems faced the same exchange rate constraint. So far, the contingency line provided by the French treasury and capital controls have allowed the zone to combine a fixed exchange rate and a relatively autonomous monetary policy. Financial development and zone enlargement would challenge this relative autonomy for two reasons: (1) the potential cost to the French treasury would increase; and (2) residents would potentially be able to avoid capital controls. For the zone to maintain its fixed exchange rate, close targeting of foreign reserves would become important
Table Of Contents
Contents; I. Introduction; II. Monetary Policy Autonomy in the Franc Zone; A. Franc Zone Institutional Setup; Tables; 1. Franc Zone Members; Box; 1. The Compte d'Operations; Figures; 1. Potential Fiscal Effort for the French Treasury; 2. Foreign Reserve Target; 2. Foreign Reserves Target; B. The Eastern Caribbean Currency Union; 3. Eastern Caribbean Currency Union: Members and Rules; 4. Franc Zone and Eastern Caribbean, Currency Union: Differences and Similarities; III. Testing Monetary Autonomy in the Franc Zone; A. Long-Run Relationship Between Base Money and Foreign Reserves
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (25 p.)
Specific Material Designation
Form Of Item

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