CBE to play active role in money market

A new general monetary policy will be applied in the next stage to push forward the national economy, the Governor of the Central Bank of Egypt (CBE) Mahmoud Abul Eiyoun said yesterday.

ÊÊÊ He added that the new policy depends on transparency in management and reconsidering the regulations of the current monetary policy. The policy aims to achieve three main targets: providing accurate and sufficient information at the right time and curbing contradiction and duplication of duties among various departments of the CBE, said Abul Eiyoun.

ÊÊÊ He pointed out that for the first time in Egypt the CBE is reviewing its views on Egypt's future monetary policy and is now playing an active role in the money market.

ÊÊÊ Egypt has to reconsider its monetary policy for a number of reasons including what is happening on the international market and its impacts on the local economy, said Abul Eiyoun.

ÊÊÊ The Egyptian economy has been badly affected by the 1997 turmoil in Asia which led to a sharp decrease in the volume of short-term foreign investment in the stock exchange, he explained.

ÊÊÊ He added that a decrease in the exchange rate of currencies of Asian countries had encouraged their exports. Egyptian imports from Asia in 1997/98 were estimated at 16.9 billion, with an increase of $1.2billion compared to 1996.

ÊÊÊ This has affected Egypt's trade balance negatively.

ÊÊÊ He added that the new monetary policy will stop sudden changes in the interest rates to streamline economic performance.

ÊÊÊ The CBE is adopting the latest technology in providing decision-makers with the latest financial statistics and monetary information to cope with the rapid changes in the world.

ÊÊÊ They are upgrading their administrative infrastructure and linking the terminal office with all CBE branches nationwide, as well as linking all Egyptian banks with the CBE main network.

ÊÊÊ This policy will create a new mechanism for funding the budget deficit, through what is called anchor-dealers in the market of government securities.

ÊÊÊ The CBE will introduce two new services that are to be rendered for the first time in the country in order to pump cash into the market quickly, Abul Eiyoun said.

ÊÊÊ The first service called the 'over-night loan' which is offered with an interest rate that is similar to the ceiling of interest on loans approved by the CBE.

ÊÊÊ The second service is called the 'over-night deposit', and banks will offer the minimum interest rate approved by the CBE, added Abul Eiyoun.