Central Bank of South Sudan asks people to use Sudan Pound as legal tender

The Bank of South Sudan is the central bank of the Republic of South Sudan. It was established in 2011 and is the youngest member (?) to enter the central bank club.

The central bank recently asked the public to use South Pudan as legal tender. People are using foreign currencies for their transactions and the central bank has warned that any sich foreign currency transaction will be penalised.

Well as Minsky famously said “Everyone can create money; the problem is to get it accepted“.  It is not as if people will not like to use South Sudan Pound, it is just that they dont see it is a stable currency.

Open Market Operations in India – An Appraisal

Abhilasha, Bhimappa Arjun Talwar, Krishna Mohan Kushwaha and Indranil Bhattacharyya in this RBI Bulletin article discuss changes in OMO:

In a modern market-based monetary policy operating framework, open market operation (OMO) is the principal instrument of liquidity management by central banks. This article reviews the Indian experience on OMOs and examines their impact on the central bank’s balance sheet. It also examines the role OMOs play in a world with significant spillover effects.

Highlights:

1. Globally, the scale and extent of OMOs – both sales and purchases – have increased significantly over the past fifteen years. By augmenting/mopping up systemic liquidity, OMOs help in modulating yields which transmit to other financial market instruments.
2. In the Indian context, OMOs are instruments for altering durable liquidity conditions in the system barring special transactions such as Operation Twist (OT). OMO purchases increase the domestic assets in the balance sheet of the Reserve Bank, and also the reserve money, and vice versa for OMO sales.
3. An empirical examination in the Indian context reveals that external / exogenous factors such as movements in the US Treasury yields have a significant impact on domestic long-term yields. Given this, our empirical results show that OMOs remain a potent tool to steer long-term interest rates in alignment with the stance of monetary policy.

When central banks lend to banks whose board members are shareholders of the central bank: Case of Banque De France

Kris James Mitchener & Eric Monnet in this paper look at this very interesting case of connected lending by Banque De France in 1930s:

Because of secrecy, little is known about the political economy of central bank lending. Utilizing a novel, hand-collected historical daily dataset on loans to commercial banks, we analyze how personal connections matter for lending of last resort, highlighting the importance of governance for this core function of central banks. We show that, when faced with a banking panic in November 1930, the Banque de France (BdF) lent selectively rather than broadly, providing substantially more liquidity to connected banks – those whose board members were BdF shareholders. The BdF’s selective lending policy failed to internalize a negative externality – that lending would be insufficient to arrest the panic and that distress via contagion would spillover to connected banks. Connected lending of last resort fueled the worst banking crisis in French history, caused an unprecedented government bailout of the central bank, and resulted in loss of shareholder control over the central bank.