Monetary and Exchange Policy and Operations in the Caucasus and Central Asia

On November 5-7, 2014, the IMF Middle East and Central Asia Department (MCD), in cooperation with the Swiss State Secretariat for Economic Affairs (SECO) and the Swiss National Bank (SNB), organized a two-day Monetary Policy Peer-to-Peer Workshop and a one-day Forum for Central Bank Governors from the Caucasus and Central Asia. Both were held in Zurich at the SNB. Norbert Funke and Asel Isakova represented the IMF Institute for Capacity Development (ICD) and the JVI.

The program started with a two-day peer-to-peer workshop for CCA central bank specialists. In their opening remarks, Mr. Werner Hermann (SNB), Ms. Rosmarie Schlup (SECO), and Mr. Mark Horton (MCD) all noted the impressive progress CCA central banks have made in the past two decades in building up their monetary and exchange rate policies, achieving lower inflation and interest rates, and deepening the financial sector. However, they noted that there is scope for further gains by enhancing monetary and exchange rate strategies, modernizing forecasting tools, instruments, and operations, and improving communication.

The four workshop sessions dealt with issues currently confronting central bankers. Mr. Funke spoke on monetary and exchange rate policy. He analyzed the pros and cons of a variety of strategies and explained benefits from a move to more flexible exchange rate regimes and to inflation targeting. Ms. Isakova spoke on the objectives and tools of central bank communication and how they might be used to support inflation targeting. She emphasized that communication can enhance transmission of monetary policy, help reduce inflation and exchange rate volatility, and support financial stability.

Mr. Tommaso Mancini Griffoli from the IMF Monetary and Capital Market Department discussed monetary policy operations, and Mr. Ben Hunt, advisor in the IMF Research Department, explained how to design a structured forecasting and policy analysis system and the role that macro models play in policy deliberation and communications. All four lectures were followed by presentations by country representatives and guest discussants.

During the session on peer learning networks, Ms. Monika Rubiolo (SECO) and Mr. Natan Epstein (MCD) discussed establishing such a network—a community of practitioners working on monetary and exchange policy and operations issues at CCA central banks. Members of such a community, they pointed out, could exchange information, gain and build knowledge, and thus learn how to promote institutional and policy changes. Mr. Epstein noted that the IMF, SECO, and the SNB plan to foster development of such a network among monetary and exchange policy experts in CCA.

During the Governors’ Forum that followed the workshop, guest discussants described the experiences of the Czech Republic, Hungary, Israel, Russia, and Serbia in establishing monetary and exchange rate frameworks. The event provided an opportunity for lively discussions among participants from the region, the guest speakers, and the organizers. It was also an excellent opportunity for the JVI to contribute to a current policy debate in the region, to meet both alumni and likely future course participants, and to support our IMF colleagues in building a regional platform for continuing peer-to-peer knowledge exchange and cooperation.

Asel Isakova