The political economy of central bank effectiveness: The case of National Bank of Rwanda
This paper examines the political determinants of the portrayal of the National Bank's achievement of promoting price and financial stability
Abstract
In a survey conducted in Rwanda by the Pockets of Effectiveness project, the Central Bank was listed as among the top-performing government organisations in the country. This paper examines the political determinants of the portrayal of the National Bank of Rwanda바카라 사이트™s (BNR) achievement of its mandate: promoting price and financial stability. The paper uses the political settlements framework to highlight the political determinants of financial sector reforms in the country. Rwanda바카라 사이트™s underlying political economy 바카라 사이트“ and particularly the government바카라 사이트™s evolving relationships with domestic capital vis-Ã -vis foreign capital 바카라 사이트“ has contributing to shaping the Rwandan financial sector바카라 사이트™s trajectory. In particular, the Rwandan government has prioritised a strategy of being a financial sector hub, which is based on increased global financial integration and portraying the achievement of 바카라 사이트˜best practice바카라 사이트™ reforms. These goals have come at the cost of traditional developmentalists goals for central banks, including direct lending for structural transformation. BNR has achieved success in its mandate. However, achieving success in its market-led mandate reduces the policy tools at its disposal to promote structural transformation. The paper argues that reforming BNR along neoliberal lines has mirrored the broader macro-strategy of the country, with the ruling Rwandan Patriotic Front (RPF) choosing to rely increasingly on legitimacy with external actors, rather than supporting the growth of strengthening domestic state바카라 사이트“ business relationships to support economic transformation.
This work is part of the Effective States and Inclusive Development Research Centre programme
Citation
Behuria, P. (2020) The political economy of central bank effectiveness: The case of National Bank of Rwanda. ESID Working Paper No. 151. Manchester, UK: The University of Manchester.
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