The Central Bank of Tanzania has officially started using a monetary policy system that uses interest in the implementation of the monetary policy in the country.
“This is part of the improvements in the financial sector, aimed at increasing the effectiveness of monetary policy,” said the Governor of the Central Bank of Tanzania, Mr. Emmanuel Tutuba, while officially launching the system- at the Central Bank of Tanzanian conference hall, Dar es Salaam.
This means that the BoT has officially shifted from a monetary policy system that uses the abundance of funds to a one that uses interest, the governor said at an event attended by bank and financial institutions chiefs and the press.
A financial policy system that uses overflow of finances has been used for nearly 28 years. During this period, the Central Bank has been able to achieve its objectives of controlling inflation and contributing to economic growth, despite various challenges in the economy especially those from abroad.
Mabadiliko haya mapya yanatokana na changamoto mbalimbali ikiwemo maendeleo katika sekta ya fedha, hususan kuongezeka kwa ubunifu na matumizi ya teknolojia katika utoaji wa huduma za kifedha.
“This situation has caused difficulty in estimating the amount of financial availability that corresponds to the needs of economic activities in the country.” “Given this situation, the Central Bank had to look for an alternative monetary policy system that is appropriate in the present time and environment,” said the Governor.
In implementing this system, the central bank uses short-term interest rates to control the abundance of money.
This system is also used by several African countries such as Rwanda, Kenya, Zambia, Uganda, Ghana, and South Africa. Outside Africa, this system is used by New Zealand, Canada, Japan, the United Kingdom, and many other countries.
Either, he said, shifts in the monetary policy system are also being made to implement the protocol to establish the East African Monetary Union, towards becoming a single currency and a single East African Central Bank. Also, it is an agreement by other regional communities that Tanzania is a member to make these changes.
Chanzo: BoT
