Title: Monetary Policy in Bhutan : Implications of Indian Rupee Circulation
Abstract: The central bank of Bhutan issues its currency the ngultrum. At the same time, the Indian rupee circulates within the country with parity This paper investigates the implications of rupee circulation for monetary policy in Bhutan using the money multiplier framework and evaluates the impact of the rupee, e.g., Indian currency held within the borders of Bhutan but remaining outside of Bhutan's banking system. The conclusion that emerges is that Bhutan's monetary authorities should continue their efforts on financial sector development since that will gradually lead to absorption of the Indian rupee into the country's financial system and thereby strengthen the link between monetary variables and economic activities.
Publication Year: 1990
Publication Date: 1990-04-01
Language: en
Type: preprint
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Cited By Count: 2
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