lN21 study case assignment

1. MONETARY POLICY RESPONSES TO THE GLOBAL
FINANCIAL CRISIS: A CASE STUDY OF EGYPT
Celin Gunawan (2201836583)
Dhafia Rakhanahda Anhar (2201839824)
Devandra Nabila Aulia (2201843784)
Rahma Sarita (2201836551)
Tasca Maverick (2201834786)
LN21-Manajemen

2. Executive
Summary

3. Problems
Recommendation
Analysis
CBE is suffering from global
financial crisis and conventional
monetary policy instrument were
unable to reverse the meltdown.
Implement strict
controls on banks to
improve and
consolidate the
banking sector.
Money supply targets are
determined not in terms of
absolute levels, but rather in
terms of a range which allows for
random shocks beyond the
control of the monetary
authorities.

4. Brief
History

5. business key points
● CBE (central bank of egypt)
● egypt’s over dependence on imported food,causing the prices to soar
● the deal operating targets for the Central Bank of Egypt are the overnight rate and legal
reserve requirements.
● this chart shows that CBE is low compared to other banks in this particular chart is for
the balance sheets

6. key challenge
● central bank of egypt is suffering GFC (global financial crisis)
● from symptoms of chronic inflation and looming socio-political turmoil.
● as economic fragility and financial weakness become mutually reinforcing during the
global financial crisis (GFC), prompt policies were globally undertaken to undermine
the virulence of the meltdown .
● But conventional monetary policy instruments were unable to solely reverse the
meltdown.

7. INDUSTRY
ANALYSIS

8. 01
02
04
03
Function
● Monetary policy framework
● Inflation
Monetary Policy
● On site & off site supervision
● Central Credit Registry
Banking Supervision
● Regulations
● Real time gross settlement
(RTGS) Data
Payment Systems
● Fintech innovation fund
Financial Technology

9. P E
S T
PEST ANALYSIS
Sociocultural Factors
Cultural and traditional influences
affect how people see and trust the
central bank.
Political Factors
Government laws or decisions may
affect the state of central bank
because limited control by executive
and legislation bodies exist.
Economic Factors
The central bank and the economy
are tied. How the economy growths
affects the decision made by the
central bank.
Technological Factors
Technology is changing the way
people handle their funds and how
money in the nation flows.

10. SWOT Analysis of the Industry
STRENGTH
● Direct involvement in nation-wide
decisions that are related to the
economy.
● Large network across the country.
WEAKNESS
● Less international presence.
● Low brand presence
compared to commercial
banking.
OPPORTUNITY
● Favorable government
schemes.
THREATS
● Policies of government.
● Fluctuating economic
scenarios.

11. Central Bank also released an annual report to inform their performances in the
current or latest year. This is the example of the data in the annual report of CBE.

13. COMPANY
ANALYSIS

14. SWOT
Internal Strengths
-as a bank have goals/vision: price stability,
investment and gdp growth.
-
- mision: implement strict controls on banks
to improve and consolidate the banking
sector, reforming state-owned banks and
settling NPLs
Weaknesses
•Coordination that has not gone well
External Opportunities
•Revive the repo market
•acquired commodities and precious metals
to maintain the 20 per cent targeted safety
level of foreign reserves to GDP
•
•
Threats
•Slowing down macroeconomic growth because of global
recession
•Reduction workers‘ remittances and tourist revenue by
more than 25 per cent.
•

16. “it is well enough that people of the nation do not understand our
banking and monetary system, for if they did, I believe there would
be a revolution before tomorrow morning” – Henry Ford

17. Alternatives

18. Control the pase of currency plus chequing
deposits
Pros
● increase of aggregate demand via an
excess of real balances which produces a
decline in real interest rates causing
higher levels of consumption and
investment and, as a result, inflation
pressure
● changes in the real interest rate modify
the cyclical position of the economy,
exacerbating or dampening inflation
pressures
Cons
● this effect is not fully
transmitted to prices although
the cointegrating vector
suggests a close relationship
between the path of prices and
the quantity of money

19. Dynamic stochastic general equilibrium
(DSGE)
Pros
● The revaluation of the Egyptian pound
lowers the cost of production, hence
curbing inflation and expanding GDP
Cons
● The employment of the LRR as an
operational target has minimal
stabilising effects and is ineffectual in
curbing inflation

20. Transparency and accountability
Pros
● balance between maintaining the political
independence and impartiality of the central
bank
● ensuring the highest levels of transparency and
accountability
Cons
● The CBE has to explain all of its policy decisions
whenever any of the conventional monetary
tools are used, instead of solely issuing a concise
briefing including solely the discount rates.
● Central bankers have to invite and encourage
the feedback and input of specialists by issuing
periodical consultative documents prior to
introducing any major policy amendment

21. Recommendation

22. It is recommended that money supply
targets are determined not in terms of
absolute levels, but rather in terms of a
range which allows for random shocks
beyond the control of the monetary
authorities. Once a range for currency plus
chequing deposits has been defined, the
Bank should make it public and monitor it
on a regular basis.