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Easing the Nepali Liquidity Crisis

dc.contributor.authorMukesh Khanal
dc.description.abstractDuring normal conditions, the NRB’s monetary policy is effective in tackling liquidity problems. Some of the solutions that the NRB has been pursuing are: bank mergers, lowering the CRR, lowering the interbank lending rate, and liquidity injection. Maybe NRB’s reluctance in committing itself to lowering the interest rates has something to do with the fact that inflation, which is already very high in Nepal, can spiral out of control if interest rates are too low. A viable solution to the liquidity crisis is that our government should buy the banks, with discretion and proper audit to determine which ones are good bets. The bad ones that seem like they will not survive—even with a government buyout—should be allowed to go bankrupt and exit the market. This would be a win-win situation. The good banks would survive, and the government would make some money during the process. If we do nothing, and hope the free market fixes the problem sooner or later, we risk aggravating the situation. Like the US, our liquidity crisis has also occurred due to the slowdown of our real estate market. We could also face a debt crisis very soon if we do not solve this crisis.
dc.publisherInstitute for Integrated Development Studies
dc.titleEasing the Nepali Liquidity Crisis
dc.subject.expertCultural Development
dc.subject.expertDevelopment Economics
dc.subject.expertDevelopment Issues
dc.subject.expertFinancial Sector Development
dc.subject.expertInfrastructure Development
dc.subject.expertUrban Development Finance
dc.subject.expertFinancial System
dc.subject.expertFinancial Sector Reform
dc.subject.expertFinancial Institution
dc.subject.expertBank Financing
dc.subject.adbRural planning
dc.subject.adbEconomic development
dc.subject.adbEconomic indicators
dc.subject.adbStandard of living
dc.subject.adbDevelopment projects
dc.subject.adbDevelopment policy
dc.subject.adbHousing projects
dc.subject.adbDevelopment models
dc.subject.adbSocial reform
dc.subject.adbUrban planning
dc.subject.adbPublic Borrowing
dc.subject.adbCredit Policy
dc.subject.naturalReal estate development
dc.subject.naturalHousing development
dc.subject.naturalCommunity banks
dc.subject.naturalMortgage banks
dc.subject.naturalHousing policy
dc.subject.naturalTax administration and procedure
dc.subject.naturalReal property and taxation
dc.subject.naturalProperty tax
dc.subject.naturalCredit control
dc.subject.naturalBanks and banking
dc.subject.naturalTitle companies
dc.subject.naturalTax deductions
dc.title.seriesIIDS Policy Brief
dc.title.volumeissue #2
dc.contributor.imprintInstitute for Integrated Development Studies
oar.adminregionSouth Asia Region
oar.authorKhanal, Mukesh

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