The restoration of monetary policy tools in armed conflict countries: the case of Yemen

Abstract

Among the many problems facing Yemen, the disruption of the monetary policy tools remains paramount affecting millions of lives. This study aims to restore the monetary policy tools' functions in Yemen. This is done by first identifying the reasons behind the monetary policy tools' disruption, and then developing a new efficient monetary policies' management system (MPMS). Semi-structure interviews are used in two different stages: First, to identify the reasons behind monetary policy tools disruption; Second, to assess the efficacy of the developed MPMS. The study reveals that a high unpredictable inflation, a sharp fluctuation in the currency value, and a loss of trust in the central bank's functions are major reasons for the disruption of the country's monetary policy tools. Additionally, the developed MPMS received the satisfaction of the interviewee parties who include former T-bills investors, high-level officials in the Central Bank of Yemen, and the Minister of Finance. Thus, indicating efficacy achievement to the developed MPMS. Our results achieve a restoration to the disrupted monetary policy tools in armed conflict countries (i.e., Yemen).