| A new inter-bank rate guideline system named CAIBOR (Cairo Inter-bank Offering Rate) was introduced in September 2000 by 23 participating commercial banks accounting for 90% of total banking activity.
Monetary developments included tightening credit conditions and establishing a more flexible exchange rate regime started in January 2001. A tight monetary stance was pursued to restore macroeconomic balances. As a result of the fiscal/monetary policy mix, international reserves stabilized and inflation rates continued their downward trend to reach 2.2% in October 2001. The CBEs ability to conduct market-based monetary policy is being enhanced through forthcoming improvements in the primary market for treasury bills. Also, the impending establishment of a primary dealer system should help achieve increased interest rate flexibility.
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