Financial Liberalisation and the Demand for Money in Pakistan (Fiscal AND MONETARY Issues) (Report‪)‬

I. INTRODUCTION An efficient and liberalised financial sector is essential for promoting economic growth and welfare. The process of financial liberalisation through "deepening" and eliminating distortion and segmentation of financial markets improves the process of the mobilisation of savings as well as the efficiency of investment, thereby accelerating the overall rate of economic growth. At the end of 1989 Pakistan undertook an ambitious financial sector reforms programme with the aim to improve the effectiveness of monetary policy through greater reliance on market forces. The main liberalisation policies were aimed at liberalising interest rates, reducing controls on credit, enhancing competition and efficiency in the financial system, strengthening the supervisory framework, and promoting the growth and deepening of financial markets. (1)