Experts: Central Bank Fails to Achieve Monetary Stability
Sudan Events – Rehab Abdullah
Former Central Bank of Sudan official and banking expert Malik Al-Rashid has criticized the bank for failing to achieve its primary objective of monetary stability, as mandated by law.
He said the current monetary policy, based on the outdated quantity theory of money, has failed to deliver results. He noted that the Central Bank had historically relied on a model that sought to control four variables—money supply, its velocity, GDP, and the general price level—despite evidence that velocity is unstable and the model has yielded no positive outcomes, even in other countries.
Al-Rashid argued that Sudan’s monetary policies have ignored the demand side of money, focusing only on supply, and thus repeatedly failed. He emphasized that modern central banks worldwide use advanced econometric models that Sudan’s central bank has neglected.
He concluded that the bank’s policies remain stuck in a “vicious circle,” with the pound depreciating daily against the dollar, runaway inflation worsening, and all previous measures failing to contain it. He called for comprehensive reforms, including updating outdated policies, restructuring staff, and granting the bank greater independence to craft effective strategies.
Meanwhile, Dr. Badr Al-Din Qureshi, First Deputy Governor of the Central Bank, defended the current framework, saying it aims to limit monetary expansion and curb “cash leakage” from currency printing. However, he acknowledged overreliance on indirect tools such as reserve requirements, stressing the need for more direct mechanisms like adjusting financing margins and activating open market operations.
