This book examines the objectives, activities and independence of central banks in developing countries. It is based on original financial information from Africa, Asia, Europe, Latin America and the Caribbean. It explores the practical problems faced by these central banks over the past 15 years in confronting government demands for monetary financing, formulation and implementing monetary policy, choosing and maintaining an exchange rate regime as well as enhancing their status and independence. The book covers three general topics: government financing, foreign exchange systems and the domestic banking system. In all three areas, central banks in developing countries face environments that differ radically from the environments faced by central banks in the richer OECD countries. There are difficulties with uncompetitive financial systems, unskilled labour forces and the endemic problem of government finance. However positive changes are now occurring in the central banks of developing countries, especially as the benefits of price stability become widely accepted. The book is in a clear and easy to use format with generous use of tables, figures and boxed material. This book is published in association with the Bank of England and presents the definitive account of the role of central banks in developing countries.