Transformations  in
Business & Economics

Monetary Anchor and Exchange Rate Arrangements: The Case of the Democratic Republic of the Congo (History and Empirical Evidence)
Edouard Mambu ma Khenzu

ABSTRACT. This paper provides an insight into the hectic history of monetary anchor and exchange rate arrangements set up since the late nineteenth century in the African territory known today as the Democratic Republic of the Congo. It starts by making reference to exchange rate arrangements that existed in the 16^th century, between the Portuguese currencies and the nzimbu, libongo, and mitako, known as currencies of the ancient Kingdom of Congo discovered by the Portuguese in 1482, of which a large territory is integral part of the current Democratic Republic of the Congo. The paper analyses successively the key features of monetary regimes and exchange rate arrangements over three periods of the Congo’s history, namely, the Congo Free State (Etat Indépendant du Congo) era (1885-1908), the time when the Congo was a Belgian colony (1908-1960), and the post-colonial epoch, starting from 1960 to the early 2000s. Attached to the paper is an appendix that presents in a comprehensive review of exchange rate arrangements in the Congo over the period covered, with a particular focus on the post-colonial era in so far as the latter is characterised by a vast number of attempts of monetary adjustments and stabilisation programmes, implemented, for most of them, in unfavourable conditions and political environment.

KEYWORDS: chronic high inflation, currency substitution, dollarisation, exchange rate, hyperinflation, intervention currency, legal tender, monetary anchor, state budget deficit, the Democratic Republic of the Congo.

JEL classification: O16, H6, P24, N17, N27.