The informal system of remittances and currency board: complementarity or antagonism? the case of hawala transfers in Djibouti

We propose an empirical study analyzing the link between monetary regime (Currency Board) and informal monetary practices (hawala transfers) in Djibouti. The analytical and empirical results both from monetary accounting and econometric simulations, particularly from different tests for cointegration between the balance of payments, reserve money, and hawala transfers for the period 2002-2011, show that informal practices develop in harmony with the highly rigid monetary regime. The interaction of formal and informal sector provides a macromonetary balance and stability, thereby perpetuating the regime of Currency Board.