Journal Description Editorial Committee How to Subscribe Forthcoming Articles Staff Papers Archive Copyright Information Research at the IMF Free Email Notification Receive emails when we post new
items of interest to you. |
|
|
Capitalizing Central Banks: A Net Worth Approach Alain Ize Full Text of this Article (PDF 376K) Abstract: This paper provides
a simple, quantitative, net-worth-based approach to assessing the need
for central bank capital. It derives a concept of "core capital"
(a function of the central bank's operating expenditures and the
carrying cost of its international reserves) as the minimum capital needed
by a central bank to ensure the credibility of its inflation target. The
approach is illustrated with the published accounts of three loss-making
central banks and selected accounting entries for a broader sample of
central banks. Policy implications are explored. In particular, the paper
argues that central bank capitalizations cannot be automatic and require
instead a broad policy debate. |