European Parliament Library

Central Bank Financial Strength, Policy Constraints and Inflation, Peter Stella

Central bank financial strength is positively associated with good policy performance. Financially weak central banks generate losses which undermine macroeconomic stability and call into question the credibility of their policies. In assessing central bank financial strength a careful examination of the policy regime and the volatility of the economic environment is necessary. Conventional measures of private enterprise financial strength- profitability and capital-can be very misleading when applied to central banks. The way in which a central bank balance sheet is strengthened matters. Providing the central bank with marketable government debt that can be used to develop a money market that in turn may become the locus of central bank monetary operations serves both to directly strengthen the institution and improve the quality of the environment in which it operates, thereby facilitating the attainment of its ultimate performance objectives
Table Of Contents
Contents; Acronyms; I. Introduction; II. Concepts of Central Bank Financial Strength and Policy Performance; Figures; 1. Impact of Volatility and Nature and Ambitiousness of Policy Regime on Probability of a Recapitalization; III. Overview of Central Bank Financial Strength in a Variety of Countries; Tables; 1. United States: Consolidated Federal Reserve System; 2. Bank of Canada; 3. European Central Bank; IV. Evidence for the Impact of Financial Strength on Policy Performance; 2. Other Items Net to Total Assets, 1992; 3. Other Items Net to Total Assets, 1997
Literary Form
non fiction
Description based upon print version of record
Physical Description
1 online resource (27 p.)
Specific Material Designation
Form Of Item

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