Capitalizing Central Banks: A Net Worth Approach

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)...

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Bibliographic Details
Main Author: Ize, Alain (Author)
Format: Electronic eBook
Language:English
Published: Washington, D.C International Monetary Fund 2005
Series:IMF Working Papers Working Paper No. 05/15
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Summary: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
Physical Description:1 Online-Ressource (25 p)
ISBN:145186034X
9781451860344

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