By
David Archer and
Paul Moser-Boehm
BIS Papers No 71
April 2013
This paper looks at the relevance of a central bank's own finances
for its policy work. Some central banks are exposed to significant
financial risks, partly due to the environment in which they operate,
and partly due to the nature of policy actions. While financial
exposures and losses do not hamper central banks' operational
capabilities, they may weaken the effectiveness of central bank policy
transmission. Against this backdrop, the paper analyses the determinants
of a central bank's financial position and the possible implications of
insufficient financial resources for policymaking. It also provides a
conceptual framework for considering the question of whether central
banks have sufficient financial resources.
JEL classification: E58, E61, G01, M41