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A better way to account for fiat money at the Central Bank

Thomas Colignatus ()

General Economics and Teaching from EconWPA

Abstract: Proper monetary accounting rules are: (1) Central Banks should conform to the practice of the US Federal Reserve to distinguish its Balance Sheet from its Statement of Conditions. (2) Fiat money should not appear as a liability in a Balance Sheet. (3) The Central Bank should not record more government bonds than required for open market operations. Surplus bonds should be accounted as being void (on loan from the government who should destroy them). If these rules are not observed, a wrong measure of government debt arises, distorting the requirements for policy making.

Keywords: Fiat Money; Money; Central Bank; Government Debt; Seigniorage; Inflation Tax; Gold Standard; Accounting (search for similar items in EconPapers)
JEL-codes: A00 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-fmk, nep-mac and nep-mon
Date: 2005-12-31
Note: Type of Document - doc; pages: 4. Composed in Word for Windows on a Windows XP machine
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