Doing it differently or The impact of the financial crisis on central bank balance sheets in emerging economies

Szilárd Erhart, Gergely Kicsák (), Zsolt Kuti (), Zoltán Molnár () and Zoltán Monostori
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Gergely Kicsák: Magyar Nemzeti Bank (the central bank of Hungary)
Zsolt Kuti: Magyar Nemzeti Bank (the central bank of Hungary)
Zoltán Molnár: Erste Bank Hungary

MNB Bulletin (discontinued), 2013, vol. 8, issue Special, 46-60

Abstract: This study investigates changes in central bank balance sheets and the non-conventional central bank measures triggered by the crisis by comparing international examples. The trend of rapid expansion in central bank balance sheets and the resulting higher need for sterilisation is not solely a Hungarian phenomenon, as it represents a challenge for central banks around the world. Responding to a variety of exchange rate and financial crises since the end of the 1990s, the central banks of emerging economies have gradually increased their foreign exchange reserves. The large weight of foreign exchange reserves in the balance sheets caused considerable increases in the total assets of the central banks of emerging countries. Later, after the 2008 financial crisis, advanced economies saw sudden increases in their central banks’ balance sheet totals following non-conventional operations and asset purchase programmes. The expansion of central bank balance sheets and the increase in the surplus liquidity of the financial intermediary system has caused changes to central bank liabilities and their structures. Following an assessment of the global situation, we present eight case studies, providing detailed analyses of the changes to the central bank balance sheets of emerging economies.

Keywords: monetary policy; central bank balance sheet; sterilisation; liquidity management; foreign reserves; non-conventional monetary policy; monetary policy instruments (search for similar items in EconPapers)
JEL-codes: E51 E58 (search for similar items in EconPapers)
Date: 2013
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