A Central Bank's Optimal Balance Sheet Size?
Charles A Goodhart
No 12272, CEPR Discussion Papers from C.E.P.R. Discussion Papers
Unlike other facets of monetary policy renormalisation, there has been little discussion yet of what principles should determine the optimum size of a Central Bank's balance sheet, the end-point to which on-going portfolio reductions should approach. In this note I start by addressing the arguments of those who would leave this balance sheet very large, much as now; and then continue with the counter-arguments, also stressing the nature of the relationships between monetary and fiscal policies, and between the Central Bank and the Treasury's Debt Management Office.
Keywords: auction risk; Central Bank Balance Sheet; Debt Management; interest rate risk; liquidity; Monetary Policy Renormalisation; QE (search for similar items in EconPapers)
JEL-codes: E50 E52 E63 H63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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