Do Central Banks Need Capital?

Peter Stella

No 1997/083, IMF Working Papers from International Monetary Fund

Abstract: Central banks may operate perfectly well without capital as conventionally defined. A large negative net worth, however, is likely to compromise central bank independence and interfere with its ability to attain policy objectives. If society values an independent central bank capable of effectively implementing monetary policy, recapitalization may become essential. Proper accounting practice in determining central bank profit or loss and rules governing the transfer of the central bank’s operating result to the treasury are also important. A variety of country-specific central bank practices are reviewed to support the argument.

Keywords: WP; central bank capital; monetary policy; distribution rule; profit and loss account; interest income; profit transfer; transfer policy; market value; transfers profits; profit payment; debt issuance; profit distribution rule; central bank loss; central bank solvency; Financial statements; Commercial banks; Fiscal accounting and reporting; Currencies; Central bank accounting; Baltics (search for similar items in EconPapers)
Pages: 39
Date: 1997-07-01
References: Add references at CitEc
Citations: View citations in EconPapers (85)

Downloads: (external link)
http://www.imf.org/external/pubs/cat/longres.aspx?sk=2260 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:imf:imfwpa:1997/083

Ordering information: This working paper can be ordered from
http://www.imf.org/external/pubs/pubs/ord_info.htm

Access Statistics for this paper

More papers in IMF Working Papers from International Monetary Fund International Monetary Fund, Washington, DC USA. Contact information at EDIRC.
Bibliographic data for series maintained by Akshay Modi ().