Responsibility of Central Banks for Stability in Financial Markets

Garry Schinasi ()

No 2003/121, IMF Working Papers from International Monetary Fund

Abstract: What is the role of central banks in ensuring financial stability? This paper addresses this controversial subject, in part by drawing on the experiences in Europe, Japan, and the United States, and by examining four questions. What is meant by financial stability? Do central banks have a natural role in ensuring financial stability? What does a central bank need to execute this role effectively? How far have central banks actually gone in safeguarding financial stability? The experience drawn on in the paper suggest that central banks: have a natural role to play; at times may require supervisory information to execute this natural role; and have incurred risks to their balance sheets to ensure financial stability.

Keywords: WP; financial system; central bank money; banking supervision; ECB regulation; market discipline; monetary policy; financial stability; central banking; financial crises management; ECB statute; market surveillance; banking policy view; conceived central bank; market stability; Financial sector stability; Bank supervision; Central bank mandate; Monetary base; Europe; Global (search for similar items in EconPapers)
Pages: 19
Date: 2003-06-01
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Citations: View citations in EconPapers (33)

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