Quasi-Fiscal Implications of Central Bank Crisis Interventions

John Hooley, Ashraf Khan, Claney Lattie, Istvan Mak, Natalia Salazar, Amanda Sayegh and Peter Stella

No 2023/114, IMF Working Papers from International Monetary Fund

Abstract: We develop a stylized balance sheet framework to help identify ‘quasi-fiscal’ components of central bank crisis interventions and show how sources of fiscal risk are created from both the new claims and how they are funded. Combining central bank balance sheet data with survey evidence from intervention announcements, we document the risks to the public sector balance sheet from central banks’ interventions in response to the Covid-19 crisis, including non-conventional lending to the financial and non-financial sectors and large-scale purchases of government securities. Case study analysis indicates that management of fiscal risks from central bank crisis interventions varies greatly across countries, although several good practices can be identified.

Keywords: Central bank; quasi-fiscal; fiscal risks; monetary policy; fiscal policy; sovereign debt management; policy coordination; support facilities; intervention announcement; asset purchase facility; liquidity-providing repo; variable interest entity; Central bank balance sheet; Central bank operations; Financial statements; Global (search for similar items in EconPapers)
Pages: 48
Date: 2023-06-02
New Economics Papers: this item is included in nep-ban and nep-mon
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