Summary of Central Bank Finances

BIS Papers No 71

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Central Bank Finances summary
New economic research on central banks’ financial strength reveals how they handle increasingly volatile economies.

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The Bank for International Settlements (BIS) takes an important look at the roles of central banks in the volatile aftermath of the financial crisis of 2008. BIS economists David Archer and Paul Moser-Boehm assess various criteria to determine how central banks’ financial strength helps them to achieve their economic and political objectives. They also investigate the tools available to central bankers and policy makers. Their comprehensive report delves into the changes that pushed central banks into unexplored policy domains and that now constitute the new normal in international financial markets. The authors don’t offer absolute answers to such multifaceted issues as capital retention, “distribution asymmetries” and risk exposures. However, they do propose a sound framework that central banks and associated entities can use to evaluate their financial strength and monetary strategies. getAbstract considers this a significant report about the changing, increasingly complex work of central banks. It will help industry participants and finance professionals unravel erroneous public assumptions about a complicated but critically important subject.

In this summary, you will learn

  • How central banks’ roles have changed since the 2008 financial crisis
  • How financial strength affects a central bank’s ability to carry out its policies
  • How increasingly volatile markets influence central bank strategies
  • What variables central bankers and governments must consider when ruling on capital needs, disbursements and overall financial strength
 

Summary

Changing Roles for Central Banks
Central banking is hard work, and it has become even harder. The 2008 financial crisis and the global response to it pushed these institutions into the limelight. Circumstances forced central banks such as the US Federal Reserve, the Bank of England and...
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About the Authors

David Archer is head of central banking studies at the Bank for International Settlements, where Paul Moser-Boehm is a senior economist.


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