Responsibility of Central Banks for Stability in Financial Markets

Author/Editor:

Garry J. Schinasi

Publication Date:

June 1, 2003

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

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.

Series:

Working Paper No. 2003/121

Subject:

Bank supervision Banking Central bank mandate Central banks Financial crises Financial regulation and supervision Financial sector policy and analysis Financial sector stability Monetary base Money

English

Publication Date:

June 1, 2003

ISBN/ISSN:

9781451854404/1018-5941

Stock No:

WPIEA1212003

Pages:

19

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