Do Central Banks Need Capital?

Author/Editor:

Peter Stella

Publication Date:

July 1, 1997

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:

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.

Series:

Working Paper No. 1997/083

Subject:

Banking Central bank accounting Central banks Commercial banks Currencies Financial institutions Financial statements Fiscal accounting and reporting Money Public financial management (PFM)

English

Publication Date:

July 1, 1997

ISBN/ISSN:

9781451850505/1018-5941

Stock No:

WPIEA0831997

Pages:

39

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