IMF Working Papers

Central Bank Losses and Experiences in Selected Countries

By Claudia H Dziobek, John W. Dalton

April 1, 2005

Download PDF

Preview Citation

Format: Chicago

Claudia H Dziobek, and John W. Dalton Central Bank Losses and Experiences in Selected Countries, (USA: International Monetary Fund, 2005) accessed June 18, 2025
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

Under normal circumstances, a central bank should be able to operate at a profit with a core level of earnings derived from seigniorage. Losses have, however, arisen in several central banks from a range of activities including monetary operations under extreme conditions and financial sector restructuring. The paper discusses the impact of losses on central bank operations and lays out the principles and practices for handling central bank losses. It is suggested that losses should be disclosed as a reduction of the central bank's net worth unless covered by the government. Governments may cover losses through recapitalization of the central bank, and this will create a new central bank asset, usually in the form of government securities held by the central bank. Six case studies illustrate the circumstances under which losses may arise, their coverage, and central banks' disclosure practices.

Subject: Banking, Currencies, Financial statements, Foreign exchange, Personal income

Keywords: Bank, Central bank, Central bank loss, Loss, Unrealized loss, WP

Publication Details

  • Pages:

    13

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2005/072

  • Stock No:

    WPIEA2005072

  • ISBN:

    9781451860917

  • ISSN:

    1018-5941

You May Also Be Interested In...

Papua New Guinea: 2025 Article IV Consultation, Fourth Reviews Under the Extended Arrangement Under the Extended Fund Facility and the Arrangement Under the Extended Credit Facility, Requests for a Waiver of Nonobservance of Performance Criterion, Modification of a Quantitative Performance Criterion, and First Review Under the Arrangement Under the Resilience and Sustainability Facility-Press Release; Staff Report; and Statement by the Executive Director for Papua New Guinea

June 18, 2025

Ukraine: Technical Assistance Report-Foreign Exchange Derivatives Market Development

June 13, 2025

Post-Pandemic Investment in Spain: Assessing the Sluggish Recovery

June 13, 2025

Honduras: Third Reviews Under the Extended Fund Facility and the Extended Credit Facility Arrangements, and Request for Modification of Performance Criteria-Press Release; Staff Report; and Statement by the Executive Director for Honduras

June 13, 2025