Quasi-Fiscal Implications of Central Bank Crisis Interventions

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

June 2, 2023

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John Hooley, Ashraf Khan, Claney Lattie, Istvan Mak, Natalia Salazar, Amanda Sayegh, and Peter Stella. Quasi-Fiscal Implications of Central Bank Crisis Interventions, (USA: International Monetary Fund, 2023) accessed October 6, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

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.

Subject: Central bank balance sheet, Central bank operations, Central Banks, Financial statements, Fiscal risks, Public debt, Public financial management (PFM)

Keywords: Asset purchase facility, Central bank, Central bank balance sheet, Central bank operations, Financial statements, Fiscal policy, Fiscal risks, Global, Intervention announcement, Liquidity-providing repo, Monetary policy, Policy coordination, Quasi-fiscal, Sovereign debt management, Support facilities, Variable interest entity

Publication Details

Pages:

48
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2023/114
Stock No:

WPIEA2023114
ISBN:

9798400241185
ISSN:

1018-5941

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