Some New Directions for Financial Stability?

per Jacobson lecture, September 30, 2004

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Bibliographic details

• Published: September 30, 2004
• Series: per Jacobson lecture
• DOI: https://doi.org/10.5089/9781451980868.028

Central bank functional responsibilities (overview)

• Central bank required to maintain systemic financial stability without supervisory oversight of individual financial institutions.
• Financial Services Authority (FSA) has responsibility for supervising individual financial institutions, while the central bank retains other key system-wide responsibilities.

Payments system and market infrastructure oversight

• Central bank responsibility includes the smooth running of the domestic payments system.
• By extension, oversight of the structure and soundness of clearing and settlement systems for:
  • the main financial markets,
  • money and bond markets,
  • the foreign exchange market,
  • the equity market.

Contingency planning and operational resilience

• A prominent associated function (heightened by 9/11) is contingency planning against major physical disruption of markets caused by terrorism or natural causes.

Liquidity provision and lender-of-last-resort (LOLR) actions

• Central bank provides injections of liquidity:
  • to the financial system as a whole via open market operations, or
  • via lender-of-last-resort (LOLR) actions to individual institutions.
• Policy trade-off highlighted: LOLR operations to individual institutions might put taxpayers’ money at risk.

Subjects and keywords covered

• Asset and liability management
• Banking; Commercial banks
• Financial crises; Financial institutions
• Financial regulation and supervision
• Financial sector policy and analysis; Financial sector stability
• Liquidity indicators; Liquidity management; Liquidity risk
• Additional keywords: capital value, fair value accounting, monetary policy committee, Per Jacobsson Foundation lecture, Iron Curtain speech, value, Eastern Europe, Europe, Global, MISC PUBS, Misc.