Why a central bank’s bottom line doesn’t matter (that much)

Rationale Central banks in some developed countries have started to record, or will soon record, losses. These losses are due to the structural changes in their balance sheets after the exceptional measures adopted during the economic crises of recent years, which were necessary to maintain price st...

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Detalles Bibliográficos
Autores: Esteban García-Escudero, Enrique, Romo González, Luna Azahara
Tipo de recurso: artículo
Fecha de publicación:2024
País:España
Institución:Banco de España
Repositorio:Repositorio Institucional del Banco de España
OAI Identifier:oai:repositorio.bde.es:123456789/36255
Acceso en línea:https://repositorio.bde.es/handle/123456789/36255
Access Level:acceso abierto
Palabra clave:Central banking
Profit and loss
Eurosystem
Price stability
Monetary policy
Política monetaria
Contabilidad bancaria
Estabilidad de precios
Bancos centrales y otras autoridades monetarias
E52
E58
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oai_identifier_str oai:repositorio.bde.es:123456789/36255
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repository_id_str
spelling Why a central bank’s bottom line doesn’t matter (that much)Esteban García-Escudero, EnriqueRomo González, Luna AzaharaCentral bankingProfit and lossEurosystemPrice stabilityMonetary policyPolítica monetariaContabilidad bancariaEstabilidad de preciosBancos centrales y otras autoridades monetariasE52E58Rationale Central banks in some developed countries have started to record, or will soon record, losses. These losses are due to the structural changes in their balance sheets after the exceptional measures adopted during the economic crises of recent years, which were necessary to maintain price stability. This article explains why these losses are expected to be temporary and why central banks can continue to perform their functions and deliver on their mandate even when incurring losses. Takeaways •A central bank’s aim is not to maximise profits, but instead to use monetary policy to achieve price stability. •Central banks cannot be insolvent as they issue the currency (base money) with which they continue to cover their operating expenses and meet their present and future payment obligations. •There are numerous examples of central banks that have continued to deliver on their mandates even when incurring losses. In these cases, a robust legal framework that protects central banks’ autonomy is key.Banco de EspañaMadrid : Banco de España, 20242024info:eu-repo/semantics/articleapplication/pdfhttps://repositorio.bde.es/handle/123456789/36255reponame:Repositorio Institucional del Banco de Españainstname:Banco de EspañaInglésEconomic Bulletin / Banco de España, 2024/Q2, 01Versión en español 123456789/36273info:eu-repo/semantics/openAccessoai:repositorio.bde.es:123456789/362552026-06-20T12:44:27Z
dc.title.none.fl_str_mv Why a central bank’s bottom line doesn’t matter (that much)
title Why a central bank’s bottom line doesn’t matter (that much)
spellingShingle Why a central bank’s bottom line doesn’t matter (that much)
Esteban García-Escudero, Enrique
Central banking
Profit and loss
Eurosystem
Price stability
Monetary policy
Política monetaria
Contabilidad bancaria
Estabilidad de precios
Bancos centrales y otras autoridades monetarias
E52
E58
title_short Why a central bank’s bottom line doesn’t matter (that much)
title_full Why a central bank’s bottom line doesn’t matter (that much)
title_fullStr Why a central bank’s bottom line doesn’t matter (that much)
title_full_unstemmed Why a central bank’s bottom line doesn’t matter (that much)
title_sort Why a central bank’s bottom line doesn’t matter (that much)
dc.creator.none.fl_str_mv Esteban García-Escudero, Enrique
Romo González, Luna Azahara
author Esteban García-Escudero, Enrique
author_facet Esteban García-Escudero, Enrique
Romo González, Luna Azahara
author_role author
author2 Romo González, Luna Azahara
author2_role author
dc.subject.none.fl_str_mv Central banking
Profit and loss
Eurosystem
Price stability
Monetary policy
Política monetaria
Contabilidad bancaria
Estabilidad de precios
Bancos centrales y otras autoridades monetarias
E52
E58
topic Central banking
Profit and loss
Eurosystem
Price stability
Monetary policy
Política monetaria
Contabilidad bancaria
Estabilidad de precios
Bancos centrales y otras autoridades monetarias
E52
E58
description Rationale Central banks in some developed countries have started to record, or will soon record, losses. These losses are due to the structural changes in their balance sheets after the exceptional measures adopted during the economic crises of recent years, which were necessary to maintain price stability. This article explains why these losses are expected to be temporary and why central banks can continue to perform their functions and deliver on their mandate even when incurring losses. Takeaways •A central bank’s aim is not to maximise profits, but instead to use monetary policy to achieve price stability. •Central banks cannot be insolvent as they issue the currency (base money) with which they continue to cover their operating expenses and meet their present and future payment obligations. •There are numerous examples of central banks that have continued to deliver on their mandates even when incurring losses. In these cases, a robust legal framework that protects central banks’ autonomy is key.
publishDate 2024
dc.date.none.fl_str_mv 2024
dc.type.none.fl_str_mv info:eu-repo/semantics/article
format article
dc.identifier.none.fl_str_mv https://repositorio.bde.es/handle/123456789/36255
url https://repositorio.bde.es/handle/123456789/36255
dc.language.none.fl_str_mv Inglés
language_invalid_str_mv Inglés
dc.relation.none.fl_str_mv Economic Bulletin / Banco de España, 2024/Q2, 01
Versión en español 123456789/36273
dc.rights.none.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv application/pdf
dc.publisher.none.fl_str_mv Banco de España
Madrid : Banco de España, 2024
publisher.none.fl_str_mv Banco de España
Madrid : Banco de España, 2024
dc.source.none.fl_str_mv reponame:Repositorio Institucional del Banco de España
instname:Banco de España
instname_str Banco de España
reponame_str Repositorio Institucional del Banco de España
collection Repositorio Institucional del Banco de España
repository.name.fl_str_mv
repository.mail.fl_str_mv
_version_ 1869412996563861504
score 15.300724

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