IMF Working Papers

Do Central Banks Need Capital?

By Peter Stella

July 1, 1997

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Peter Stella. Do Central Banks Need Capital?, (USA: International Monetary Fund, 1997) accessed November 21, 2024
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.

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

Keywords: Baltics, Central bank accounting, Central bank capital, Central bank loss, Central bank solvency, Commercial banks, Currencies, Debt issuance, Distribution rule, Financial statements, Fiscal accounting and reporting, Interest income, Market value, Monetary policy, Profit and loss account, Profit distribution rule, Profit payment, Profit transfer, Transfer policy, Transfers profits, WP

Publication Details

  • Pages:

    39

  • Volume:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 1997/083

  • Stock No:

    WPIEA0831997

  • ISBN:

    9781451850505

  • ISSN:

    1018-5941