Central Bank Balance Sheets as Policy Tools

31 Pages Posted: 4 Jan 2013

See all articles by Alain Durré

Alain Durré

European Central Bank (ECB) - Directorate General Economics; IéSEG - Université Catholique de Lille; National Center for Scientific Research - LEM

Huw Pill

European Central Bank (ECB)

Date Written: October 1, 2012

Abstract

In the face of the recent financial crisis, central banks have varied the size and structure of their balance sheets. Such actions attempt to exploit additional instruments of central bank policy that go beyond the traditional monetary policy instrument (ie control over the shortterm interest rate). The objectives of these measures have varied across countries: offering additional stimulus to the economy in the face of a lower bound on the level of short-term interest rates; supporting market functioning by expanding central bank intermediation; and managing cross-border capital flows in an environment where the domestic financial system lacks the ability to intermediate such large and/or foreign-currency-denominated financial flows. This paper reviews experience with such measures, in particular drawing lessons from the European experience that have potential relevance for Asian central banks.

Full publication: Are Central Bank Balance Sheets in Asia Too Large?

Keywords: money, credit, money markets, central bank balance sheets

JEL Classification: E5, E4

Suggested Citation

Durre, Alain C. J. and Pill, Huw, Central Bank Balance Sheets as Policy Tools (October 1, 2012). BIS Paper No. 66m, Available at SSRN: https://ssrn.com/abstract=2185372

Alain C. J. Durre (Contact Author)

European Central Bank (ECB) - Directorate General Economics ( email )

Kaiserstrasse 29
D-60311 Frankfurt am Main
Germany

IéSEG - Université Catholique de Lille ( email )

3, rue de la Digue
F-59800 Lille
France

National Center for Scientific Research - LEM ( email )

106-112 Boulevard de l'Hopital
F- 75647 Paris Cedex 13
France

Huw Pill

European Central Bank (ECB) ( email )

Sonnemannstrasse 22
Frankfurt am Main, 60314
Germany

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