Responsibility of Central Banks for Stability in Financial Markets

19 Pages Posted: 30 Jan 2006

See all articles by Garry J. Schinasi

Garry J. Schinasi

Independent Advisor, Global Financial Stability

Date Written: June 2003

Abstract

What is the role of central banks in ensuring financial stability? This paper addresses this controversial subject, in part by drawing on the experiences in Europe, Japan, and the United States, and by examining four questions. What is meant by financial stability? Do central banks have a natural role in ensuring financial stability? What does a central bank need to execute this role effectively? How far have central banks actually gone in safeguarding financial stability? The experience drawn on in the paper suggest that central banks: have a natural role to play; at times may require supervisory information to execute this natural role; and have incurred risks to their balance sheets to ensure financial stability.

Keywords: financial stability, central banking, financial crises management

JEL Classification: E58, G15, G18, G33, H10, N20

Suggested Citation

Schinasi, Garry J., Responsibility of Central Banks for Stability in Financial Markets (June 2003). IMF Working Paper, Vol. , pp. 1-19, 2003. Available at SSRN: https://ssrn.com/abstract=879197

Garry J. Schinasi (Contact Author)

Independent Advisor, Global Financial Stability ( email )

Washington, 20008
+1-202-361-0958 (Phone)

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