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Doing it differently or The impact of the financial crisis on central bank balance sheets in emerging economies

Author

Listed:
  • Szilárd Erhart

    () (Magyar Nemzeti Bank (the central bank of Hungary))

  • Gergely Kicsák

    () (Magyar Nemzeti Bank (the central bank of Hungary))

  • Zsolt Kuti

    () (Magyar Nemzeti Bank (the central bank of Hungary))

  • Zoltán Molnár

    () (Erste Bank Hungary)

  • Zoltán Monostori

    () (Magyar Nemzeti Bank (the central bank of Hungary))

Abstract

This study investigates changes in central bank balance sheets and the non-conventional central bank measures triggered by the crisis by comparing international examples. The trend of rapid expansion in central bank balance sheets and the resulting higher need for sterilisation is not solely a Hungarian phenomenon, as it represents a challenge for central banks around the world. Responding to a variety of exchange rate and financial crises since the end of the 1990s, the central banks of emerging economies have gradually increased their foreign exchange reserves. The large weight of foreign exchange reserves in the balance sheets caused considerable increases in the total assets of the central banks of emerging countries. Later, after the 2008 financial crisis, advanced economies saw sudden increases in their central banks’ balance sheet totals following non-conventional operations and asset purchase programmes. The expansion of central bank balance sheets and the increase in the surplus liquidity of the financial intermediary system has caused changes to central bank liabilities and their structures. Following an assessment of the global situation, we present eight case studies, providing detailed analyses of the changes to the central bank balance sheets of emerging economies.

Suggested Citation

  • Szilárd Erhart & Gergely Kicsák & Zsolt Kuti & Zoltán Molnár & Zoltán Monostori, 2013. "Doing it differently or The impact of the financial crisis on central bank balance sheets in emerging economies," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 8(Special), pages 46-60, October.
  • Handle: RePEc:mnb:bullet:v:8:y:2013:i:special:p:46-60
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    File URL: http://www.mnb.hu/letoltes/erhart-kicsak-kuti-molnar-monostori.pdf
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    References listed on IDEAS

    as
    1. Aaron Mehrotra, 2012. "On the use of sterilisation bonds in emerging Asia," BIS Papers chapters,in: Bank for International Settlements (ed.), Are central bank balance sheets in Asia too large?, volume 66, pages 111-131 Bank for International Settlements.
    2. Judit Antal & Áron Gereben, 2011. "Foreign reserve strategies for emerging economies - before and after the crisis," MNB Bulletin (discontinued), Magyar Nemzeti Bank (Central Bank of Hungary), vol. 6(1), pages 7-19, April.
    3. Andrew Filardo & James Yetman, 2012. "Key facts on central bank balance sheets in Asia and the Pacific," BIS Papers chapters,in: Bank for International Settlements (ed.), Are central bank balance sheets in Asia too large?, volume 66, pages 10-29 Bank for International Settlements.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    monetary policy; central bank balance sheet; sterilisation; liquidity management; foreign reserves; non-conventional monetary policy; monetary policy instruments;

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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