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Issuing central bank securities


  • Garreth Rule


Many central banks around the world are faced with the challenge of implementing their policy goals in the presence of surplus liquidity in domestic banking systems. Surplus liquidity can impair the central bank's ability to control its operational target and impact on its profitability, potentially affecting its ability to operate in an independent manner. Within the range of instruments available, the issuance of central bank securities is one policy option that has been used effectively by a number of central banks. In this handbook we look at the characteristics of central bank securities and how the fit into the broader monetary operations framework of a central bank. We then look at alternative instruments available to a central bank, before considering the advantages and disadvantages of these different options. It concludes by considering means of co-ordinating central bank securities with the issuance of central government securities and briefly looks at methods of auction employed to issue such securities.

Suggested Citation

  • Garreth Rule, 2011. "Issuing central bank securities," Handbooks, Centre for Central Banking Studies, Bank of England, edition 1, number 30.
  • Handle: RePEc:ccb:hbooks:30

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    References listed on IDEAS

    1. Blake, Andrew P. & Zampolli, Fabrizio, 2011. "Optimal policy in Markov-switching rational expectations models," Journal of Economic Dynamics and Control, Elsevier, vol. 35(10), pages 1626-1651, October.
    2. Todd Keister & James J. McAndrews, 2009. "Why are banks holding so many excess reserves?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 15(Dec).
    3. Bindseil, Ulrich, 2004. "Monetary Policy Implementation: Theory, past, and present," OUP Catalogue, Oxford University Press, number 9780199274543, June.
    4. Blake, Andy & Gondat-Larralde, Celine, 2010. "Chief Economists' Workshop: state-of-the-art modelling for central banks," Bank of England Quarterly Bulletin, Bank of England, vol. 50(3), pages 214-218.
    5. Andrew P. Blake & Tatiana Kirsanova, 2011. "Inflation Conservatism and Monetary-Fiscal Policy Interactions," International Journal of Central Banking, International Journal of Central Banking, vol. 7(2), pages 41-83, June.
    6. Joyce, Michael & Lasaosa, Ana & Stevens , Ibrahim & Tong, Matthew, 2010. "The financial market impact of quantitative easing," Bank of England working papers 393, Bank of England.
    7. Blake, Andy & Kirsanova, Tatiana & Yates, Tony, 2011. "The gains from delegation revisited: price-level targeting, speed-limit and interest rate smoothing policies," Bank of England working papers 415, Bank of England.
    8. Claudio Borio & Piti Disyatat, 2010. "Unconventional Monetary Policies: An Appraisal," Manchester School, University of Manchester, vol. 78(s1), pages 53-89, September.
    9. Robert N McCauley, 2003. "Unifying government bond markets in East Asia," BIS Quarterly Review, Bank for International Settlements, December.
    10. Liu, Philip & Mumtaz, Haroon, 2010. "Evolving macroeconomic dynamics in a small open economy: an estimated Markov-switching DSGE model for the United Kingdom," Bank of England working papers 397, Bank of England.
    11. Todd Keister & Antoine Martin & James J. McAndrews, 2008. "Divorcing money from monetary policy," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 41-56.
    12. Claudia H Dziobek & John W. Dalton, 2005. "Central Bank Losses and Experiences in Selected Countries," IMF Working Papers 05/72, International Monetary Fund.
    13. Baumeister, Christiane & Liu, Philip & Mumtaz, Haroon, 2010. "Changes in the transmission of monetary policy: evidence from a time-varying factor-augmented VAR," Bank of England working papers 401, Bank of England.
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    Cited by:

    1. Garreth Rule, 2012. "Collateral management in central bank policy operations," Handbooks, Centre for Central Banking Studies, Bank of England, edition 1, number 31.
    2. Adigozalov, Shaig & Huseynov, Salman, 2015. "İnflyasiya hədəflənməsinin əməliyyat çərçivəsi: ölkə təcrübələri AMB üçün nə vəd edir?
      [Operational framework of Inflation Targeting: what promises do country experiences make to the CBAR?]
      ," MPRA Paper 76349, University Library of Munich, Germany.
    3. Garreth Rule, 2015. "Understanding the central bank balance sheet," Handbooks, Centre for Central Banking Studies, Bank of England, edition 1, number 32.
    4. Simon T Gray & Runchana Pongsaparn, 2015. "Issuance of Central Bank Securities; International Experiences and Guidelines," IMF Working Papers 15/106, International Monetary Fund.

    More about this item


    Issuing central bank securities;

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects


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