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Understanding the central bank balance sheet

Author

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  • Garreth Rule

Abstract

The central bank's balance sheet plays a critical role in the functioning of the economy. The main liabilities of the central bank (banknotes and commercial bank reserves) form the ultimate means of settlement for all transactions in the economy. Despite this critical role the central bank's balance sheet remains an arcane concept to many observers. This handbook provides a useful framework for understanding the necessary details.

Suggested Citation

  • Garreth Rule, 2015. "Understanding the central bank balance sheet," Handbooks, Centre for Central Banking Studies, Bank of England, number 32, April.
    • Handle: RePEc:ccb:hbooks:32
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    References listed on IDEAS

    as
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    11. Emily Beau & John Hill & Tanveer Hussain & Dan Nixon, 2014. "Bank funding costs: what are they, what determines them and why do they matter?," Bank of England Quarterly Bulletin, Bank of England, vol. 54(4), pages 370-384.
    12. Colin Ellis & Haroon Mumtaz & Pawel Zabczyk, 2014. "What Lies Beneath? A Time‐varying FAVAR Model for the UK Transmission Mechanism," Economic Journal, Royal Economic Society, vol. 0(576), pages 668-699, May.
    13. Claudio Borio & Anna Zabai, 2018. "Unconventional monetary policies: a re-appraisal," Chapters, in: Peter Conti-Brown & Rosa M. Lastra (ed.), Research Handbook on Central Banking, chapter 20, pages 398-444, Edward Elgar Publishing.
    14. Roger Clews & Chris Salmon & Olaf Weeken, 2010. "The Bank's money market framework," Bank of England Quarterly Bulletin, Bank of England, vol. 50(4), pages 292-301.
    15. Haroon Mumtaz & Gabor Pinter & Konstantinos Theodoridis, 2018. "What Do Vars Tell Us About The Impact Of A Credit Supply Shock?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 59(2), pages 625-646, May.
    16. Gábor Pintér, 2019. "House Prices and Job Losses," The Economic Journal, Royal Economic Society, vol. 129(618), pages 991-1013.
    17. Antoine Martin & James McAndrews & David Skeie, 2016. "Bank Lending in Times of Large Bank Reserves," International Journal of Central Banking, International Journal of Central Banking, vol. 12(4), pages 193-222, December.
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    20. Andrew Blake & Garreth Rule & Ole Rummel, 2015. "Inflation targeting and term premia estimates for Latin America," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 24(1), pages 1-21, December.
    21. Sarah John & Matt Roberts & Olaf Weeken, 2012. "The Bank of England’s Special Liquidity Scheme," Bank of England Quarterly Bulletin, Bank of England, vol. 52(1), pages 57-66.
    22. Ms. Claudia H Dziobek & Mr. John W. Dalton, 2005. "Central Bank Losses and Experiences in Selected Countries," IMF Working Papers 2005/072, International Monetary Fund.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Alberto CARDACI & Francesco SARACENO, 2015. "Inequality, Financialisation and Economic Crises: An Agent-Based Macro Model," Departmental Working Papers 2015-21, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    2. David Bholat & Robin Darbyshire, 2016. "Accounting in central banks," Bank of England working papers 604, Bank of England.
    3. Alberto Cardaci & Francesco Saraceno, 2019. "Inequality and imbalances: a monetary union agent-based model," Journal of Evolutionary Economics, Springer, vol. 29(3), pages 853-890, July.
    4. Alberto Cardaci & Francesco Saraceno, 2015. "Inequality, Financialisation and economic crises : an agent-based model," Working Papers hal-03470036, HAL.
    5. repec:hal:spmain:info:hdl:2441/7qe4u05nfo9gcaran6h19ej29p is not listed on IDEAS
    6. Benn Robertson, 2017. "Structural Liquidity and Domestic Market Operations," RBA Bulletin (Print copy discontinued), Reserve Bank of Australia, pages 35-44, September.
    7. Clavero, Borja, 2017. "A contribution to the Quantity Theory of Disaggregated Credit," MPRA Paper 76657, University Library of Munich, Germany.
    8. Yuri Biondi & Feng Zhou, 2019. "Interbank credit and the money manufacturing process: a systemic perspective on financial stability," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 14(3), pages 437-468, September.
    9. Kolozsi, Pál Péter & Horváth, Gábor, 2020. "Mennyit ér a likviditás?. A magyar bankrendszer likviditáskeresleti függvényének becslése [How much are reserves worth? Estimating interbank liquidity demand in Hungary]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(2), pages 113-139.
    10. repec:spo:wpmain:info:hdl:2441/6h4m03fi1i9olbq081sgh502mt is not listed on IDEAS
    11. Rösl, Gerhard & Seitz, Franz, 2022. "On the stabilizing role of cash for societies," IMFS Working Paper Series 167, Goethe University Frankfurt, Institute for Monetary and Financial Stability (IMFS).
    12. repec:spo:wpmain:info:hdl:2441/7qe4u05nfo9gcaran6h19ej29p is not listed on IDEAS
    13. Wang, Tianxi, 2021. "Government Bonds, Bank Liquidity and Non-Neutrality of Monetary Policy in the Steady," Economics Discussion Papers 29502, University of Essex, Department of Economics.
    14. Ragnheiður Jónsdóttir, 2019. "The Central Bank of Iceland's liquidity management system," Economics wp79, Department of Economics, Central bank of Iceland.
    15. E. U. Kure & O. O. Mbutor & U. A. Rotimi & Y. Adamu, 2019. "The Central Bank Balance Sheet as a Tool for Monetary Policy: Evidence from Nigeria," Economic and Financial Review, Central Bank of Nigeria, vol. 57(2), June.
    16. George Pantelopoulos, 2021. "Exogenous and endogenous sterilisation under managed exchange rates," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 756-779, September.
    17. Stein, Julian Alexander Cornelius & Braun, Dieter, 2019. "Stability of a time-homogeneous system of money and antimoney in an agent-based random economy," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 520(C), pages 232-249.
    18. Joana Sousa Leite & Diana Correia & Cristina Coutinho & Carmen Camacho, 2022. "The Banco de Portugal balance sheet expansion during the last two decades: a monetary policy perspective," Working Papers o202205, Banco de Portugal, Economics and Research Department.
    19. Jessica Reale, 2022. "Interbank market and funding liquidity risk in a stock‐flow consistent model," Metroeconomica, Wiley Blackwell, vol. 73(3), pages 734-769, July.
    20. Sarah Bell & Jon Frost & Boris Hofmann & Damiano Sandri & Hyun Song Shin, 2024. "Central bank capital and trust in money: lessons from history for the digital age," BIS Papers, Bank for International Settlements, number 146.
    21. Alberto Cardaci & Francesco Saraceno, 2016. "Inequality, Financialisation and Credit Booms - a Model of Two Crises," LEAP Working Papers 2016/2, Luiss Institute for European Analysis and Policy.
    22. repec:hal:spmain:info:hdl:2441/6h4m03fi1i9olbq081sgh502mt is not listed on IDEAS

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    More about this item

    Keywords

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    JEL classification:

    • E02 - Macroeconomics and Monetary Economics - - General - - - Institutions and the Macroeconomy
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • 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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