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Responsibility of Central Banks for Stability in Financial Markets

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  • Mr. Garry J. Schinasi

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.

Suggested Citation

  • Mr. Garry J. Schinasi, 2003. "Responsibility of Central Banks for Stability in Financial Markets," IMF Working Papers 2003/121, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2003/121
    as

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    References listed on IDEAS

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    5. Paul A. Volcker, 1984. "The Federal Reserve position on restructuring of financial regulation responsibilities," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Jul, pages 547-557.
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