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Quasi-Fiscal Implications of Central Bank Crisis Interventions

Author

Listed:
  • John Hooley
  • Mr. Ashraf Khan
  • Claney Lattie
  • Istvan Mak
  • Ms. Natalia Salazar
  • Amanda Sayegh
  • Mr. Peter Stella

Abstract

We develop a stylized balance sheet framework to help identify ‘quasi-fiscal’ components of central bank crisis interventions and show how sources of fiscal risk are created from both the new claims and how they are funded. Combining central bank balance sheet data with survey evidence from intervention announcements, we document the risks to the public sector balance sheet from central banks’ interventions in response to the Covid-19 crisis, including non-conventional lending to the financial and non-financial sectors and large-scale purchases of government securities. Case study analysis indicates that management of fiscal risks from central bank crisis interventions varies greatly across countries, although several good practices can be identified.

Suggested Citation

  • John Hooley & Mr. Ashraf Khan & Claney Lattie & Istvan Mak & Ms. Natalia Salazar & Amanda Sayegh & Mr. Peter Stella, 2023. "Quasi-Fiscal Implications of Central Bank Crisis Interventions," IMF Working Papers 2023/114, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2023/114
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