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The Fiscal Abuse of Central Banks

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  • Maxwell J. Fry

Abstract

This paper reviews the fiscal activities that governments in a sample of 26 developing countries have obliged their central banks to undertake. In the main, these activities fall under five categories: (1) collecting seigniorage; (2) imposing financial restriction; (3) implementing selective credit policies; (4) undertaking foreign exchange operations at nonmarket-clearing prices; and (5) providing implicit or explicit deposit insurance at subsidized rates and recapitalizing insolvent financial institutions. Not all central banks engage in all these activities, but some central banks perform additional fiscal activities such as collecting taxes and running food procurement programs.

Suggested Citation

  • Maxwell J. Fry, 1993. "The Fiscal Abuse of Central Banks," IMF Working Papers 93/58, International Monetary Fund.
  • Handle: RePEc:imf:imfwpa:93/58
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    Citations

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    Cited by:

    1. Peter Stella, 2002. "Central Bank Financial Strength, Transparency, and Policy Credibility," IMF Working Papers 02/137, International Monetary Fund.
    2. Bholat, David & Darbyshire, Robin, 2016. "Accounting in central banks," Bank of England working papers 604, Bank of England.
    3. Stephen Quinn & William Roberds, 2016. "Death of a Reserve Currency," International Journal of Central Banking, International Journal of Central Banking, vol. 12(4), pages 63-103, December.
    4. Peter Stella & Ulrich H Klueh, 2008. "Central Bank Financial Strength and Policy Performance; An Econometric Evaluation," IMF Working Papers 08/176, International Monetary Fund.
    5. Kotaro Ishi & Kenji Fujita & Mark R. Stone, 2011. "Should Unconventional Balance Sheet Policies Be Added to the Central Bank toolkit? a Review of the Experience so Far," IMF Working Papers 11/145, International Monetary Fund.
    6. Hochreiter, Eduard & Rovelli, Riccardo & Winckler, Georg, 1996. "Central banks and seigniorage: A study of three economies in transition," European Economic Review, Elsevier, vol. 40(3-5), pages 629-643, April.
    7. Pornpinun Chantapacdepong & Nuttathum Chutasripanich & Bovonvich Jindarak, 2012. "Central Bank Balance Sheet and Policy Implications," Working Papers 2012-07, Monetary Policy Group, Bank of Thailand.
    8. Walker F. Todd, 1993. "FDICIA's emergency liquidity provisions," Economic Review, Federal Reserve Bank of Cleveland, issue Q III, pages 16-23.
    9. Koldko, Grzegorz W., 1999. "Ten years of post-socialist transition lessons for policy reform," Policy Research Working Paper Series 2095, The World Bank.
    10. repec:bla:reviec:v:25:y:2017:i:5:p:990-998 is not listed on IDEAS
    11. Owen F. Humpage & Jean M. McIntire, 1995. "An introduction to currency boards," Economic Review, Federal Reserve Bank of Cleveland, issue Q II, pages 2-11.
    12. Jakob Korbinian Eberl, 2016. "The Collateral Framework of the Eurosystem and Its Fiscal Implications," ifo Beitr├Ąge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 69, June.

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