Why is this bank not like other banks?

From the Bank for International Settlements Annual Report, the topic is the difficulty that central banks might face in exiting from the current stance of ultra-low interest rates and massive balance sheet expansion —

Central banks also face various political economy challenges as they consider
exiting. History has shown that monetary policy decisions are best when insulated
from short-term political expediency considerations; hence the importance of
operational autonomy. This applies with particular force in extreme conditions such
as those prevailing today. On balance, political economy pressures could make exit
harder and work towards delaying it […] Second, central banks’ finances could easily come under strain, raising questions about their use of public money, reducing government revenues and possibly even undermining the institutions’ financial independence. The public’s tolerance for central bank losses may be quite low. (p73)

Thus, the so-called “central bank for central banks” believes that central banks are essentially just regular banks that have been given a specific mandate by the government. That may reflect a loose extrapolation from the history of central banking in the USA and UK, but it’s not correct. Karl Whelan explains here. It’s no wonder that central banking attracts so much conspiracy-theorizing when central banks themselves are so obtuse about what they do.

2 thoughts on “Why is this bank not like other banks?

  1. Pingback: Why is this bank not like other banks? | Fifth Estate

  2. The banks have had a hard time much bought upon themselves. We listen to central banks every word hoping they will pull us out of this financail mess. What we need now is though the media to decide to change tack and start finding positives in things they look at and not treading us in the dirt all the time because the big problem is confidence and until some is restored then the economy is stuck firmly to the ground

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