Issues in central bank finance and independence

Conventional economic policy models focus only on selected elements of the central bank balance sheet, in particular monetary liabilities and sometimes foreign reserves. The canonical model of an "independent" central bank assumes that it chooses money (or an interest rate) unconstrained by a need to generate seignorage for itself or the government. Whereas a long line of literature has emphasized the dangers of fiscal dominance influencing the conduct of monetary policy, this paper considers the relatively novel idea that an independent central bank could be constrained in achieving its policy objectives by its own balance sheet situation. If one accepts this potential constraint as a valid concern, the financial strength of the central bank as a stand-alone entity becomes highly relevant for ascertaining monetary policy credibility. We consider several strands of evidence that clearly indicate fiscal backing for central banks cannot be assumed, and hence financial independence is relevant to operational independence. First, we examine 135 central bank laws to illustrate the variety of legal approaches adopted with respect to central bank financial independence. Second, we examine the same data set with regard to central bank recapitalization provisions to show that even in cases where the treasury is nominally responsible for keeping the central bank financially strong, it may do so in purely a cosmetic fashion. Third, we show that, in actual practice, treasuries have frequently not provided central banks with genuine financial support on a timely basis, leaving them excessively reliant on seignorage to finance their operations or forcing them to abandon policy objectives.Banks and banking, Central ; Monetary policy

Issues in central bank finance and independence

Conventional economic policy models focus only on selected elements of the central bank balance sheet, in particular monetary liabilities and sometimes foreign reserves. The canonical model of an independent central bank assumes that it chooses money (or an interest rate) unconstrained by a need to generate seignorage for itself or the government. Whereas a long line of literature has emphasized the dangers of fiscal dominance influencing the conduct of monetary policy, this paper considers the relatively novel idea that an independent central bank could be constrained in achieving its policy objectives by its own balance sheet situation. If one accepts this potential constraint as a valid concern, the financial strength of the central bank as a stand-alone entity becomes highly relevant for ascertaining monetary policy credibility. We consider several strands of evidence that clearly indicate fiscal backing for central banks cannot be assumed, and hence financial independence is relevant to operational independence. First, we examine 135 central bank laws to illustrate the variety of legal approaches adopted with respect to central bank financial independence. Second, we examine the same data set with regard to central bank recapitalization provisions to show that even in cases where the treasury is nominally responsible for keeping the central bank financially strong, it may do so in purely a cosmetic fashion. Third, we show that, in actual practice, treasuries have frequently not provided central banks with genuine financial support on a timely basis, leaving them excessively reliant on seignorage to finance their operations or forcing them to abandon policy objectives

Nucleic acids through condensation of nucleosides and phosphorous acid in the presence of sulfur

Short phosphorothioate oligonucleotides have been prepared by refluxing an equimolar mixture of thymidine and triethylammonium phosphite in toluene in the presence of elemental sulfur. Desulfurization and subsequent digestion of the products by P1 nuclease revealed that nearly 80% of the internucleosidic linkages thus formed were of the canonical 3',5'-type

Understanding Catalysis of Phosphate-Transfer Reactions by the Large Ribozymes

Large ribozymes are unique among catalytic RNA molecules in that their reactions involve intermolecular nucleophilic attack on an RNA phosphodiester linkage. Crystal structures of near-atomic resolution are now available for the group I and group II self-splicing introns and the RNA subunit of RNase P. The structural data agrees well with the earlier models proposed on the basis of biochemical studies and the evidence at hand suggests that all of the large ribozymes utilize a mechanism in which coordination of MgII ions reduces the negative charge on the scissile phosphodiester linkage, as well as assists both the nucleophilic attack and the departure of the leaving group

Impact of steric constraints on the product distribution of phosphate-branched oligonucleotide models of the large ribozymes

To assess the extent to which steric constraints may influence the product distribution of the reactions of the large ribozymes, phosphate-branched oligonucleotides of varying length and sequence have been synthesized and their alkaline hydrolysis studied over a wide temperature range. At low temperatures, the branching trinucleoside-3 ',3 ',5 '-monophosphate moiety is hydrolyzed almost exclusively by P-O3 ' fission. At higher temperatures, P-O5 ' fission competes, accounting at most for 22% of the overall reaction. The results suggest that steric constraints imposed by the secondary structure of the reaction site may significantly contribute to the observed regioselectivity of the transesterification reactions catalyzed by the large ribozymes

Intracomplex general acid/base catalyzed cleavage of RNA phosphodiester bonds: the leaving group effect

The general acid/base catalyzed cleavage of a number of alkyl esters of uridine-3'-(and -5'-) phosphate has been studied by utilizing a cleaving agent, in which the catalytic moiety (a substituted 1,3,5-triazine) is tethered to an anchoring Zn-II: cyclen moiety. Around pH 7, formation of a strong ternary complex between uracil, Zn-II and cyclen brings the general acid/base catalyst close to the scissile phosphodiester linkage, resulting in rate acceleration of 1-2 orders of magnitude with the uridine-3'-phosphodiesters. Curiously, no acceleration was observed with their 5'-counterparts. A beta(lg) value of -0.7 has been determined for the general acid/base catalyzed cleavage, consistent with a proton transfer to the leaving group in the rate-limiting step

Oligonucleotides Incorporating Palladacyclic Nucleobase Surrogates

An oligonucleotide incorporating a palladacyclic nucleobase has been prepared by ligand-directed metalation of a phenylpyridine moiety. This oligonucleotide hybridized with natural counterparts placing any of the canonical nucleobases opposite to the palladacyclic residue. The palladated duplexes had B-type conformation and melting temperatures comparable to those of respective unmodified duplexes with a single mismatch. In the duplexes placing C, G or T (but not A) opposite to the palladacyclic residue, greatly increased absorptivity suggested formation of a Pd-II-mediated base pair. Absorptivity and ellipticity of these duplexes persisted even at the highest temperatures applicable in T-m and CD experiments (90 degrees C). Evidently the Pd-II-mediated base pairs do not dissociate under the experimental conditions

3-Acetyloxy-2-cyano-2-(alkylaminocarbamoyl)propyl Groups as Biodegradable Protecting Groups of Nucleoside 5 '-mono-Phosphates

Thymidine 5`-bis[3-acetyloxy-2-cyano-2-(2-phenylethylcarbamoyl)propyl] phosphate (1) has been prepared and the removal of phosphate protecting groups by hog liver carboxyesterase (HLE) at pH 7.5 and 37 degrees C has been followed by HPLC. The first detectable intermediates are the (R(P))- and (S(P))-diastereomers of the monodeacetylated triester 14, which subsequently undergo concurrent retro-aldol condensation to diester 4 and enzyme-catalyzed hydrolysis to the fully deacetylated triester 15. The former pathway predominates, representing 90% of the overall breakdown of 14. The diester 4 undergoes the enzymatic deacetylation 700 times less readily than the triester, but gives finally thymidine 5`-monophosphate as the desired main product. To elucidate the potential toxicity of the electrophilic 2-cyano-N-(2-phenylethyl) acrylamideby-product 17 released upon the deprotection, the hydrolysis of 1 has also been studied in the presence of glutathione (GSH)

Acetylated and Methylated beta-Cyclodextrins as Viable Soluble Supports for the Synthesis of Short 2 '-Oligodeoxyribo-nucleotides in Solution

Novel soluble supports for oligonucleotide synthesis 11a-c have been prepared by immobilizing a 5'-O-protected 3'-O-(hex-5-ynoyl) thymidine (6 or 7) to peracetylated or permethylated 6-deoxy-6-azido-beta-cyclodextrins 10a or 10b by Cu(I)-promoted 1,3-dipolar cycloaddition. The applicability of the supports to oligonucleotide synthesis by the phosphoramidite strategy has been demonstrated by assembling a 3'-TTT-5' trimer from commercially available 5'-O-(4,4'-dimethoxytrityl) thymidine 3'-phosphoramidite. To simplify the coupling cycle, the 5'-O-(4,4'-dimethoxytrityl) protecting group has been replaced with an acetal that upon acidolytic removal yields volatile products. For this purpose, 5'-O-(1-methoxy-1-methylethyl)-protected 3'-(2-cyanoethyl-N, N-diisopropyl-phosphoramidite) s of thymidine (5a), N-4-benzoyl-2'-deoxycytidine (5b) and N-6-benzoyl-2'-deoxyadenosine (5c) have been synthesized and utilized in synthesis of a pentameric oligonucleotide 3'-TTCAT-5' on the permethylated cyclodextrin support 11c

Mimics of small ribozymes utilizing a supramolecular scaffold

For elucidating the mechanism of the general acid/base catalysis of the hydrolysis of RNA phosphodiester bonds, a number of cleaving agents having two cyclen moieties tethered to a 1,3,5-triazine core have been prepared and their ability to bind and cleave uridylyl-3', 5'-uridine (UpU) studied over a wide pH range. Around neutral pH, the cleaving agents form a highly stable ternary complex with UpU and Zn-II through coordination of the uracil N3 and the cyclen nitrogen atoms to the Zn-II ions. Under conditions where the triazine core exists in the deprotonated neutral form, hydrolysis of UpU, but not of adenylyl-3',5'-adenosine (ApA), is accelerated by approximately two orders of magnitude in the presence of the cleaving agents, suggesting general base rather than metal ion catalysis. The probable mechanism of the observed catalysis and implications to understanding the general acid/base-catalyzed phosphodiester hydrolysis by ribozymes are discussed.</p