Central bank losses : origins, conceptual issues, and measurement problems

Abstract

Central bank losses usually originate, the author explains, when a bank takes on other functions besides its normal role, such as subsidized loans to priority sectors, rescues of troubled financial institutions, or takeovers of private or public debt. This paper attempts to review the issues related to Central Banks'quasi fiscal deficits. In the first section, a taxonomic description of origins of quasi fiscal deficits is made. The second section explores the relation between economic and accounting losses. The third section analyzes inflation adjustment and net lending treatment which are relevant to the definition of non financial public sector deficits. Finally, alternative ways of calculating the central banks'quasi fiscal losses are reviewed.Economic Theory&Research,Banks&Banking Reform,Economic Stabilization,International Terrorism&Counterterrorism,Environmental Economics&Policies