Most economists say clear recapitalisation frameworks are important. But many central banks still lack them
“So why does anybody care about central bank recapitalisation?” asks Stephen Cecchetti, a professor of finance at Brandeis University in the US. “Do you care about the capitalisation of the Department of Transportation?”
Cecchetti’s question may be designed to be provocative, but it encapsulates the key issue with central bank capital frameworks – central banks don’t strictly need capital to continue functioning. A central bank’s balance sheet can be considered part of the consolidated
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