Why are central banks reporting losses? Does it matter?
Central banks have increasingly deployed their balance sheets in recent decades as a tool to pursue macroeconomic and financial stability objectives in support of their economies. After the Great Financial Crisis (GFC), some advanced economy (AE) central banks used asset purchase programmes (APPs) or other lending programmes to achieve their policy aims. Others introduced such programmes during the Covid19 pandemic. These were funded mainly through interest-bearing commercial bank reserves, resulting in a declining share of interest-free liabilities. In doing so and to pursue their policy objectives, central banks ... (full story)