Abstract
There are several reasons why central banks are important to our discussion of the Public Sector Balance Sheet They are beneficially owned by the state. Their monopoly of the issuance of legal tender central bank money makes them the natural lender of last resort and market maker of last resort. Since the Global Financial Crisis and the Covid-19 crisis the size of their balance sheets has increased significantly. Excessive recourse to central bank financing always is a tempting alternative for fiscally weak governments.
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Notes
- 1.
We include qualitative easing (the acquisition of higher-risk and possibly less liquid assets by the central bank) in QE. Sometimes this combined quantitative and qualitative easing is referred to as QQE.
- 2.
Office for Budgetary Responsibility (2023). Financial Sustainability Report July 2023 p. 14.
- 3.
Key Economic Indicators Number 02802, House of Commons Library, 22 June 2023.
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Ball, I., Buiter, W., Crompton, J., Detter, D., Soll, J. (2024). Central Banks and the Public Sector Balance Sheet. In: Public Net Worth. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-031-44343-5_7
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DOI: https://doi.org/10.1007/978-3-031-44343-5_7
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Publisher Name: Palgrave Macmillan, Cham
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