Managing with negative capital

The Czech National Bank (CNB) is a central bank with negative capital. Standing at around €4 billion at the time of writing, the deficit is the result of both historical and ongoing events. The CNB was established in 1993 with a low capital base, and profits that were generated subsequently were spent in the 1990s on stabilising and consolidating the banking sector. In addition, the CNB accumulated relatively high levels of foreign exchange reserves, initially due to capital inflows duri