DNB officials propose framework for central bank capital

Study offers central banks a guide to the complexities of latent risk and independence

Netherlands Bank
Photo: Rachael King

How much capital does a central bank need? The question is not straightforward, note Paul Wessels and Dirk Broeders in a paper published today (July 25). But they propose a framework that could guide central banks towards an answer.

Capital adequacy is rising on the agenda for many central banks, as those with large holdings of government bonds are likely to face mounting losses in the coming months.

Yet the existing literature on central bank capital is limited, the two officials from the

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