Central banks should explain why losses are necessary – BIS paper

Policy goals sometimes necessitate losses but they need to be accompanied by clear communications

The Bank for International Settlements, Basel
Photo: Ulrich Roth

A central bank’s most important role is meeting its mandates, not making profits, but when losses mount, clear communication is critical, the Bank for International Settlements says.

“To maintain the public’s trust and to preserve central bank legitimacy now and in the long run, stakeholders should appreciate that central banks’ policy mandates come before profits,” the bulletin article says.

Losses should not compromise a central bank’s ability to fulfil its mandate. Central banks do not seek

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