More independent central banks take on greater risk – ECB paper
Low rates, tighter fiscal policy and good growth accompanied by higher risk-taking on balance sheets
Central banks with higher degrees of independence take on more risk in their monetary policy operations, new research from the European Central Bank finds.
The paper, released on July 28, looks at asset purchase programmes from the 1990s until the mid-2010s. The authors – Bernhard Bartels, Barry Eichengreen, Julian Schumacher and Beatrice Weder di Mauro – find that central banks took on increasing levels of risk over the period.
Using a value-at-risk framework, they find that the average risk
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