Citation

Discussion Paper Details

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Full Details

Title: A Central Bank's Optimal Balance Sheet Size?

Author(s): Charles A Goodhart

Publication Date: September 2017

Keyword(s): auction risk, central bank balance sheet, Debt Management, interest rate risk, liquidity, Monetary Policy Renormalisation and QE

Programme Area(s): Monetary Economics and Fluctuations

Abstract: Unlike other facets of monetary policy renormalisation, there has been little discussion yet of what principles should determine the optimum size of a Central Bank's balance sheet, the end-point to which on-going portfolio reductions should approach. In this note I start by addressing the arguments of those who would leave this balance sheet very large, much as now; and then continue with the counter-arguments, also stressing the nature of the relationships between monetary and fiscal policies, and between the Central Bank and the Treasury's Debt Management Office.

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Bibliographic Reference

Goodhart, C. 2017. 'A Central Bank's Optimal Balance Sheet Size?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=12272