Financial Independence and Accountability for Central Banks - Risk Books
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Financial Independence and Accountability for Central Banks

Edited By Kenneth Sullivan and Martina Horáková


Central bank balance sheets have changed considerably in the years following the crisis and central banks face heightened scrutiny from government and stakeholders over the composition of their assets and liabilities, and volatility in reported income.

Drawing on a range of experiences from central banks around the world, this book offers practical insights into how central banks can respond in presenting their financial statements and improve accountability.

Financial Independence and Accountability for Central Banks is a guide for those with responsibility for financial reporting and risk management more broadly in central banks as to good practice in the industry.

Read your free sample here.

A Central Banking Publications book

Publish date: 31 Oct 2014

Availability: In stock


Book description

The financial crisis that began in 2007 has led to dramatic changes to the policies and practices of central banking.

Central banks have been forced to take onto their balance sheets huge amounts of assets that, as recently as five years ago, they would not have touched. Moreover, traditionally ‘safe’ government debt, the mainstay of central bank balance sheets, has been hit by sovereign risk. On the liability side, central banks find themselves increasingly called upon to meet new demands, such as foreign currency support for the domestic banking sector. Furthermore, institutional changes and increased supervisory or macroprudential responsibilities have changed the institutional risk profile of central banks and contingent liabilities.

In sum, the central bank balance sheet is now an active (as opposed to reactive) instrument of monetary, financial stability and, for some, fiscal policy.

As balance sheets come under the spotlight and in a drive for greater transparency, many central banks have adopted or are adopting International Financial Reporting Standards (IFRS). However, IFRS asks for the majority of assets to be marked at fair value, this can cause large swings in unrealised gains and losses due to volatility in unhedged foreign-exchange positions. Such movements can significantly impact financial results, affecting balance sheets, capital and so have the potential to compromise policy effectiveness, financial strength and independence.

This book addresses the challenges arising from the interaction of changes in financial reporting, policy and independence from a practitioner perspective, offering practical insights into how central banks can present their financial statements and improve accountability.

Designed to guide those responsible for financial reporting and risk management more broadly as to good practices in the industry, Financial Independence and Accountability for Central Banks equips those responsible for central bank accountability with the tools to tackle these challenges.

Book details

Publish date
31 Oct 2014
155mm x 235mm

Editor biography

Kenneth Sullivan and Martina Horáková

Kenneth Sullivan

Kenneth Sullivan is formerly a senior financial sector expert with the IMF, having previously spent seven years at the Reserve Bank of New Zealand as chief manager of both accounting and corporate services. Since 1993, he has served as an accounting expert on IMF missions, providing accounting technical assistance to central banks around the world, organised and presented at central bank accounting workshops and participated in Financial Sector Assessment Program and Safeguard Assessment missions. He is also the IMF’s representative on the International Accounting Standards Board’s Standards Advisory Committee, and chairs an annual central bank accounting study group addressing issues of transparency in financial reporting. He has written on issues of central bank financial reporting capital adequacy, organisation and accountability.

Martina Horáková

Martina Horáková is the head of Seminars and Advisory at Central Banking Publications (CBP), where she has worked since 2007. She oversees and organises public policy seminars, conferences and roundtables for senior policymakers from central banks, ministries of finance and financial regulatory agencies around the world. In her advisory role, she is conducting the first in CBP’s benchmarking survey series on the topic of central bank governance, and she also edits CBP books and occasionally contributes to the Central Banking Journal. Before joining CBP, she gained a master’s in development economics from the School of Oriental and African Studies, University of London, and also studied economics at the Freie Universität Berlin.

Table of contents

1     Executive summary
Kenneth Sullivan (formerly International Monetary Fund) and Martina Horáková (Central Banking Publications)

2    Central bank post-crisis financial strength and independence
Ludek Niedermayer (formerly Czech National Bank)

3    Central bank balance sheets and the global financial crisis: Insights offered
Kenneth Sullivan (formerly International Monetary Fund)

4    Designing the structure of central bank capital
Friedrich Karrer (National Bank of Austria)

5    Funding and accountability: An overview of financial management
Ian Ingram (formerly European Central Bank)

6    The organisation of risk management in central banks
Allan Kearns (Central Bank of Ireland)

7    Central bank board and risk management: Form, function and facilitation
Peter Nicholl (formerly Central Bank of Bosnia and Herzegovina and Reserve Bank of New Zealand)

8    Objectives of central bank financial reporting
Kenneth Sullivan (formerly International Monetary Fund)

9    The impact of IFRS implementation by central banks 
Marisa Minzoni (Central Bank of Brazil)

10    The Eurosystem accounting framework: A central-bank specific accounting standard
Niall Merriman, Olivier Morelle and Konstantinos Apostolou (European Central Bank)

11    Reporting performance: Alignment with functions and policy
Robin Darbyshire (formerly Bank of England)

12    IFRS amendments: A central bank perspective
Andrew Hawkins (PwC)

13    Reporting the financial results of central banks by their main functions
Salome Skhirtladze (National Bank of Georgia)

14    Managing and reporting financial risk
Rudy Wytenburg (Bank of Canada)

15    Central bank disclosures under IFRS 7: Foreign exchange reserve holdings
Marit Rønneberg and Jan Jørgen Necas (Norges Bank)

16    Managing and reporting operational risk
Janet Cosier (formerly Bank of Canada)

17    Design features of capital provisions in central bank law
Atilla Arda (International Monetary Fund)

18    Accounting for repo transactions
Tevfik Koldas, I. Anil Talasli and Baris Çinar (Central Bank of the Republic of Turkey)

19    Foreign currency and exchange reserves accounting 
Milan Šebesta (Czech National Bank)

20    The role and importance of internal audit
Paul Apps (formerly Reserve Bank of Australia)

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