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Summary /
Abstract
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Recently, weak central bank financial positions, especially of emerging economies, have brought into the public spotlight whether or not such weakness will constrain or obstruct the policy implementation in the long run. The country case studies and statistical performance show that the central bank capital erosion does not directly relate to the policy effectiveness, but creates the vulnerabilities to the monetary policy process. The key factor helping to achieve the policy objectives, even with the losses or negative capital, is “central bank credibility”. The policy choices to reduce such vulnerabilities are discussed in this paper. |