Asset choice in British central banking history, the myth of the safe asset, and bank regulation
The paper describes the use of commercial bills in Bank of England open-market operations from the earliest days of central banking in the 19th century, when, it is suggested, the Bank of England’s main objective was what would now be called macro-prudential, until the 1980s, when commercial bill...
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| Format: | Article |
| Language: | English |
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University of Warsaw
2015-06-01
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| Series: | Journal of Banking and Financial Economics |
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| Online Access: | https://press.wz.uw.edu.pl/cgi/viewcontent.cgi?article=1084&context=jbfe |
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| _version_ | 1841564069940690944 |
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| author | William A. Allen |
| author_facet | William A. Allen |
| author_sort | William A. Allen |
| collection | DOAJ |
| description | The paper describes the use of commercial bills in Bank of England open-market operations
from the earliest days of central banking in the 19th century, when, it is suggested, the Bank of
England’s main objective was what would now be called macro-prudential, until the 1980s, when
commercial bill purchases were an essential feature of contemporary anti-inflationary policy. It
explores the relationship between government securities, central bank assets and bank liquidity
regulation, exposes as a myth the belief that government securities are perfectly safe assets,
and challenges the idea that central banks should confine their asset holdings to government
securities. In addition, the paper argues that by making more active use of the policy instrument
of central bank asset choice, by acknowledging the connection between liquidity regulation
and open-market operations, and by making certain changes to the Basel 3 Liquidity Coverage
Ratio regulations, central banks could both better achieve some of their macro-prudential policy
objectives and stimulate high-quality bank lending. |
| format | Article |
| id | doaj-art-fe9a532b88804444b27b621ba746f0d5 |
| institution | Kabale University |
| issn | 2353-6845 |
| language | English |
| publishDate | 2015-06-01 |
| publisher | University of Warsaw |
| record_format | Article |
| series | Journal of Banking and Financial Economics |
| spelling | doaj-art-fe9a532b88804444b27b621ba746f0d52025-01-02T23:18:00ZengUniversity of WarsawJournal of Banking and Financial Economics2353-68452015-06-0120152(4)183110.7172/2353-6845.jbfe.2015.2.2Asset choice in British central banking history, the myth of the safe asset, and bank regulationWilliam A. Allen0Cass Business School, London, United KingdomThe paper describes the use of commercial bills in Bank of England open-market operations from the earliest days of central banking in the 19th century, when, it is suggested, the Bank of England’s main objective was what would now be called macro-prudential, until the 1980s, when commercial bill purchases were an essential feature of contemporary anti-inflationary policy. It explores the relationship between government securities, central bank assets and bank liquidity regulation, exposes as a myth the belief that government securities are perfectly safe assets, and challenges the idea that central banks should confine their asset holdings to government securities. In addition, the paper argues that by making more active use of the policy instrument of central bank asset choice, by acknowledging the connection between liquidity regulation and open-market operations, and by making certain changes to the Basel 3 Liquidity Coverage Ratio regulations, central banks could both better achieve some of their macro-prudential policy objectives and stimulate high-quality bank lending.https://press.wz.uw.edu.pl/cgi/viewcontent.cgi?article=1084&context=jbfecommercial billsbills of exchangebank of englandeligibilitybank liquiditybasel 3liquidity coverage ratiooverfundingmonetary targetsmacroprudential policyrisk‑free assetgovernment securities |
| spellingShingle | William A. Allen Asset choice in British central banking history, the myth of the safe asset, and bank regulation Journal of Banking and Financial Economics commercial bills bills of exchange bank of england eligibility bank liquidity basel 3 liquidity coverage ratio overfunding monetary targets macroprudential policy risk‑free asset government securities |
| title | Asset choice in British central banking history, the myth of the safe asset, and bank regulation |
| title_full | Asset choice in British central banking history, the myth of the safe asset, and bank regulation |
| title_fullStr | Asset choice in British central banking history, the myth of the safe asset, and bank regulation |
| title_full_unstemmed | Asset choice in British central banking history, the myth of the safe asset, and bank regulation |
| title_short | Asset choice in British central banking history, the myth of the safe asset, and bank regulation |
| title_sort | asset choice in british central banking history the myth of the safe asset and bank regulation |
| topic | commercial bills bills of exchange bank of england eligibility bank liquidity basel 3 liquidity coverage ratio overfunding monetary targets macroprudential policy risk‑free asset government securities |
| url | https://press.wz.uw.edu.pl/cgi/viewcontent.cgi?article=1084&context=jbfe |
| work_keys_str_mv | AT williamaallen assetchoiceinbritishcentralbankinghistorythemythofthesafeassetandbankregulation |