Introduction

175 years of financial risks and returns in central banking: Danmarks Nationalbank, 1839–2014

“…In 1999, the Basel Committee proposed a revision of capital-adequacy rules that incorporated recent developments in risk-management techniques (Jorion 1997; Abildgren et al 2010). This in turn might also have influenced central banks, whose reputation and credibility could be damaged by inadequate risk-management strategies compared to those of the private banking sector (Bindseil et al 2009).…”

“…However, their mandates are usually focused on the provision of the public goods mentioned above rather than on maximising (risk-adjusted) profits. The risk-management frameworks used in the private fund management industry might therefore not always be directly applicable to central banks (Foster 2004; Bindseil et al 2009; Bank for International Settlements 2011; European Central Bank 2015; Bholat and Darbyshire 2016). For instance, there might be a direct economic cost related to holdings of foreign-exchange reserves if the domestic short-term interest rate is higher than abroad.…”

Euro Area Policies: Selected Issues

“…It has been implemented mainly to accommodate banks' desire to frontload reserve fulfillment. This was a helpful step that illustrated the benefits of the Eurosystem's flexible reserve requirement system that combines relatively high remunerated reserve cushions with long reserve maintenance periods (Bindseil, Gonzalez, and Tabakis (2008).…”