Central Bank Financial Strength and Policy Performance: An Econometric Evaluation by Ulrich Klüh; Peter Stella

Author:Ulrich Klüh; Peter Stella
Language: eng
Format: epub
ISBN: 9781452784397
Publisher: International Monetary Fund
Published: 2008-08-15T00:00:00+00:00

Figure 8. Measures of Central Bank Revenues and Costs

Source: Bankscope

The overall decline in central bank interest revenues that seems to drive these developments has been largely attributed to two major factors:

The worldwide decline in inflation rates, coupled with a decreasing inclination to hold currency, has probably been the major driving force behind declining profitability. In the sample of 100 countries studied by Ize (2006), average inflation has fallen from around 14 percent in the period 1985-1995 to around 7 percent in the following decade, while currency holdings as a percentage of GDP have declined by around 1.5 percentage points.

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