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2022 | Buch

Central Bank Ratings

A New Methodology for Global Excellence

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When the global financial crisis broke, central banks in both the US and the UK undertook massive asset purchase programmes which resulted in considerable increase in assets. Cross-border spillover effects were noted across global economies. Balance sheet adjustments may eventually gnaw at the profit-earning capacities of central banks, and in extreme cases, negative equity can manifest.

This updated book investigates a benchmark for comparing central banks. The author employs a unique and large set of metrics to gauge the quality of central banks and presents an argument to reflect upon international best practices covering 124 banks in this latest study. The study uses different criteria including the accounting body, research, presence of stress-testing exercises, inflation-targeting frameworks, staff efficiency, and languages of communication with the public, amongst others. The book begins by providing an overview of central banking, before exploring some stylized facts about central banks in unique detail. It then presents a ratings methodology for worldwide central banks to analyse the results. A backtesting exercise is included to validate the quality of the ratings obtained. The book concludes by offering insights into the comparison of central banks.

Inhaltsverzeichnis

Frontmatter
Chapter 1. Introduction
Abstract
The objective of this chapter is to provide the readers with a general historical and functional overview of central banking worldwide. First, the historical background of central banking is discussed.
Indranarain Ramlall
Chapter 2. An Overview of Central Banking in the World
Abstract
Central banks constitute core financial institutions usually endowed with price stability function.
Indranarain Ramlall
Chapter 3. Some Stylized Facts About Central Banks
Abstract
A three-pronged approach to central bank classification is used in the current study. Central banks which display the full version of their financials in their annual reports in an international language (English or French) are classified in the excellence division. Compared to the first edition of the book, the second edition now includes ten more central banks in the analysis, namely, Argentina, Burundi, Congo, Jordan, Liberia, Maldives, Morocco, Sierra Leone, Swaziland and Zimbabwe.
Indranarain Ramlall
Chapter 4. Ratings Methodology for Central Banks Worldwide
Abstract
Different types of ratings have been developed in view of generating excellence in the specific area under focus. Ironically, every human being has been rated in his life based on exams undertaken at various levels of the educational pyramid. The interesting thing about rating is that it is inherently linked to a relative concept—the winner being ranked relative to any other unit in the rating scale adopted.
Indranarain Ramlall
Chapter 5. Second and Third Division Rated Central Banks
Abstract
As per the Bank for International Settlement, there are 176 central banks posted under central bank websites. The European Central Bank is removed since only National Central Banks are considered based under a country-wise perspective, leaving the sample size to 175 central banks. Based on no availability of data for countries enlisted under Bank of Central African States (Cameroon, Central African Republic, Chad, Equatorial Guinea and Gabon) and Central Bank of West African States (Benin, Burkina Faso, Guinea-Bissau, Mali, Niger, Senegal and Togo), these 12 countries were thereby removed from 175, leading to a refined sample of 163 central banks.
Indranarain Ramlall
Chapter 6. Results and Discussions
Abstract
The global central bank ratings are based on central banks found in the excellence division, also labelled as category A central banks, which consisted of 124 central banks relative to 114 central banks employed in the first edition.
Indranarain Ramlall
Chapter 7. Backtesting
Abstract
Any developed ratings should be rigorously assessed to confirm their validity, more precisely, to confirm their reliability in use. This requires the use of external data sources in the validation process. To fulfil that requirement, recourse is made to the following data, namely, Ease of Doing Business, Human Development Index and Corruption Perception Index and Sovereign ratings data.
Indranarain Ramlall
Chapter 8. Conclusion
Abstract
In light of the 2007 US Subprime crisis, strenuous efforts were exerted on the global financial system in view of mitigating systemic risks, which tend to be particularly acute for developed countries based on their high level of integrated financial systems. Central banks’ interventions during the global financial crisis were critical to safeguard financial stability. A more or less similar state of affairs occurred during COVID-19 as central banks resorted once again to asset purchase programmes to ensure that economies do not lapse into recessions.
Indranarain Ramlall
Backmatter
Metadaten
Titel
Central Bank Ratings
verfasst von
Dr. Indranarain Ramlall
Copyright-Jahr
2022
Electronic ISBN
978-3-030-98713-8
Print ISBN
978-3-030-98712-1
DOI
https://doi.org/10.1007/978-3-030-98713-8

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