Should Unconventional Balance Sheet Policies Be Added to the Central Bank toolkit? a Review of the Experience so Far

What is the case for adding the unconventional balance sheet policies used by major central banks since 2007 to the standard policy toolkit? The record so far suggests that the new liquidity providing policies in support of financial stability generally warrant inclusion. As the balance sheet policies aimed at macroeconomic stability were used only by a small number of highly credible central banks facing a lower bound constraint on conventional interest rate policy, they are not relevant for most central banks or states of the world. Best practices of these policies are documented in this paper.Central bank role;Financial risk;Financial stability;Liquidity management;Risk management;central bank, central banks, bond, bond purchases, liquidity support, bonds, financial institutions, reserve bank, moral hazard, bond purchase, debt management, financial markets, corporate bonds, bank bond, money market, interest rate policy, debt maturity, money markets, government bonds, financial system, domestic financial markets, private credit, financial market, financial systems, financial intermediation, financial sector, financial instability, term bonds, public debt, government bond, long-term bonds, government debt, international reserves, bond yields, sovereign debt, flexible exchange rate, public sector debt, crowding out, short-term debts, flexible exchange rate regimes, debt management strategy, liquidity injections, bond markets, public debt management, money market mutual fund, public bonds, debt management policy, government bond markets, financial services, financial policies, private debt, liquidity injection, government deficit, bond sales, private sector assets, reserve assets, financial intermediaries, external liquidity, public sector debts, financial reform, private sector asset, bond market, financial reforms, income ? bond, money market funds, money market rates, public debts, corporate bond, short-term debt, debt manager, reserve portfolio, reserve currency, bilateral agreements, debt management office, international finance, financial volatility, debt problems, reserve requirements, private debtors, debt managers, term ? bond, financial repression, government bond yields