02122cas a2200265 a 4500 AALejournalIMF011716 230101c9999 xx r poo 0 0eng d 5.00 USD 9781463937782 1018-5941 BD-DhAAL BD-DhAAL Tovar Mora, Camilo. Does Central Bank Capital Matter for Monetary Policy? / Camilo Tovar Mora, Pedro Castro, Gustavo Adler. Washington, D.C. : International Monetary Fund, 2012. 1 online resource (22 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Heavy foreign exchange intervention by central banks of emerging markets have lead to sizeable expansions of their balance sheets in recent years?accumulating foreign assets and non-money domestic liabilities (the latter due to sterilization operations). With domestic liabilities being mostly of short-term maturity and denominated in local currency, movements in domestic monetary policy interest rates can have sizable effects on central bank's net worth. In this paper we examine empirically whether balance sheet considerations influence the conduct of monetary policy. Our methodology involves the estimation of interest rate rules for a sample of 41 countries and testing whether deviations from the rule can be explained by a measure of central bank financial strength. Our findings, using linear and nonlinear techniques, suggests that central bank financial strength can be a statistically significant factor explaining large negative interest rate deviations from "optimal" levels. Mode of access: Internet Adler, Gustavo. Castro, Pedro. IMF Working Papers; Working Paper ; No. 2012/060 Full text available on IMF http://elibrary.imf.org/view/journals/001/2012/060/001.2012.issue-060-en.xml IMF e-Library