Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/88225
Authors: 
Lehmbecker, Philipp
Missong, Martin
Year of Publication: 
2008
Series/Report no.: 
ROME Discussion Paper Series 08-03
Abstract: 
Recently, the U. S. subprime crisis has shown that a weak collateralization of credits may have massive economic implications, entailing severe perturbations of the international financial system. We focus on central bank lending and try to pin down the quantitative impact of the collateralization of central banks' credits. A questionnaire on national monetary frameworks was used to collect data from central banks. Drawing on these data we derive an index of the quality of eligible assets measuring the minimum requirements for the issue of money by the respective central bank. We provide data for 62 countries and we show that this index has the potential to affect monetary stability as measured by national inflation rates. The existence of a correlation between inflation and the quality of eligible collateral would strongly support fundamental claims of property economics, an economic theory based on a clear cut distinction between property and possession. Property economics emphasizes the role of collateralized lending in explaining the process of money creation and, more generally, the emergence of any economic activity.
Subjects: 
Monetary economics
monetary theory
inflation
collateral
central banks
property
property economics
central bank independence
index construction
JEL: 
E42
B59
C43
Document Type: 
Working Paper

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