Central Bank Reserves: Law, Policy, and Operations2 sources

This article from the Modern Law Review examines the legal and constitutional basis for central banks' power to create money, specifically focusing on central bank reserves. The authors analyze the legal frameworks in the US, UK, and Eurozone, highlighting the obscure nature of the laws governing reserve creation. They explain the crucial role of reserves in the financial system, particularly in monetary policy, including conventional and unconventional methods like quantitative easing (QE). The article also discusses the implications of this legal ambiguity for central bank authority and explores the potential impact of central bank digital currencies (CBDCs) on the existing system. Finally, the authors challenge the common perception of central banks as having unlimited power to create money.

https://onlinelibrary.wiley.com/doi/epdf/10.1111/1468-2230.12688