Interest Rate Policy and the Assets and Financial Results of Central Banks in Selected European Union Member States

In reaction to the 2008 global financial crisis, central banks made large-scale asset acquisitions using their reserves. This unusual monetary strategy has persisted throughout the pandemic, and in certain cases beyond 2022. By then, central bank balance sheets had grown by up to tenfold. Then, as interest rates climbed sharply, these enormous holdings began to suffer significant losses. These losses vary qualitatively depending on whether the central bank purchased domestic or international assets, resulting in transfers within or between countries.

The aim of the research undertaken in this article is to examine the impact of changes in the interest rates of selected central banks on the value of their assets in the period 2015-2023. The European Central Bank was selected for the study as the central bank of 20 euro area member states and the central banks of selected European Union countries still outside the euro area (Czech Republic, Denmark, Hungary, Poland, Sweden). The research used research methods based on literature studies in the field of finance and banking as well as statistical and econometric methods (Granger causality test and Vector Autoregression Model). The research used quarterly data from the Bank for International Settlements.