Upon completion of this course, participants will be able to:

• Analyze the structure and components of a central bank's balance sheet (assets and liabilities).
• Explain the mechanics and impact of central bank operations on commercial bank **reserve balances**.
• Evaluate the risk and policy implications of providing banking services, such as custodian services and payment system access.
• Understand the operational role of the balance sheet in **monetary policy implementation** and signaling.
• Model the impact of foreign exchange interventions and asset purchases on the balance sheet composition.
• Assess the legal and accounting treatment of central bank capital, reserves, and profit/loss distribution.
• Examine the use of the balance sheet to manage systemic liquidity through standing and lending facilities.
• Analyze the challenges of balance sheet expansion and normalization following periods of unconventional policy.

• Treasury, Reserve Management, and Financial Markets Staff at Central Banks.
• Monetary Policy Implementation and Operations Specialists.
• Banking Supervision and Financial Stability Analysts.
• Economists and Researchers focusing on Central Bank Operations.
• Government Officials dealing with Fiscal and Debt Management.
• Internal Auditors focused on Financial Operations and Controls.

• Case Studies on Central Bank QE Implementation and Withdrawal
• Interactive Group Modeling of Balance Sheet Operations and Reserve Impact
• Workshops on Collateral Valuation and Haircut Calculation
• Discussions on the Political Economy of Central Bank Profit and Loss
• Expert Lectures on IFRS/GAAP for Central Banking Accounting
• Individual Assignments on Analyzing and Interpreting a Central Bank's Financial Statement

Unit 1: Structure and Functions of the Central Bank Balance Sheet

• Mapping the primary assets (foreign exchange reserves, securities, loans) and liabilities (currency, reserves, government deposits).
• The concept of **high-powered money** and its relationship to the balance sheet.
• The central bank as the Banker to the Government and the Banker to Commercial Banks.
• Operational impact of minimum reserve requirements on the liability side.
• Accounting standards (e.g., IFRS/GAAP) for central bank assets and liabilities.

Unit 2: Liquidity Management and Standing Facilities

• The role of the balance sheet in managing systemic liquidity (structural vs. frictional).
• Mechanics of marginal lending and deposit facilities (standing facilities).
• Collateral frameworks: eligibility, valuation, haircuts, and legal enforceability.
• Impact of liquidity operations (OMO, repo, reverse repo) on the balance sheet and interbank rates.
• Managing the balance sheet during periods of financial stress and liquidity shortages.

Unit 3: Monetary Policy and FX Interventions

• How open market operations are executed through the balance sheet to target policy rates.
• The balance sheet implications of **Quantitative Easing (QE)** and large-scale asset purchases.
• Mechanics of foreign exchange market intervention and its effect on reserve assets and bank reserves.
• Managing risks associated with a large, diversified, and rate-sensitive balance sheet.
• The signaling effect of balance sheet composition and size.

Unit 4: Capital, Profit, and Risk Management

• The concept of central bank capital, retained earnings, and revaluation reserves.
• Operational and financial risks (interest rate, credit, FX) inherent in balance sheet management.
• Determining and managing the central bank's profit/loss and its impact on government finances.
• Legal and governance framework for balance sheet integrity and reporting.
• Risk-transfer mechanisms between the central bank and the government (e.g., indemnities).

Unit 5: Balance Sheet Normalization and Future Challenges

• Strategies and operational challenges for normalizing a balance sheet expanded by QE.
• The impact of Central Bank Digital Currency (CBDC) on commercial bank reserves and the balance sheet structure.
• Balance sheet management for climate-related financial risk (green asset purchases).
• International coordination and the impact of other central banks' balance sheet policies.
• The trade-offs between financial prudence and effective policy implementation.