This approach would limit losses at the central bank even if the IOU was not interest bearing. But it would effectively amount to a tax on the banking system, as it is the banks that would hold these low-interest balances once the government has spent the money. In this case, it is this tax that would help finance the extra spending.
Timely and flexible implementation of monetary policy Having explained the policy decisions made at the two Monetary Policy Meetings in February 2001, allow me to elaborate on their background. First of all, we have taken these policy measures on the basis of our understanding of economic and financial developments at present and in the future.