This role will in turn explain why central banks, including of course the Eurosystem and the ECB, have expanded their balance sheets during the crisis. Second, I will elaborate on risk management in central banks, explaining how this differs from risk management practices in private financial firms.
In doing so, I will also talk about the risk management framework of the ECB and the Eurosystem and how this contributes to the ECB’s policy goals, among other things, by ensuring the institution’s financial protection. My objective is to provide a better understanding of the specificities of central banking activities in the supply of liquidity to the financial sector.