Central Banks as Fiscal Players: The Drivers of Fiscal and Monetary Policy Space

Central banks are often discussed as monetary authorities, but their balance sheets also have consequences for public finance. In Central Banks as Fiscal Players, economist Willem Buiter brings those connections into focus, asking how central-bank liabilities and profits affect the fiscal room available to the state.

The book offers a unified framework for examining the expansion of central-bank balance sheets and its implications for policy. Its arguments connect questions that are often treated separately: the accounting relationship between the central bank and treasury, the sustainability of public finances, and the limits of monetary policy.

Where monetary policy meets public finance

Buiter develops a consolidated perspective on the treasury, central bank, and state. This approach gives readers a way to consider seigniorage and monetary liabilities alongside conventional measures of public debt and fiscal balances.

From helicopter money to the zero lower bound

The discussion takes up several prominent policy debates, including how helicopter-money proposals work, when modern monetary theory may make sense, and how policymakers might address the zero lower bound on nominal interest rates. Buiter also presents his critique of the fiscal theory of the price level, making the book a pointed contribution to ongoing disagreements in monetary economics.

A close look at the Eurosystem

The final chapters turn to the design of the Eurosystem and the risks Buiter sees in its institutional structure. Together, these subjects show why central-bank architecture is not merely a technical concern: it can shape how monetary and fiscal authorities operate.

For readers following economic policy debates

Part of the Federico Caffè Lectures series, this book will interest readers of central banking, macroeconomics, and public finance, including students and professionals who want to engage with debates about policy space, sovereign finances, and the role of monetary institutions. Buiter’s approach is analytical and argumentative, making it especially relevant to readers prepared to assess competing claims rather than seek a neutral introductory survey.