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It is a mark to market loss so it is only an accounting loss....

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Christos12

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14/03/23

23:00

Post #: 66767028
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Originally posted by bruceyg: ↑

Australia's Central Bank Has Equity Wiped Out by Billions in Bond Losses (usnews.com)

this article is a bit confusing so a bit of clarity from the economic gurus would be welcome.

in the opening paragraphs the article claims that the rba has losses of $45 billion but says that because the rba can create money it isnt insolvent and will continue as normal; note that - the rba can create money

then further down in the article the claim is made "That also means the RBA would not require a cash injection from the government, as happened in 2013 when the bank suffered valuation losses on its foreign currency reserves."

so if the rba can create its own money (out of nothing) then why would it require a cash injection from the govt, meaning the poor tax payer?

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It is a mark to market loss so it is only an accounting loss. With rises in interest rates the value of bonds decreases.
But the RBA will hold until maturity when they will be worth their marked value again. So there is no real loss.
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