Central bank losses, electronic money and contestable central banking YÜK SEL ­ G Ö RME z

Section 2 addresses the literature. Section 3 explores an argument suggesting that central banks cannot make losses under normal circumstances, if they only conduct monetary policy. After summarizing the main sources of loss in Section 4, Section 5 investigates whether electronic money developments may put extra pressure on central banks to get rid of non-monetary policy functions to avoid losses undermining their strength relative to other monetary zones. Section 6 explores the case of the Turkish Central Bank and its loss-making monetary policy environment. Conclusions will be drawn in Section 7.