Central banks, especially in Europe, face an uncomfortable and potentially self-reinforcing accumulation of challenges over capital, profitability and credibility that could badly erode their independence and performance. Klaas Knot, De Nederlandsche Bank president and a pivotal figure on the 26-member European Central Bank council, has underlined the seriousness of the problems by publicly warning that central banks should ‘critically assess their capital levels’. Central bank losses in northern Europe have been recognised since 2022 as adding to monetary policy-making complexity. They are likely to rise well above ... (full story)