Small blocks of ice separated from a larger ‘parent’ one | Iceland Landscapes, Seascapes and Nightscapes © Jennifer King photography
Off-balance-sheet fiscal agencies
OBFAs are public-private institutions whose activities combine traces of monetary and fiscal policy, such as government-sponsored enterprises, development banks, or other special purpose vehicles.
OBFAs are typically sub-balance sheets of treasuries that have implicit capital guarantees from the ‘parent’ treasury but are endowed with more elasticity space as they are subject to less rules, regulations, and oversight. Using an analogy from the shadow banking scholarship, OBFAs are treasuries’ special purpose vehicles which open up channels for organisational and operational innovation that treasuries do not usually have.
Governing through OBFAs implies that activities which treasuries are not allowed or able to carry out by law, agreement, or political compromise increasingly get outsourced to balance sheets that are less restricted legally and politically – in some cases, they are even registered under a different jurisdiction.
For our research, we assume that OBFAs often play a critical role to manage the systemic and procedural challenges of financing a large-scale transformation. They can both provide elasticity themselves and serve to steer the initial expansion, long-term funding, and final contraction in a monetary architecture.