The Czech National Bank (CNB) is another central bank that has been able to achieve price stability irrespective of its negative equity situation (other examples include Slovakia, Israel, Mexico and Thailand). This country case has been described by Frait (2005), Cincibuch et al. (2008, 2009) and Frait and Holub (2011), who stressed the non-inflationary nature of the CNB’s accounting losses related to large FX reserves and assessed the bank’s ability to get out of its negative equity situation in the future without resorting to faster price growth. On the other hand, Mandel and Zelenka (2009) partly disputed the benign view.
