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This paper proposes a new approach to improve the way central banks can analyze and manage the financial risks of a national economy. It is based on the modern theory and practice of contingent claims analysis (CCA), which is successfully used today at the level of individual banks by managers, investors, and regulators. The basic analytical tool is the risk-adjusted balance sheet, which shows the sensitivity of the enterprise's assets and liabilities to external "Shocks." At the national level, the sectors of an economy are viewed as interconnected portfolios of assets, liabilities, and guarantees - some explicit and others implicit.
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