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Seigniorage and the Transfer of Central Bank Profits to the Government

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  • Ernst Baltensperger
  • Thomas J. Jordan

Abstract

SUMMARY This paper reconsiders different questions related to the transfer of central bank profits to the government. We arrive at three main conclusions: I) The extent to which central bank profits are transferred is irrelevant, economically speaking, as long as fiscal spending is independent of the size of the transfers; 2) The asset structure should reflect the needs of the central bank to ensure the credibility of its money. Portfolio return is of secondaly importance; 3) In order to minimize the spending response of the fiscal authority, transfers of central bank profits should evolve at a constant rate which reflects an average of previous profits. ZUSAMMENFASSUNG In diesem Aufsatz werden verschiedene Fragen im Zusammenhang mit der Überweisung von Zentralbankgewinnen an die Fiskalbehörde diskutiert. Es können drei Hauptschlussfolgerungen gezogen werden: I) Das Ausmasq der Gewinnüberweisung ist irrelevant, solange das Ausgabever‐halten der Fiskalbehörde davon unabhängig ist: 2) Die Aktivenstruktur sollte dem Bedürfnis der Zentralbank dienen, die Glaubwüdigkeit ihres Geldes zu garantieren. Die Rentabilität hat eine zweitrangige Bedeutung; 3) Um die Reaktion des Ausgabeverhaltens der Fiskalbehörde zu mini‐mieren, sollten die Überweisungen uber längere Zeit konstant gehalten werden und einem Durchschnitt aus früheren Gewinnen entsprechen. RÉSUMÉ Cet article considi‐re des questions différentes concernant le transfert des bénéfices de la banque centrale au gouvernement. II y a trois conclusions principales: I) L'étendue des bénétkes transférés n'a pas d'importance si les dépenses fiscales n'en dépendent pas: 2) La structure des actifs devrait retléter le besoin de la banque centrale d'assurer la crédibilité de sa monnaie. La rentabilité n'a qu'une importance secondaire; 3) Pour réduire I'augmentation des dépenses du gouvernement, le transfert des bénéfices de la banque centrale devrait évoluer d'une façon constante et refléter la moyenne des bénéfices précédents

Suggested Citation

  • Ernst Baltensperger & Thomas J. Jordan, 1998. "Seigniorage and the Transfer of Central Bank Profits to the Government," Kyklos, Wiley Blackwell, vol. 51(1), pages 73-88, February.
    • Handle: RePEc:bla:kyklos:v:51:y:1998:i:1:p:73-88
    DOI: 10.1111/1467-6435.00038
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    Cited by:

    1. Hagiwara, Reona, 2020. "Seigniorage and Japanese fiscal sustainability: Simulation analysis using an overlapping generations model," Economic Modelling, Elsevier, vol. 84(C), pages 340-356.
    2. Andreas M. Fischer & Thomas J. Jordan & Caesar P. Lack, 2002. "Giving Up the Swiss Franc:Some Considerations on Seigniorage Flows under EMU," Swiss Journal of Economics and Statistics (SJES), Swiss Society of Economics and Statistics (SSES), vol. 138(I), pages 61-82, March.
    3. Nicoleta Bărbuță-Mișu & Tuna Can Güleç & Selim Duramaz & Florina Oana Virlanuta, 2020. "Determinants of Dollarization of Savings in the Turkish Economy," Sustainability, MDPI, vol. 12(15), pages 1-16, July.

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