Euro Banknotes in Circulation and the Allocation of Monetary Income within the Eurosystem
AbstractBanknotes in circulation are traditionally the most important liability item in the balance sheet of central banks. The launch of euro cash created the need to treat this item in new way to reflect the joint liability of all Eurosystem members – the ECB and all national central banks (NCBs) of the euro area – for euro banknotes. In this context, the implications of banknote migration expected both within and outside the euro area, as well as its potential impact on the distribution of profits among the euro area central banks, were subject to extensive discussions already before the cash changeover. A major challenge for the Eurosystem has been the fair allocation of monetary income. This is the income accruing to the individual NCBs in the performance of their monetary policy functions. In particular, this income – traditionally referred to as seigniorage income – includes income derived from assets held against notes in circulation and deposit liabilities to credit institutions. The experience of the first five years after the cash changeover shows that the combination of all relevant aspects of the Eurosystem’s banknote circulation and seigniorage income rules has ensured a fair allocation of monetary income, the functional integrity of the Eurosystem,2 and thus the fulfillment of the objective stipulated by Article 32 of the Statute of the European System of Central Banks3 (ESCB).
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Bibliographic InfoArticle provided by Oesterreichische Nationalbank (Austrian Central Bank) in its journal Monetary Policy & the Economy.
Volume (Year): (2007)
Issue (Month): 1 ()
Postal: Oesterreichische Nationalbank, Documentation Management and Communications Services, Otto-Wagner Platz 3, A-1090 Vienna, Austria
Find related papers by JEL classification:
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
- E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
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- Hans-Werner Sinn & Holger Feist, 2000. "Der Euro und der Geldschöpfungsgewinn: Gewinner und Verlierer durch die Währungsunion," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 53(31), pages 14-22, December.
- Daniel Gros, 1998. "Distributing Seigniorage under EMU," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 51(17-18), pages 29-39, October.
- Charles B. Blankart & Sven Bretschneider, 2012. "Nutzen und Kosten eines Austritts Griechenlands aus dem Euro," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 65(09), pages 12-16, 05.
- VAN HOVE, Leo, 2007. "Central Banks and Payment Instruments: a Serious Case of Schizophrenia," MPRA Paper 5281, University Library of Munich, Germany.
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