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Central Bank Profit Distribution As A Monetary Policy Tool

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  • Hiermeyer, Martin

Abstract

Next to conventional and unconventional monetary policy, there may be another form of monetary policy: Central bank profit distribution to the government. By distributing a higher profit than normal if inflation is below target, and a lower profit than normal if inflation is above target, central bankers may achieve their inflation target better. To guard against excessive inflation, lawmakers might stipulate that central bankers can only distribute higher profits than nor-mal if conventional monetary policy is exhausted (0% policy rate).

Suggested Citation

  • Hiermeyer, Martin, 2020. "Central Bank Profit Distribution As A Monetary Policy Tool," MPRA Paper 99864, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:99864
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    References listed on IDEAS

    as
    1. Bindseil, Ulrich & Manzanares, Andrés & Weller, Benedict, 2004. "The role of central bank capital revisited," Working Paper Series 392, European Central Bank.
    2. Studener, Werner & Merriman, Niall & Karakitsos, Polychronis & Bunea, Daniela, 2016. "Profit distribution and loss coverage rules for central banks," Occasional Paper Series 169, European Central Bank.
    3. Mr. Peter Stella, 1997. "Do Central Banks Need Capital?," IMF Working Papers 1997/083, International Monetary Fund.
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    Keywords

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    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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