Spending Seigniorage: Do Central Banks Have a Governance Problem?

March 1, 2006

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Format: Chicago

Alain Ize. Spending Seigniorage: Do Central Banks Have a Governance Problem?, (USA: International Monetary Fund, 2006) accessed November 21, 2024

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper reviews how central banks allocate seigniorage, based on systematic crosscountry comparisons of their financial accounts. Central banks are classified as weak or strong, depending upon their structural profitability. Weak central banks typically (although not exclusively) operate in smaller and less wealthy countries, lack independence from their governments, and are burdened by compulsory transfers and low capital. Their operating expenditures, nonperforming assets, international reserve carrying costs, and international reserve accumulation needs are high. Governance appears to be a potential concern in many central banks, both weak and strong, with operating expenditures often adjusting upward for high profitability and capital accumulation adjusting downward for low profitability. The main policy implications are briefly reviewed.

Subject: Banking, Central banks, Currencies, Distressed institutions, Expenditure, Financial institutions, International reserves, Money, National accounts, Personal income

Keywords: Central bank, Central bank recapitalization, Central banking, Currencies, Distressed institutions, Expenditure performance index, Global, Governance, Income statement, International reserves, Personal income, Revenue base, Seigniorage, Strong central banks, Weak central banks, WP

Publication Details

Pages:

34
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2006/058
Stock No:

WPIEA2006058
ISBN:

9781451863185
ISSN:

1018-5941

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