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A Conceptual Approach to the Creation and Allocation of Central Bank Profits in the Euro Area

A Conceptual Approach to the Creation and Allocation of Central Bank Profits in the Euro Area
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Year:    2000

Author:    Rösl, Gerhard, Schäfer, Wolf

Credit and Capital Markets – Kredit und Kapital, Vol. 33 (2000), Iss. 1 : pp. 39–61

Abstract

The conceptual approach to the allocation of monetary competence within the Euro area leads to a tripartite system concerning the creation of central bank net profits: it is divided into an ECB-, NCB-ESCB-specific and NCB-ESCB-independent component. The expected amount of the ECB-net gain is rather limited due to the ECB’s lack of operational activities. Furthermore it is unlikely that any noteworthy redistribution effects will occur. But the same does not hold for a considerable proportion of NCBs’ net gains. According to Art. 32.2 of the ECB/ESCB Statute, the monetary net income of the NCBs are to be pooled and - in terms of our basic concept - have to be interpreted as ESCB-specific net profits generated by the NCBs. They are recorded following the deadline-earmarking-procedure. Resulting unwelcome redistribution effects might not be entirely avoidable, but they can be restricted by applying a suitable procedure. The analysis of the NCBESCB- independent component enquires into the scope for monetary policies left to NCBs even after entering the monetary union. This proportion of NCB-ESCBindependent net profits should be recorded separately and stay with each NCB, respectively. (JEL E50, E58, E59)

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Journal Article Details

Publisher Name:    Global Science Press

Language:    Multiple languages

DOI:    https://doi.org/10.3790/ccm.33.1.39

Credit and Capital Markets – Kredit und Kapital, Vol. 33 (2000), Iss. 1 : pp. 39–61

Published online:    2000-01

AMS Subject Headings:    Duncker & Humblot

Copyright:    COPYRIGHT: © Global Science Press

Pages:    23

Author Details

Rösl, Gerhard Email

Schäfer, Wolf Email

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Section Title Page Action Price
Gerhard Rosi/Wolf Schäfer: A Conceptual Approach to the Creation\rand Allocation of Central Bank Profits\rin the Euro Area 39
I. The Problem 39
II. The distribution of monetary competence in the Euro area 39
III. Systematization of the sources of the central banks' net profits 40
IV. The creation and allocation of the ECB net profit 41
1. Balance sheet basics and operational monetary policy of the ECB 41
2. The creation of the ECB net profit 43
3. The allocation of the ECB net profit and covering of the ECB loss 43
V. The creation of net profits of the NCBs through ESCB operations 43
1. The structure of the NCB-ESCB balance sheet 43
2. The NCB-ESCB-p&l account 45
3. The allocation of the monetary (net) income of the NCBs 47
4. The reallocation of the monetary (net) income 48
VI. The creation of NCB's net profits through ESCB-independent operations 49
1. The NCB-ESCB-independent balance sheet 49
2. The NCB-ESCB-independent p&l account 50
3. The allocation of the NCB-ESCB-independent net profit 50
VII. Indirect determination of the monetary income in the transition period 51
Annex 53
A. Determination and reallocation of the monetary income on the basis of the earmarking method 54
a) Situation without cross-border payments 54
b) Situation with cross-border payments 55
B. Determination and reallocation of the monetary income on the basis of the indirect method 56
a) Situation without cross-border payments 56
b) The situation with cross-border payments 57
References 58
Summary: A Conceptual Approach to the Creation and Allocation of Central Bank Profits in the Euro Area 60
Zusammenfassung: Entstehung und Verteilung der Zentralbankgewinne im Euro-Währungsraum. Ein konzeptioneller Ansatz 60
Résumé: La création et l'allocation des profits de la Banque Centrale dans l'espace euro. Une approche conceptuelle 61