An accounting-based model of seigniorage, and recent monetary developments

Zbigniew Polański and Mikołaj Szadkowski

Bank i Kredyt, 2021, vol. 52, issue 5, 391-436

Abstract: The aim of this paper is to identify the changes of seigniorage during 2003–2019 in a group of central banks. To achieve this we propose an accounting-based model of seigniorage creation and distribution. It is used to research the developments in seven monetary areas (i.e. of the euro area, Japan, Poland, Sweden, Switzerland, the UK and the US). We show that the post-2007 period differs substantially from the earlier one with respect to most variables of the model, which can be attributed above all to the implementation of unconventional monetary policies. Our estimates, based on a dataset compiled especially for the study, suggest that there was a break following the Great Financial Crisis as the share of seigniorage in central banks’ profits declined noticeably. On the distribution side, we observed an increase in average central bank transfers to governments in all larger economies in 2008–2019. Central banks’ finances in the three smaller economies (Poland, Sweden, Switzerland), however, markedly diverged from those of monetary authorities’ in larger economies, particularly after 2007.

Keywords: E52; E58; E65 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:nbp:nbpbik:v:52:y:2021:i:5:p:391-436

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