Monetary Policy and the Business of Central Banking

Behind their role as policy makers, central banks are also businesses with many operational tasks which the public is little aware of. They finance the various services which they provide to the public out of “seigniorage” income (the income generated from issuing central bank money), which is influenced by the composition and the properties (risk, return) of the assets and liabilities in their balance sheets. The SUERF Annual Lecture will start from current discussions about the losses incurred by central banks and ask whether there is a conflict between the policy mandate of the central bank and the viability of the central bank as a business, which is essential to its independence. Sources of losses, such as the risk on assets held and the interest paid on reserves, will be considered, as will be the relation of these phenomena to monetary policy and to the central bank’s mandate. In a longer perspective, central banks’ “business model” as such may need reconsideration as seigniorage may be disappearing in a digitalized world.

The 2024 SUERF Annual Lecture will highlight topical perspectives relevant in this context from one of Europe’s leading academic researchers in the field. Two senior policy makers will add their perspectives. There will be ample room for interaction among the panel and with the audience.