Reimbursements to government by central banks

Different central banks have different policies to determine how profits should be distributed to government. Profit distribution frameworks try to balance the need to reimburse government for the profits made in exercising the central bank’s responsibilities against ensuring that the institution can have operational independence and appropriate levels of capital.

Different profit distribution rules grant central banks different levels of flexibility to deal with circumstances that affect their profits and appropriate reserve levels. The South African Reserve Bank (SARB) pays a fixed dividend of 10% on the paid-up capital (amounting to R200 000 in 2022), with the remainder of distributable profit split with 10% allocated to a reserve fund and 90% paid to government. The SARB did not transfer any income to the government between 2010 and 2019 (or in 2022) as it made losses on holding foreign reserves and needed to rebuild its contingency reserve.

The Federal Reserve (US in the chart below), on the other hand, is required to remit surpluses to the US government after deducting a fixed 6% dividend to its shareholders and provided that the surplus fund exceeds paid-up capital, allowing losses in a current year to be offset against future profits. The Reserve Bank of Australia (RBA), distributes profits to government after setting aside funds for contingencies. Other central banks have regular agreements with government to determine how distributions are determined. The Reserve Bank of New Zealand (RBNZ), for example, recommends an appropriate distribution, subject to government approval. The Bank of England (BOE) determines the proportion of Banking Department profits payable government relative to the level of loss‑absorbing capital held by the Bank. The BOE did not pay a dividend in 2022 as the Bank’s loss‑absorbing capital fell below the capital framework threshold.

The chart shows that for the Federal Reserve’s transfers to the US government averaged about 0.4% of GDP since 2008, compared to 0.1%  for the RBA, 0.01% for the BOE, 0.1% for the RBNZ, and only 0.003% for the SARB. Unfortunately, it is difficult to obtain comparable data on the seigniorage revenue from different central banks to properly assess the contribution from differences in the extent of money in circulation and interest rate levels to differences in the profits obtained by different central banks.


See here for an analysis of the impact of quantitative easing on Federal Reserve remittances.

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