On the profitability of central banks

Central bank profits are important as they help to maintain a strong balance sheet and financial independence from the government. Within the central banking community, annual profits (including seigniorage) are often regarded as an added benefit of central bank operations, but not as an important output metric in its own right. In this study, I show that central bank profits can be steered explicitly (to a certain extent) within the leeway of the primary (policy) mandate, and over a longer period of time. Profitability considerations could be included in the composition of financial assets, the minimum reserves remuneration, and the margin (corridor) between the monetary credit and deposit rates.