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Negative rates and seigniorage: Turning the central bank business model upside down – the special case of the ECB

Gros, Daniel, (2016), “Negative rates and seigniorage: Turning the central bank business model upside down – the special case of the ECB”, Voxeu, 27  June

The business of central banks used to be profitable – they issued cash and could invest the proceeds in the assets they liked. This column argues that the ECB has turned the old business model of central banks around. Today, it earns a stream of income on its liabilities, while the returns of an increasing part of its assets go to the national central banks. This cannot be a stable arrangement.

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