The WSJ reports that the ECB earned €1.4bn in net profit last year, well below that of the US Fed and the Bank of England. Open Europe’s Raoul Ruparel is quoted noting that the actions of central banks can give a “double benefit” by delivering a profit and keeping rates low for governments. However, he warned that this “shouldn't be a key metric by which central bank action should be judged,” as it could create perverse incentives.The ECB's supposed profit is phony. The same with that of the Fed. A central bank prints money when it monetizes a government bond. The government pays off the bond with more printed money, and the central bank books the interest as profit. This is just an accounting fiction between a counterfeiter of money and his beneficiary.
WSJ Capital.gr Economica
Friday, February 21, 2014
Phony Central Bank Profit
From today's Open Europe news summary: