<p>In general, central banks are profitable because they hold a portfolio of interest bearing assets (government bonds) against non-interest bearing liabilities (currency).</p>
<p>A central bank's revenue is generally more than enough to pay for its staff and other costs, leaving some left over to remit to the national government.</p>
<p>In 2020, the Bank of Canada had almost \$2.6 billion in revenue against about \$0.6 billion in costs leaving a net income of about \$2 billion. As you can see in their financial results here: <a href="https://www.bankofcanada.ca/publications/annual-reports-quarterly-financial-reports/annual-report-2020/financial-results/" rel="nofollow noreferrer">https://www.bankofcanada.ca/publications/annual-reports-quarterly-financial-reports/annual-report-2020/financial-results/</a></p>

CC BY-SA 4.0
2022-01-14T20:59:24.713Z
2022-01-14T20:59:24.713Z
James Wattam
<p>Central banks like the Bank of England and the Fed must cover their costs. I was wondering how they do this? I can think of two possible mechanisms:</p>

<ol>
<li><p>Government allocates money from its tax revenue to the central bank, which then uses this money to cover costs.</p></li>
<li><p>The central bank creates an amount of money necessary to cover its costs.</p></li>
</ol>

<p>This question is specifically about central banks as they alone have the authority to create new money.</p>

CC BY-SA 4.0
2019-11-19T00:26:29.420Z
You can easily find the [Bank of England's annual accounts](https://www.bankofengland.co.uk/-/media/boe/files/annual-report/2019/boe-2019.pdf) - it does not use either method
Henry
CC BY-SA 4.0
2019-11-19T01:58:14.453Z
@KennyLJ This is about *central* bank though... so the answer might be different?
Art
CC BY-SA 4.0
2019-11-19T17:21:33.647Z
@Henry Is it your understanding from the annual accounts that the costs are all funded out of central bank profits?
Barnaby Golden
CC BY-SA 4.0
2019-11-19T17:33:52.403Z
Yes, they are. And in the US at least, if profits did not exceed costs, they’d be funded by the Treasury.
dismalscience
CC BY-SA 4.0
2019-11-20T03:39:05.040Z
Indeed the Fed does, at least during a contingency. During the US government shut-down of 2018-2019, the Fed did not shut down and its staff continued to be paid, using coupon payments from its QE portfolio.
Michael
CC BY-SA 4.0
2019-11-26T23:10:16.167Z
@Michael could you provide source for this? Not that I dont believe you but I find it interesting and would want to know more about this. I tried to google it but could not find it probably using wrong key words
1muflon1
<central-banking>
Do central banks pay their staff and other costs with money that they create?
Barnaby Golden
# Do central banks pay their staff and other costs with money that they create?

(Asked by: username_0 on 2019-11-18)

Central banks like the Bank of England and the Fed must cover their costs. I was wondering how they do this? I can think of two possible mechanisms:

1. Government allocates money from its tax revenue to the central bank, which then uses this money to cover costs.
2. The central bank creates an amount of money necessary to cover its costs.

This question is specifically about central banks as they alone have the authority to create new money.

**Tags:** central-banking

> **Comments:**
> **username_1**: You can easily find the [Bank of England's annual accounts](https://www.bankofengland.co.uk/-/media/boe/files/annual-report/2019/boe-2019.pdf) - it does not use either method  
> **username_2**: @KennyLJ This is about *central* bank though... so the answer might be different?  
> **username_0**: @username_1 Is it your understanding from the annual accounts that the costs are all funded out of central bank profits?  
> **username_3**: Yes, they are. And in the US at least, if profits did not exceed costs, they’d be funded by the Treasury.  
> **username_4**: Indeed the Fed does, at least during a contingency. During the US government shut-down of 2018-2019, the Fed did not shut down and its staff continued to be paid, using coupon payments from its QE portfolio.  
> **username_5**: @username_4 could you provide source for this? Not that I dont believe you but I find it interesting and would want to know more about this. I tried to google it but could not find it probably using wrong key words  

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## 1 answers

### Answer by username_6 on 2022-01-14. Score: 2 | Accepted answer

In general, central banks are profitable because they hold a portfolio of interest bearing assets (government bonds) against non-interest bearing liabilities (currency).

A central bank's revenue is generally more than enough to pay for its staff and other costs, leaving some left over to remit to the national government.

In 2020, the Bank of Canada had almost \$2.6 billion in revenue against about \$0.6 billion in costs leaving a net income of about \$2 billion. As you can see in their financial results here: <https://www.bankofcanada.ca/publications/annual-reports-quarterly-financial-reports/annual-report-2020/financial-results/>


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