The National Bank derives its income almost exclusively from the performance of tasks in the public interest entrusted to it by the legislature, in particular those related to monetary policy.

The National Bank’s monetary policy tasks (exercised within the Eurosystem) essentially entail overseeing the creation of money, controlling the money supply, and ensuring that money retains its value (in other words, safeguarding price stability). These are traditionally sovereign prerogatives, entrusted to the central bank in order to ward off political influence (a principle enshrined in Article 130 TFEU).

As monetary policy is a sovereign prerogative, the associated net income arising from such tasks obviously inures to the benefit of society, subject to the deductions stipulated in Article 32(1) to (3) of the Organic Act.

This income is referred to as “monetary income” in Article 32 of the Protocol on the Statute of the European System of Central Banks and of the European Central Bank and is defined as “annual income derived from [its] assets held against notes in circulation and deposit liabilities to credit institutions” (Article 32.2), i.e. the “monetary base”. Monetary income is governed by a European statutory framework involving partial redistribution among the national central banks.

Put simply, for the purpose of calculating monetary income, the monetary base is considered to comprise reference liabilities, banknotes in circulation and reserves held by the central bank that take the form of liabilities to credit institutions pursuant to monetary policy operations. There are also, however, earmarked monetary assets, specifically monetary credits and securities portfolios.

See the European Central Bank’s website (https://www.ecb.europa.eu/mopo/html/index.en.html) for more information on monetary policy and monetary policy instruments.