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independent central bank as currency custodian
• Some central banks are listed
• Poorly profitable investment
Central banks are formally independent. This was not always the case. In the past, states have deliberately influenced monetary policy. According to the European Central Bank’s website, “extensive empirical data and theoretical analysis have demonstrated the ability of independent central banks to keep inflation rates low”.
But even if central banks do not necessarily pursue state goals, the majority of international currency custodians are state-owned. These include the Reserve Bank of India, which was nationalized in 1949. The Bank of England, which was a private institution until 1946, is also 100 percent state-owned – although it operates largely independently politically. The committee members who make monthly interest rate decisions in the Bank of England are appointed by the UK Chancellor of the Exchequer.
Some central banks have private shareholders
However, some central banks are also organized as public limited companies, in which private investors can buy shares and whose shares are publicly traded on a stock exchange. This is usually for historical reasons, but does not mean that central bank shareholders also have a say in monetary policy.
Swiss National Bank SNB
The most prominent example is the Swiss National Bank (SNB), which operates as a special-statutory stock corporation under federal law.
Shares have been listed on Swiss stock exchanges since the National Bank was founded in 1907. Today, shares are traded on the SIX Swiss Exchange.
The bank is managed with the cooperation and supervision of the federal government in accordance with the provisions of the National Bank Act. Specifically, the SNB shares are designed as registered shares: around 55 percent of the total share capital is in public hands. The Swiss cantons and cantonal banks are exclusively shareholders of the institute. According to the National Bank, the remaining 45 percent of the SNB shares are “largely owned by private individuals”. As a listed company, the SNB is subject to the regulations of the Swiss stock exchange that are binding for issuers and therefore regularly publishes interim reports on business developments.
The Swiss National Bank is functionally, financially and personally independent. The federal government itself does not own any shares.
The determination of profit is regulated in the National Bank Act: The National Bank takes currency and currency policy precautions in order to be able to keep the currency reserves at the required level;
In principle, every investor from Switzerland and abroad is free to publicly buy or sell shares in the SNB. Shareholders benefit from profit growth in the form of dividends, which amount to a maximum of six percent of the share capital. One third of the remaining profit goes to the federal government and two thirds to the canton.
However, compared to other partnerships, shareholders have limited co-determination rights. The voting right of private shareholders is limited to 100 votes, a maximum dividend of CHF 15 per share is possible.
Bank of Greece
Another European national bank is listed on the stock exchange, the Bank of Greece. The share capital is 100% in the hands of private shareholders and is therefore 100% privately owned.
The bank was founded in 1827 and three years later Bank of Greece shares were listed on the Athens Stock Exchange. By law, the state’s stake in the bank should not exceed 35 percent, so that private investors can hold the majority of the shares at any time and can buy and sell their shares on the open market.
The share capital of Bank of Greece is currently EUR 111,243,361.60 and is divided into 19,864,886 shares. In recent years, the Bank of Greece has regularly paid dividends.
Like the SNB, the Bank of Greece is independent and does not take instructions in the performance of its currency custodian duties. The Central Bank of Greece is a member of the European System of Central Banks.
Banque Nationale de Belgium
The third listed central bank is also in Europe, more precisely in Belgium. 50 percent of the shares in the Banque Nationale de Belgique are owned by the state, the remaining 50 percent are distributed among private shareholders. The National Bank of Belgium has 400,000 outstanding shares, 200,000 privately held shares designated as registered or unsecured shares which can be freely traded on Euronext in Brussels. According to the bank, apart from the Kingdom of Belgium, no shareholder holds more than five percent.
The National Bank of Belgium also pays dividends to its shareholders, which consist of two components. The first dividend will be 6 per cent of the share capital plus a second dividend of 50 per cent of the net return on assets held versus the “reserve” (“regulatory reserve”) as determined by the Council of the Regency.
Meanwhile, NBB shareholders’ rights are limited compared to shareholders of other listed companies. The BNB sees itself as an “extraordinary public limited company”, primarily for historical reasons for the National Bank’s stock exchange listing, since it was brought into being as a public limited company by the legislature when it was founded. took place in 1859.
For investors, this means that they are not allowed to have a say in the amount of profit to be distributed, the approval of annual financial statements or the dismissal of incumbents. All these rights, which normally relate to the general meeting of shareholders, are exercised in the NBB by the Regency Council, made up of representatives of Belgian social and economic circles.
Japanese central bank
The Japanese central bank, the Bank of Japan, is also one of the listed central banks. The state has the majority in this institution: 55 percent. The remaining 45 percent are in the hands of private shareholders. Unlike the SNB, the Bank of Greece and the Belgian National Bank, shares in the BoJ cannot be traded in Germany.
Bank of Japan shareholders do not receive dividends, nor do the shares have voting rights. Bank profits, i.e. all net income, go directly to the state after deduction of taxes and expenses and are treated as national wealth. According to the BoJ, it is not a public company and does not hold shareholders’ meetings.
According to the Currency Guardian website, it is considered independent in terms of currency policy and therefore autonomous in terms of currency and money controls. In 1998, government control over the central bank was severely restricted, particularly in relation to the state’s oversight role.
Is the central bank’s investment worth it?
Against the background that the profit distribution of listed national banks is low or very manageable and the shareholders have no rights of co-determination in corporate policy, the question arises as to why investors should transfer their money to the central bank. should invest. Split.
Investing is less or less profitable and just looking at stock price performance there are more promising investment opportunities on the market. Since central banks are not for-profit companies themselves, the usual standards for listed companies do not apply here.
Stock exchange listings from central banks usually have a historically grown structure and are probably more of a symbolic nature. In addition, SNB & Company shares rarely trade, making the shares an illiquid but potentially volatile investment.
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