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QuestionHow are the Bank's profits distributed? What is the payment to the national treasury?

Answer

The Bank's final profits -- that is, all of the Bank's net income for the relevant term, after subtracting necessary expenses and taxes, and then providing for the amount transferred to the legal reserve and for dividends to contributories -- are paid to the government as the nation's property (Article 53 of the Bank of Japan Act). This is called the payment to the national treasury.

More or less the same system is also applied in other major central banks overseas. This is because seigniorage is generated as the governments have given monopolies on the issuance of banknotes to their respective central banks.

In Japan, the Bank is obliged to make the payment to the national treasury within two months after each relevant fiscal year-end. This payment constitutes revenue in the government's general account for the relevant fiscal year and is eventually returned to the public through general account expenditures.

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