Income Like most banks, a central bank’s income will come mainly from earned interest. However, there is also scope for central banks to generate income through charges for such activities as government banking, supervision, foreign exchange transactions, and payment transactions on behalf of customers. Also, banknotes are an interest-free form of funding that central banks can invest in interest-bearing assets. The income arising from issuing notes is commonly called seigniorage. Seigniorage arises not from the notes themselves but from the assets financed by the note circulation. The Bank of England exceptionally separates out the seigniorage via a separate accounting entity, the Issue Department17, and all income from the Issue Department is paid over to the UK Treasury on a regular basis.18 Most central banks do not separate out their balance sheets in this way. Instead, seigniorage is apportioned out of total income.19 We underscore that seigniorage is income actually earned on the assets matching the note circulation. The definition of seigniorage as the difference between the face value of notes 17 The separation of the Issue Department is contained in the Bank of England Charter Act 1844. This Act gave the Bank of England the exclusive right to issue notes in England and Wales. It required the Bank to identify the assets backing the note issue separately from its other activities. It was a form of ‘ring-fencing.’ 18 The historical justification for distributing seigniorage to the state is that, before modern times, the monopoly on money-making belonged to government (Desan 2015). 19 The concept of seigniorage is sometimes extended to include income generated from other policy related liabilities such as banks’ required reserves. Within the Eurosystem, monetary income fits this description. It is shared between the member central banks according to a formula based on relative sizes of national economies and populations.