# Isn't money moving towards central bank in the long run?

Central banks typically pumps money into the system by :

• lending out to private banks

But in both these cases won't the central bank get back more money when it ends it's position (ie., initial money along-with the interest) and in the end more money from the system would get accumulated with the central bank.

A minor point, but central banks also pay for operating expenses. So they have to spend some of the surplus on salaries, building maintenance, etc. And they also get more surplus by printing physical money.

However in most countries it is included within the charter of the central bank that any surplus left over at the end of some period is to be transferred to the government treasury. The government is then free to spend this surplus.

This is one of the reasons for the seperation of the central bank and the government. If a government had control of the bank it could be tempted to instruct the bank to create a surplus and then use said surplus to finance government expenditures. This is deemed undesirable as it inreases inflation.

Should a central bank somehow end up with a deficit rather then a surplus it falls to the treasury to help them out (if needed).

• An example: The central bank buys bonds for \$100 and get \$110 at the end of the year. If this is the only thing they have done, then the \$10 dollar earning is surely transferred to the government. Furthermore, if new money was issued to pay the \$100 for the bond, that is also surplus, and at the end of the year it will be transferred to the government. But if the bank had the \\$100 from the previous year, it is just capital, and not transferred at the end of this year either. – Giskard Jul 9 '16 at 7:20