. the tab always has to be paid and it is paid out of taxes and government revenues in one form or another. i would like to explain why. i will start with some central bank accounting. when a central bank creates money to finance government spending it does so by crediting the government's deposit account with it. these extra deposits represent a liability of the central bank. and on the asset side of the balance sheet, the central bank might have an iou from the government to be paid in the future. now suppose that the additional government spending is successful in stimulating the economy and this starts to push inflation up. at some point, interest rates would need to be increased to avoid https : / / www. rba. gov. au / speeches / 2020 / sp - gov - 2020 - 07 - 21. html 7 / 13 21 / 07 / 2020 covid - 19, the labour market and public sector balance sheets | speeches | rba inflation rising too far. if this lift in interest rates did not occur, inflation would rise, perhaps to a very high level. in this case, it would be through the inflation tax that the community pays for the extra government spending. so there is no free lunch – the spending is just paid for in a different way. now instead suppose that interest rates are increased to avoid high inflation successfully. even then, there is still no free lunch. how the tab is paid though depends on the nature of the arrangements that are in place. one possibility would be for the government to pay back the iou along with any accumulated interest at some point down the track. this repayment would need to be funded by future taxes. if instead the iou was not interest - bearing and was not repaid, the central bank would start accumulating losses as the interest rate it paid on its deposit liabilities increased and there was no offsetting income. this would lead to a decline in dividends to the government and possibly a future recapitalisation of the central bank. both have to be funded through tax revenue. another possibility would be to increase the general level of interest rates to deal with inflation, but to maintain the low interest rate on deposit balances held at the central bank. this approach would limit losses at the central bank even if the iou was not interest bearing. but it would effectively amount to a tax on the banking system, as it is the banks that would hold these low - interest balances once the government has spent

ship ’ s owners receiving compensation. in 1700, the ship returned to dublin and the captain, eoghan massey, claimed that his men had spent five years in captivity at the hands of algerian corsairs, who had used the ship to engage in acts of piracy. as compensation had been paid out two years previously, the ownership of the ship ’ s cargo became a matter of intense debate and controversy. the same panel of merchants, which had settled the debate in 1698 on the ship ’ s fate, met once more in order to decide that all monies remaining following the proper compensation of the owners should go towards a fund for the alleviation of poverty among dublin ’ s “ decayed merchants ”. out of this case emerged the ouzel galley society, which was founded to act as a permanent arbitration body to deal with similar shipping disputes that might arise. the ouzel galley society was wound up in 1888 and its functions subsumed by the dublin chamber of commerce and the commercial buildings company, whose premises and assets the bank purchased in 1963 to facilitate the building of the dame street tower. this is a unique archive collection documenting aspects of the economic and social history of ireland in the eighteenth and nineteeth centuries. the oldest record we hold is the imports and export ledger for ireland from the year 1786. in conclusion, i would like to cite the mission statement of the new service : “ the mission of the archive is to collect, preserve, promote and make accessible records charting the history of the bank and its contribution to the development of ireland. ” with those words in mind, i am delighted to officially launch the central bank of ireland archives. 2 / 2 bis central bankers'speeches