Monday, April 6, 2015

Seigniorage

Seigniorage is the difference between the value of money and the cost to produce it. The term can be applied in the following ways:

  • Seigniorage derived from specie—metal coins, is a tax, added to the total price of a coin (metal content and production costs), that a customer of the mint had to pay to the mint, and that was sent to the sovereign of the political area.
  • Seigniorage derived from notes is more indirect, being the difference between interest earned on securities acquired in exchange for bank notes and the costs of producing and distributing those notes.

Seigniorage is a convenient source of revenue for some governments.

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