From ACT Wiki
Jump to navigationJump to search

Money - issuers.

The benefit to the issuer of a currency - usually a central government - of creating and issuing money.

Taking the example of newly minted coins, the issuing government receives the coins' face value in exchange for them, but the cost to the government is only the smaller cost of production and distribution of the coins.

In the context of coins, seigniorage is the profit to government, represented by the excess of the face value of the coins over their production costs.

In the case of banknotes, the issuing government will generally use its newly-printed banknotes to buy interest-producing securities.

Seigniorage from issuing banknotes is the difference between the interest earned and the production cost of the banknotes.

Seigniorage is also sometimes spelled seignorage or seigneurage.

It derives from the Old French word seigneur, meaning 'ruler' or sovereign - the person historically with the sole right to mint money.

See also