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Topic: Seignorage

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	Seigniorage - Wikipedia, the free encyclopedia
		Seigniorage, also spelled seignorage, is the net revenue derived from the issuing of currency.
		It arises from the difference between the face value of a coin or bank note and the cost of producing and distributing it.
		Seigniorage can also refer to a form of tax levied on the holders of a currency, and as such a redistribution of resources to the issuer.
	en.wikipedia.org /wiki/Seignorage (332 words)

	* Seignorage - (Numismatic): Definition
		Seigniorage, also spelled seignorage, is the net revenue derived from the issuing of currency For exchange rates, see here.
		A negative seignorage was at hand (seignorage is the profit the Mint makes between the cost of manufacturing a coin and its face value)...
		However, the profit the Mint made on the production of these coins (or seignorage as it is known) was minimal, and rising silver prices through the...
	en.mimi.hu /numismatic/seignorage.html (216 words)

	Adam Smith : Wealth of Nations : Chapter VI. Of Treaties of Commerce
		The seignorage, if it was not exorbitant, would add to the bullion the whole value of the duty; because, the government having everywhere the exclusive privilege of coining, no coin can come to market cheaper than they think proper to afford it.
		A moderate seignorage, therefore, would not, in any case, augment the expense of the bank, or of any other private persons who carry their bullion to the mint in order to be coined; and the want of a moderate seignonage does not in any case diminish it.
		The directors of the bank, however, would probably be unwilling to agree to the impositon of a seignorage upon the authority of a speculation which promises them no gain, but only pretends to insure them from any loss.
	www.classicreader.com /read.php/sid.2/bookid.770/sec.29 (3432 words)

	FRBSF: Economic Letter - What is the Optimal Rate of Inflation? (9/19/97)
		The difference between the losses of those who pay the tax and the revenue raised is known as the "deadweight loss" or "excess burden" of the tax, and one principle of public finance is that taxes should be administered in a way that minimizes these losses.
		In their examples, the Friedman rule remains optimal even though seignorage revenue must be replaced by distortionary taxes on labor income or consumption.
		Second, seignorage accounts for only a small fraction of tax revenue raised in the U.S., usually less than 3%, and the adjustments in other taxes needed to replace lost seignorage revenue are likely to be minor.
	www.frbsf.org /econrsrch/wklyltr/el97-27.html (1943 words)

	case02
		A secondary goal is to explore the relationship between the fiscal and monetary variables intoduced when seignorage is used as a substantial source of government financing.
		Using your results from question 5, calculate for each fiscal year (that is, for December of each year) the total real seignorage revenue raised for the year by adding up the toal of real seignorage revenues from the preceding 12 months.
		Express the annual total as a percentage of real GDP and then construct a time-series plot of this value simulataneously with a plot of the fiscal deficit as a percentage of real GDP (this variable is already provided for you).
	www.gsb.columbia.edu /faculty/CHimmelberg/case02.htm (778 words)

	Chapter Chapter 6 of The Wealth of Nations by Adam Smith
		If, before the late reformation of the gold coin, for example, there had been a seignorage of five per cent upon the coinage, there would have been a loss of three per cent upon the melting down of the gold coin.
		Wherever money is received by tale, therefore, and not by weight, a seignorage is the most effectual preventative of the melting down of the coin, and, for the same reason, of its exportation.
		They would indeed have had the seignorage to pay, which being two per cent, their loss upon the whole transaction would have been two per cent exactly the same, but no greater than it actually was.
	www.bibliomania.com /2/1/65/112/7062/5.html (519 words)

	Issue 3, 1996 - Southwest Economy - FRB Dallas
		Seignorage is the volume of goods and services that governments buy with the fiat money they print.
		Seignorage amounts to a small gift to U.S. citizens: the "taxes" paid by foreigners holding dollars reduces the amount of income taxes that must be collected from U.S. citizens.
		Seignorage is an alternative to income taxes or greater public indebtedness, not a free lunch.
	www.dallasfed.org /research/swe/1996/swe9603.html (5662 words)

	Feasta Money Proposals
		The total gain from having a reserve currency (the technical term is seignorage) is the cumulative balance of payments deficit on the import-export account that the issuing country is able to run up.
		Accordingly, these countries' only choice is whether or not to reduce their holdings of one reserve currency - perhaps because they think that it's about to fall in value compared with the others - and to increase their balances of the others to compensate.
		For as long as world trade continues to grow, the indebtedness (and thus the seignorage gains) of the reserve-currency issuing countries is likely to increase.
	www.feasta.org /documents/moneyecology/moneyproposals.htm (2020 words)

	New York's Premier Alternative Newspaper. Arts, Music, Food, Movies and Opinion (Site not responding. Last check: 2007-11-05)
		Seignorage is the difference between the value of money and the cost of its production.
		This is the view of paranoid seignorage from the other side of the looking glass, a point of view that sees a clear path connecting the above- and underground economies.
		The detection of paranoid seignorage is as elusive as any other form of seignorage; for that matter, pinning it down can be as frustrating as the statistical opaqueness of the underground economy itself.
	www.nypress.com /16/51/news&columns/feature.cfm (1739 words)

	Transcript of IMF Economic Forum on Dollarization: Fad or Future for Latin America
		Those are typically the costs of giving up seignorage, earnings associated with currency, and on the benefit side you have potentially lower spreads associated with the elimination of risks of devaluation.
		Seignorage, the way we think of seignorage in Argentina is essentially the interest payment, the interest that Argentina gets on its international reserves, the international reserves that back the currency.
		I mean usually it's really tough to explain something like seignorage in Congress and that is why I am not real optimistic about the possibility of giving the Argentines back some of their seignorage.
	www.imf.org /external/np/tr/1999/TR990624.HTM (11643 words)

	United Nations Statistics Division - National Accounts
		Kishori Lal from Statistics Canada recently raised the question of the consistency of the treatment of seignorage profits from the issue of coins in the 1993 SNA and in the Manual of Government Finance Statistics (GFS) 1986.
		Seignorage profits on the issue of coins, however, whether coming from the central bank or from a function of the monetary authorities to be separated from government are included in government revenue along with other central bank profits transferred to government" (page 62).
		The SNA, however, without explicitly addressing the topic of seignorage profits from the issue of coins establishes the principle that both, notes and coins are universally treated as liabilities within the system (para.
	unstats.un.org /unsd/sna1993/updatepage.asp?id=4 (218 words)

	Adam Smith: The Wealth of Nations. Book 4, Chapter 6 (Site not responding. Last check: 2007-11-05)
		A moderate seignorage, therefore, would not in any case augment the expense of the bank, or of any other private persons who carry their bullion to the mint in order to be coined, and the want of a moderate seignorage does not in any case diminish it.
		But if there had been a seignorage of four or five per cent upon the gold coin, it would probably, even in the state in which things then were, have put an effectual stop to the business both of exportation and of the melting pot.
		The revenue allotted by Parliament for defraying the expense of the coinage is but fourteen thousand pounds a year, and the real expense which it costs the government, or the fees of the officers of the mint, do not upon ordinary occasions, I am assured, exceed the half of that sum.
	ao.com.au /economics/1776/wealth_nations_4_06.html (3301 words)

	SSRN-Dollarization and Seignorage: How Much is at Stake? by Stephanie Schmitt-Grohe, Martin Uribe
		A central issue in the debate about dollarization is the distribution of seignorage between U.S. and the economies that are considering the adoption of the dollar as the sole legal tender.
		A common misconception is that the amount of seignorage income involved is simply equal to the interest income on the amount of foreign reserves required to exchange the entire domestic money supply for dollars.
		This way of measuring the loss of seignorage income is in general biased for it implicitly assumes no growth in monetary assets.
	papers.ssrn.com /sol3/papers.cfm?abstract_id=186136 (329 words)

	On The Principles of Political Economy and Taxation, by David Ricardo 1871
		While the State alone coins, there can be no limit to this charge of seignorage; for by limiting the quantity of coin, it can be raised to any conceivable value.
		To a moderate seignorage on the coinage of money there cannot be much objection, particularly on that currency which is to effect the smaller payments.
		Money is generally enhanced in value to the full amount of the seignorage, and, therefore, it is a tax which in no way affects those who pay it, while the quantity of money is not in excess.
	members.cox.net /economist/political-theory/ricardo/ch27.htm (3508 words)

	[A-List] Super Imperialism seminar March 1 (Site not responding. Last check: 2007-11-05)
		It is a tax on the rest of the world by the issuer of fiat currency that enjoys the status of reseerve currency for trade and finance.
		Prior to 1971 when Nixon took the dollar off gold, there was technically no US seignorage advantage, since the dollar was pegged to gold at $35 an ounze.
		But in actuality, prior to 1971, the seignorage advantage of the US was even greater than today.
	lists.econ.utah.edu /pipermail/a-list/2004-March/029386.html (634 words)

	Sustainable Public Debt
		In conditions of liquidity preference, like that experienced in Japan in the post 1990-bubble era, a government may find effective seignorage to be higher than historical or comparative norms.
		[4] Seignorage is defined here as the growth in base money stock that accrues to the money-creating agent (i.e., the government, via its central bank) as income earned from that privilege.
		Effective seignorage can be considered the ability of the central bank to expand the nominal money supply by monetizing the public debt (i.e., reducing D through open market operations) up to the extent that it does not cause inflation.
	mywebpages.comcast.net /mzobian/staticmodel (2692 words)

	Government Seignorage by John Galvin
		It occurred to me that the term "seignorage" may be the simplest way to understand it.
		In this case the seignorage value, the difference between the value of the gold content and the price of the Krugerrand, is a comparatively small percentage.
		To test our seignorage theory, let’s look at other areas where government has a monopoly and see if the same principles are at work.
	www.lewrockwell.com /orig/galvin5.html (2156 words)

	Glasgow Edition of the Works and Correspondence of Adam Smith (1981-87) Vol. II An Inquiry into the Nature and Causes ... (Site not responding. Last check: 2007-11-05)
		The seignorage, if it was not exorbitant, would add to the bullion the whole value of the duty; because, the government having every where the exclusive privilege of coining, no coin can come to market cheaper than they think proper to afford it.
		Thus by the edict of January, 1726, the* mint price [336] of fine gold of twenty–four carats was fixed at seven hundred and forty livres nine sous and one denier one–eleventh, the mark of eight Paris ounces.
		28A moderate seignorage, therefore, would not in any case augment the expence of the bank, or of any other private persons who carry their bullion to the mint in order to be coined, and the want of a moderate seignorage does not in any case diminish it.
	oll.libertyfund.org /Texts/LFBooks/Smith0232/GlasgowEdition/WealthOfNations/0141-03_Bk.html (14049 words)

	EH.Net Encyclopedia: Bimetallism
		The relative market values of gold to silver at that time were 15:1, and the legal tender value of the silver dollar was $1 and of the Eagle was $10, reflecting their relative values (ten silver Dollars would contain 3712.5 grains of silver, which is 15 times the 247.5 grain weight of the gold Eagle).
		The mint typically bought gold and silver freely that is, from anyone willing to sell at the mint price, which usually was slightly lower that the value of the coins produced, to pay for the costs of coining and, sometimes, profits or seignorage as well.
		As in the case of the gold standard - a more well-understood commodity money standard - bimetallism provided a nominal anchor for the monetary system.
	www.eh.net /encyclopedia/?article=redish.bimetallism (1420 words)

	Price Stability: Is a Tough Central Bank Enough? (Site not responding. Last check: 2007-11-05)
		Increases in seignorage are accompanied by increases in inflation.
		This increase in seignorage is accomplished by increasing the growth rate of the money supply, and thus it is accompanied by an increase in inflation.
		Rather than increasing seignorage to 6 billion apples, suppose the monetary authority hangs tough and refuses to increase seignorage.
	www.clevelandfed.org /research/com2000/0801.htm (3121 words)

	EconPapers: Skiki vono ko shtuvalo? The Seignorage Loss from Monetary Stabilization in Ukraine
		Concurrently, the level of seignorage, or inflation tax revenue, dropped from 13 percent of gross domestic output to around 1 percent of output.
		The loss in inflation tax revenue is found to be on the order of 2 percent of output--a relatively small fraction of the total loss in seignorage of some 13 percent of output.
		Consequently, calls for a return to previous hyper inflationary rates of money growth in order to reproduce earlier levels of seignorage revue are seen as misguided.
	econpapers.repec.org /paper/wpawuwpma/9712005.htm (297 words)

	FRB: Speech, Meyer -- The Future of Money and of Monetary Policy -- December 5, 2001
		The size of the Fed's portfolio, in effect, determines the seignorage the government obtains through the issue of the monetary base.
		The Treasury and hence the American taxpayer are the ultimate beneficiary of the seignorage.
		If the Fed were to lose so much seignorage that it could not cover its costs under current arrangements, it would have to look for other arrangements to cover its costs in a way that supported its independence.
	www.federalreserve.gov /boarddocs/speeches/2001/20011205/default.htm (10848 words)

	RePEc
		Abstract: Seignorage is the capital gain generated by the creation of reserve money.
		The literature on seignorage shows that countries with highly developed and deep financial systems generate few resources relative to national income (or government revenue) from seignorage.
		In fact, when all of the consequences of rapid reserve money growth are considered --- including the increased local currency cost of servicing and amortizing external debt due to exchange rate depreciation --- these countries incur a net loss from reserve money creation.
	www.inomics.com /cgi/repec?handle=RePEc:fth:eagerd:58 (164 words)

	House of Commons Standing Committee (pt 9)
		Let me make it clear that a seignorage tax would effectively represent a tax on the profits of national central banks.
		As I understand the proposal, the revenue from seignorage in EMU member countries should be pooled and then redistributed back to central banks under a formula related to GNP.
		If the seignorage revenue in all member states were to be taxed, it would represent a tax on the profits of central banks, which we would be unwilling to accept.
	www.parliament.the-stationery-office.co.uk /pa/cm199798/cmstand/eurob/st981111/81111s09.htm (1748 words)

	The Ancients and the Scholastics
		The ban on usury brought up an interesting dilemma identified by Nicole de Oresme: the debasement of national currencies by their respective governments (a practice that accelerated notoriously in 14th Century France).
		Oresme accepted that governments are entitled to some amount of seignorage on account of their minting services, but it must not be forgotten that money is effectively a loan from people to government.
		Oresme produced a succint analysis of currency debasement, arguing that the government was entitled to a modest seignorage gain for its services, but condemned alterations in money as theft.
	cepa.newschool.edu /het/schools/ancients.htm (2438 words)

	EERC
		The goal of the paper is to analyze the effect of inflation on seignorage revenue in three countries: Belarus, Russia, and Ukraine, in the period 1992 - 2000.
		In particular, the aim of the analysis is to estimate whether the rate of money growth in the high inflation period in these countries exceeded the revenue-maximizing value.
		The former is elaborated on the basis of Cagan’s (1956) seminal paper; the latter was developed by McCallum(1989) and applied by Aschauer (1997) to Ukraine in the period of 1993-1996.
	www.eerc.kiev.ua /research/matheses/show_matheseses.php?year=2001 (5904 words)

	Email a Friend
		When the ECB cannot credibly commit to inflation, multiple equilibria may arise, where inflation is excessive and labour taxes too low (Workers’ Europe), or vice versa, where taxation is excessive and inflation too low (Bankers’ Europe).
		Finally, if the ECB cannot commit to a fixed scheme for redistributing seignorage, the outcome is excess inflation and suboptimal taxation.
		Both governments anticipate that the ECB will redistribute seignorage in favour of the country with lower tax revenue, and tend to lower tax rates accordingly.
	www.cepr.org /home/cite.asp?Type=DP&Item=1909 (245 words)

	MNTFACT2
		In fiscal 1994 this profit, or seignorage, amounted to $37.7 million (multiplying this.28 cents profit by the 13.5 billion pennies produced).
		Instead of looking at a straight forward profit-loss analysis that shows a $37.7 million profit for the penny, the GAO applies a budget convention that artificially reduces the seignorage profit to the government.
		Since seignorage reduces the amount of money that the Treasury must borrow to finance the deficit, the GAO multiplied the $37.7 million seignorage profit by the average Treasury borrowing rate in fiscal 1994 to come up with a new $2.6 million "interest saved" calculation.
	www.pennies.org /MNTFACT2.html (507 words)

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