Seigniorage

Seigniorage,

Definition of Seigniorage:

  1. Government income received from minting of currency, and resulting from the difference between the cost of materials (ink, paper, metal) and the currencys face value (par value). Elimination of seigniorage is one of the big hurdles in the acceptance digital cash because the governments will lose significant sums (some 20 billion dollars in case of the US).

  2. Profit made by a government by issuing currency, especially the difference between the face value of coins and their production costs.

  3. If the seigniorage is positive, the government will make an economic profit; while a negative seigniorage will result in an economic loss.

  4. Seigniorage is the difference between the face value of money, such as a $10 bill or a quarter coin, and the cost to produce it. In other words, the economic cost of producing a currency within a given economy or country is lower than the actual exchange value, which generally accrues to governments who mint the money.

How to use Seigniorage in a sentence?

  1. If it enters bilateral or multilateral agreements, there would be a likely cost of sharing seigniorage collected on the dollars circulating in the dollarized countries.
  2. Seigniorage is the difference in face value of money, such as a $0.25 quarter coin, and the cost to produce it.
  3. In some situations, the production of currency can result in a loss instead of a gain for the government creating the currency (e.g. producing copper pennies).
  4. Seigniorage may be counted as positive revenue for a government when the money it creates is worth more than it costs to produce.

Meaning of Seigniorage & Seigniorage Definition